To robbing Peter to educate Paul (Mint)

• Mains Paper 3 : Economy 
• Prelims level : Investor Education and Protection Fund
• Mains level : Investment models

Context

• Can you name a social cause in India which is inundated with so much money, that those collecting it don’t know what to do with it? Investor education and protection must surely fit this description.
• Over the years, Indian policymakers have devised so many creative ways of appropriating retail investor money towards this cause that today multiple institutions sit on stockpiles of money dedicated to it.

The many funds

• The Investor Education and Protection Fund (IEPF) managed by the Ministry of Corporate Affairs is the big daddy of all such funds. Created by the Companies Act.
• It houses sums unclaimed from companies by way of matured deposits, debentures and IPO application monies, apart from dividends (after a waiting period of seven years).
• In 2013, it was decreed that companies would also transfer into the IEPF all shares on which dividends weren’t claimed for seven years (this could be due to owing to incorrect bank details, physical certificates, death or incomplete transmission). 
• Though the IEPF offers a searchable database for investors looking to reclaim lost amounts, retail investors complain that it is an arduous process with a very low success rate.
• The IEPF has thus deployed its rich coffers in conducting nationwide Investor Awareness Programmes (IAPs), propagating messages through radio jingles and TV ads even developing a TV serial on financial frauds.
• In FY19 alone, it organised 35,000 IAPs, covering rural areas.

Problem of plenty 

• SEBI manages its own Investor Protection and Education Fund carved out of its profits and sums forfeited from de-recognised stock exchanges. 
• As per its last published accounts for FY17, it managed ₹108 crore and spent roughly ₹20 crore on investor education.
• Every stock exchange is required to create an Investor Protection Fund out of turnover fees and fines levied from members. While their primary purpose is to compensate retail investors after broker default, surpluses go into investor education. 
• NSDL and CDSL chip in with their own Investor Protection Funds, contributing 5 per cent of their profits and penalties from market participants. 
• With very little financial information about these funds in the public domain, it is hard to say how much money they’re sitting on, or how they spend it.
• SEBI added a gusher in 2012 by decreeing that all the 40-odd mutual fund houses must spend two basis points of their annual net assets towards investor awareness. Half of this sum was later handed over to AMFI. 
• With the fund industry now managing assets of over ₹25-lakh crore, that’s nearly ₹500 crore dedicated to investor education. 
• According to AMFI, AMCs conducted 72,257 IAPs until May 2017. But this apart, no public data is available on the amounts garnered or spent by the fund industry under this head.

More, but not merrier

• It given that most of the investor education initiatives today rely on IAPs, print ads and online content, there’s significant overlap in the content across institutions.
• While many entities, including mutual funds, do make genuinely laudable efforts to propagate financial literacy, there’s also wastage, with some market players using it to subtly solicit business or conduct five-star jamborees for distributors.
• With stock market participants funding most of these initiatives, the content is heavily skewed towards equity investing, SIPs and mutual funds. But there’s a far greater need to teach young people the basics of personal finance and have basic literacy initiatives around financial planning, banking and insurance, loans, safe digital transactions, and so on.

Reworking the idea 

• The financial market regulators including RBI, IRDAI and PFRDA need to get together with the MCA to see how all the publicly-funded investor education initiatives can be pooled together and monitored, so that there is little wastage and duplication of efforts. 
• SEBI could be a good choice to oversee this money, as it has been a more efficient user of it than the MCA.
• Once this is done, with RBI’s active collaboration, it can work to broad-base the current IAPs and print content to include explainers on interest rates, loan pricing, personal finance, insurance, banking or digital transactions, across multiple Indian languages.
• It is time investor education initiatives went beyond creating generic content designed to induce the novice investor into taking his first step into equities or funds. 
• The stock exchanges on their part, must be induced to put basic information about indices and trading activity in the public domain, instead of trying to monetise every scrap of data. 

Conclusion 

• Today, a lay investor is denied access even to rudimentary data on the individual stock weights in the Nifty or Sensex, historical adjusted stock prices, total return indices and debt benchmarks, while they’re available on a subscription basis to fat-cat investors.
• All entities collecting retail money in the name of investor education must be mandated to put their latest audited accounts in the public domain. 
• If it transpires that a lot of the money is being idled, there would be a strong case to roll back some of the levies, charges and penalties on the existing investors who are paying so heavily for the education of their brethren.

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Prelims Questions:

Q.1) With respect to “Preventive steps taken to check Marine Pollution”, consider the following statements:
1. India is not a signatory to MARPOL (International Convention on Prevention of Marine Pollution).
2. Prevention of Marine Pollution is also dealt with by Merchant Shipping Rules, 2009 framed under the Merchant Shipping Act, 1958.

Which of the statements given above is/are correct?
A.   1 only
B.   2 only
C.   Both
D.   None 

Answer: B

Mains Questions:
Q.1) Do we need so many entities bankrolled by public money to propagate investor awareness? 

Role of ethics in business of innovation (Mint)

• Mains Paper 3 : Economy 
• Prelims level : Gini coefficient
• Mains level : India’s economic growth and development

Context

• ‘Innovation’ and ‘entrepreneurship’ have become business jargon. 
• It seems every business conference, journal, and management curriculum must include innovation or enterprise in its title to be noticed. 

Gini coefficient:

• Societies around the world are also troubled by large inequalities in incomes and wealth. Gini coefficients of income inequality, ranging over 0.5 in many countries, are alarming. More alarming is the inequality of wealth. 
• The Gini coefficient of wealth inequality is estimated at over 0.9, as high as it can possibly be. 
• Just eight persons own as much wealth as 50 per cent of the world’s population, i.e., as many as 3.9 billion people. Concepts of innovation and capitalist enterprise must be changed to make growth more inclusive and sustainable.

Seeking profit

• A foundational principle of ethics in all religions, and in secular philosophy too, is compassion for others. 
• All of them say that the conduct of any person who is concerned only with himself, and not with the impacts of his actions on others, is fundamentally unethical. 
• Therefore, the principle that the business of business must be only business, which has driven corporate governance, is an unethical principle.
• This is the foundational principle on which the governance of the limited-liability business corporation is founded. 
• Its board and its executives are legally enjoined to serve the interests of the shareholders of the corporation, produce profits for them, and increase their wealth. 
• They must not be distracted by soft-hearted social concerns. Those are the responsibility of governments. 

Who owns the enterprise and makes the profit? 

• The shape of the global economy has changed. Wealth begets more wealth.
• Labour costs can be reduced to increase profits, by outsourcing to lower cost countries, automation in richer ones, preventing workers’ unions from demanding higher wages, and by parcelling out bits of work in the gig economy — avoiding the employer-employee relationship altogether. 
• Only 8 per cent of an Apple iPhone’s price is labour cost. The cost of materials and other inputs accounts for 22 per cent. And as much as 70 per cent is profits.

Intellectual monopoly

• The ownership of intellectual property has become an enormous source of profit in the global economy. 
• Innovative enterprises, in the capitalist world, stand out by the amount of profit and wealth they earn from intellectual property.
• While production and sales of products are globalised, control of the rules of IPR (intellectual property rights) has become a great source for accumulation of wealth in richer countries. 

Way forward:

• Democracies around the world are threatened by populist movements upset with the chokehold on public policies by capitalists and the economists who provide them with intellectual ammunition. Institutions of business must change to make capitalism more democratic. 
• Ownership of the means of production must be dispersed more widely amongst workers, so that people at the bottom can accumulate wealth too. 
• The IPR system must be overhauled to return it to its original intention, which was to enable knowledge of innovations to be disseminated more widely to multiply its benefits, rather than enabling the perpetuation of intellectual monopolies. 
• Governments must play more effective roles in delivering public services either by providing them or by more firmly regulating businesses that provide them.

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Prelims Questions:

Q.1) With reference to the Department-related Standing Committee on Science report on Cancer patients, consider the following statements:
1. Mortality to incidence ratio of 0.68 in India is higher than that in very high human development index (HDI) countries (0.38) and high HDI countries (0.57).
2. The incidence of cancer is very high in all Southern States. 

Which of the statements given above is/are correct?
A.   1 only
B.   2 only
C.   Both
D.   None 

Answer: A

Mains Questions:
Q.1) The power of new technologies must be used to benefit the lives of many, rather than maximise the wealth of a few. Critically analyse the statement. 
 

Has India’s financial sector lost the plot? (The Hindu)

• Mains Paper 3 : Economy 
• Prelims level : Not much 
• Mains level : Financial slowdown across India

Context

•  The outcome of reforms in India, in a broader sense, is remarkable. 
•  The breadth and depth of finance have vastly increased — be it in banking, financial markets, insurance, or fund management.
•  Investment opportunities have grown with newer asset classes, an expanded market infrastructure and innovative distribution.

Background:

•  In 1990, rural areas accounted for 15 per cent of deposits and 24 per cent of credit, both of which fell to 10 per cent in 2018. 
•  Metro areas sucked in a large part of business — with deposits jumping from 39 per cent to 51 per cent and bank credit from 37 per cent to 59 per cent. Semi-urban/urban areas saw some minor changes.
•  The decline in rural banking may slow the pace of development and the achieving of the UN’s Sustainable Development Goals, despite interventions like the Jan Dhan Yojana. 
•  It would not do much good for public sector banks to overlook rural and semi-urban areas, which are traditional venues for raising low-cost deposits. 
•  The scene on the side of markets, too, is discomforting. 
•  About 70 per cent of domestic market cap, only half of the companies listed in stock markets are traded on any day; liquidity concentration in a few stocks only..
•  In the absence of independent research to promote newer companies that hold potential, is considered routine. 
•  There are structural issues that are gaining gravity and need scrutiny.

Resource mobilisation

•  Three sectors — banking, finance and insurance — mobilised anywhere up to 60 per cent of the resources from the primary markets during 2010-18.
•  Regional inequities become glaring as the western and northern regions account for 80 per cent — the South and the East are way behind with 14 per cent and 6 per cent respectively — of resources mobilised.
•  India’s public markets have not widened the investor base enough to the potential it holds, as could be seen from resources mobilised in the private placement corporate debt market (seven times higher), and Qualified Institutional Placements accounting for about 50 per cent of the primary market issuance, during 2010-18.
•  This surely is a distinction for Indian markets, but the lingering concern is about its questionable contribution to either economy or development, when the notional value traded in equity derivatives (mostly index options) is 30 times the size of spot market turnover.
•  The benefit of which is largely derived by a small fraction of smart traders specialising in the zero-sum game of taking complex bets using sophisticated strategies supported by latest trading technologies.

Banking woes

•  NBFCs depend on banks for up to 30 per cent of fund requirements, and many at present are in dire straits. The write-downs from this put additional strain on banks’ profitability.
•  New private sector banks began with a big bang in the early 1990s with less than a handful turning successful. While four of them chose to merge, from the others, two are now facing governance issues and two — licensed recently — are yet to stir up any excitement.
•  Older private banks are struggling under various types of stress. Urban cooperatives are primarily meant to be local, but management lapses are hurting their sustained growth.
•  Commercial banks still struggle to fulfil demands for short-term finance, but were made to lend long-term under the lure of universal banking — this hit them badly.

Development finance

•  Private equity flows have surged from $4.5 billion in 2009 to $16.8 billion in 2017, but remained unchanged in 2018 as start-ups began to see a struggle ahead.
•  Of the $512 billion of climate bonds issued globally till 2018, India could make $7.2 billion, as the pace of green finance began to stutter after an initial start. SME capital markets could barely raise ₹5,000 crore in the last five years.
•  Recapitalisation and merger of PSBs, rehabilitation and resolution of distressed companies, tax concessions, and adhoc support to stressed sectors at best could provide temporary relief on the side. 
•  India has yet to come up with a wholesome plan and clear strategy how to make finance work for the country

Where could it start? 

•  An honest review of the fault lines of finance by a truly independent commission with interests of India at the core and domestic economy as the priority, without the peddling of worn-out Anglo-Saxon models. 
•  The finance should be dealt with utmost sanctity and integrity, avoiding shocks like demonetisation that severely dent the public’s trust and confidence.
•  The public capital markets must be entrusted with a charter, with capital raising being the key responsibility, not just showcasing of technology prowess or excessive indulgence in speculative products. 
•  The banks should be made frontline providers of finance for SMEs, and consumption should be boosted by creating specialised institutions for long-term finance for various reasons.
•  India could strive to promote a subcontinental perspective in financial development, that could enhance its regional influence and power of engaging with global financial policy. 
•  The government and the public sector must be the trend-setters and display financial discipline and corporate governance, rather than being shielded through the various exemptions and exceptions.

Conclusion:

•  Now is the time to review and retrospect in right earnest. It would do a lot of good for a course correction.

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Prelims Questions:

Q.1) With reference to the Suranga Bawadi, consider the following statements:
1. Recently UNESCO has included Suranga Bawadi in the World Monument Watch list for 2020 along with 24 other monuments from across the world.
2. Suranga Bawadi is an integral part of the ancient Karez system of supplying water through subterranean tunnels built during Adil Shahi era in Karnataka.

Which of the statements given above is/are correct?
A.   1 only
B.   2 only
C.   Both
D.   None 

Answer: B

Mains Questions:
Q.1) Has India’s financial sector lost the plot? Comment. 

Putting back the ‘national’ in the Jallianwala Bagh trust (The Hindu)

• Mains Paper 2 : National 
• Prelims level : Jallianwala Bagh trust
• Mains level : Jallianwala Bagh trust importance and significance

Context

• Jallianwala Bagh stands witness to the sacrifices and the struggles made by the people of India. 
• One is deeply humbled by the sacrifices made and it would be no exaggeration to say that every particle of the soil here breathes a great history and a story of courage. 
• Jallianwala Bagh is to be a part of the National Museum, Delhi, so that every Indian can have a glimpse of it and can express gratitude towards the sacrifices made. 
• This is a symbol of sacrifice and patriotism, be established as a part of India’s national heritage.

A pan-Indian right:

• A trust for a special site such as Jallianwala Bagh cannot be formed on the basis of a political approach. 
• There are some institutions and places in our society or in the country that are above the reach of politics. 
• So, we should think about them beyond politics and party lines. This was the reason why the Prime Minister has noted that every countryman has a right over this trust rather than it being the fiefdom of any political party. 
• This was why the Central government thought of restructuring the trust. 
• This was also why the government said that to nominate any person of a political party would be unfair not only to this trust but also to the entire country.

As one party’s zone:

• The working of the trust was highlighted in 1970 when Prime Minister Indira Gandhi passed a resolution in February 1970 on behalf of the trustees, in her capacity as chairman of the trust. 
• Mrs Gandhi’s signature on this resolution as its chairman is on record, information about when she joined the trust and in what capacity are unavailable. 
• The Congress has no clarification of how Babu Jagjivan Ram was not a part of the trust despite being the Congress President. 
• In August 1998, a meeting of trust was held again, this time chaired by Sonia Gandhi as President of the Congress. 
• Atal Bihari Vajpayee, then Prime Minister, was not invited to be a part of the meeting. 
• Therefore, it is very clear that the trust was being run as per convenience instead of following rules and regulations.

Way forward:

• Apart from this, the Congress President, the Minister of Culture, the Leader of the Opposition in the Lok Sabha, the Governor of Punjab, the Chief Minister of Punjab and three Members nominated by the Central government would be its members. 
• The former Prime Minister I.K. Gujral, Sardar Umrao Singh and Birendra Katariya, a former Member of Parliament, were nominated for the period 2005-2010. 
• During his tenure as Prime Minister, I.K. Gujral was neither invited nor made a member of the trust. 
• Conclusion:
• It is in the light of these that the present government has felt that governance of the trust must be taken more seriously and has initiated definite changes in the way it is run. The Jallianwala Bagh National Memorial (Amendment) Bill, 2019 supports this.

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Prelims Questions:

Q.1) With reference to the 10th Pneumonia and Diarrhoea Progress Report released by the International Vaccine Access Center (IVAC) at the Johns Hopkins Bloomberg School of Public Health, consider the following statements:
1. Globally, pneumonia and diarrhoea led to nearly one of every four deaths in children under five years of age in 2017. 
2. Only half of the Indian children with diarrhoea receive ORS (oral rehydration solution) and 20% receive zinc supplementation — to help protect against, prevent and treat pneumonia and diarrhoea.

Which of the statements given above is/are correct?
A.   1 only
B.   2 only
C.   Both
D.   None 

Answer: C

Mains Questions:
Q.1) The Central government has reasons to recast the way the memorial and its trust are run not as a political fiefdom. Comment. 
 

Not so swachh: On sanitation goals (The Hindu)

• Mains Paper 2 : Governance 
• Prelims level : Swachh Bharat programme
• Mains level : Assessment of Swachh Bharat programme

Context

• India’s high-profile Swachh Bharat programme has won it plaudits globally for its goal of providing sanitation to all, but as new survey data from the National Statistical Office (NSO) show, it remains a work in progress. 
• The quest to equip houses in the countryside with a toilet has led to an expansion, but there was a deficit of about 28% as of October last year and not 5% as the Swachh Bharat Abhiyan (Gramin) had claimed. 

Background:

• The declaration that the country has ended open defecation in its rural areas, made to international acclaim on Mahatma Gandhi’s 150th birth anniversary by PM.
• Many States that were declared to be free of open defecation simply did not qualify for the status, according to the NSO data. 
• The Centre has disputed the survey results, but it should ideally treat it as a fresh assessment of how much ground is yet to be covered. 
• The data could help it review performance in States such as Jharkhand, Tamil Nadu and Rajasthan, where the lack of toilets is reported to be higher than the national average. 
• The survey provides an opportunity to review other social determinants such as education, housing and water supply which have a strong influence on adoption of sanitation. 
• It would be pointless to pursue sanitation as a separate ideal, if communities are unable to see its benefits due to overall deprivation.

Performance by the government:

• The Ministry of Jal Shakti said the coverage in 5,99,963 villages had risen from 38.7% in 2014, to 100% this year. 
• It is indisputable that the number of toilets has gone up significantly, and for which taxpayers remitted about ₹20,600 crore as a cess since 2015, until the introduction of the Goods and Services Tax. 
• The NSO survey results add a new dimension, since they controvert data relied upon by the Swachh Bharat Abhiyan on ODF.
• It will take a marathon programme to bring all-round development to India’s villages, which have not really benefited from years of fast-paced economic growth. Rural housing and water supply are key to bringing toilet access to all.
• It is doubtful whether the 2.95 crore subsidised dwellings targeted to be built by 2022 under the government’s flagship housing programme can bridge the shortfall. 

Way forward:

• It is well-recognised that development indices are low in some States, and local bodies lack the capacity and resources to bring universal sanitation even where political will is present. 
• Sustained work to eliminate black spots in coverage and a massive urban programme are critical to ending open defecation and universalising toilet access.

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Prelims Questions:

Q.1) With reference to the acquisition of certain area at Ayodhya act, 1993, consider the following statements:
1. Section 3 of the Ayodhya Act transferred the right, title and interest in relation to the area in and around the disputed land to the Central Government.
2. The validity of the Ayodhya Act was earlier upheld by the Supreme Court in Dr. M. Ismail Faruqui case, 1994. 

Which of the statements given above is/are correct?
A.   1 only
B.   2 only
C.   Both
D.   None 

Answer: C

Mains Questions:
Q.1) Sanitation cannot be a separate ideal without reference to other forms of deprivation. Critically analyse the statement. 
 

Consumer spending surveys (Indian Express)

• Mains Paper 3 : Economy 
• Prelims level : Consumer Expenditure Survey 
• Mains level : Highlights the data of Consumer Expenditure Survey

Context

• Government of India announced that in view of “data quality issues” the Ministry of Statistics had decided not to release the results of the all-India Household Consumer Expenditure Survey (CES) conducted by the National Statistical Office (NSO) during 2017-2018. 

Key highlights:

• The all-India Household Consumer Expenditure Survey (CES) is traditionally a quinquennial (recurring every five years) survey conducted by the government’s National Sample Survey Office (NSSO).
• It is designed to collect information on the consumption spending patterns of households across the country, both urban and rural. 
• The data gathered in this exercise reveals the average expenditure on goods and services and helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.

Way ahead: 

• • Government has announced that it is “separately examining the feasibility of conducting the next Consumer Expenditure Survey (CES) in 2020-2021 and 2021-22 after incorporating all data quality refinements in the survey process”. 

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Prelims Questions: 

Mains Questions:

Q.1) Describe the key highlights of the Consumer Expenditure Survey.

Rule of Rajapaksas (Indian Express)

• Mains Paper 2 : International 
• Prelims level : Not much 
• Mains level : Political autonomy in Sri Lanka 

Context

• Gotabaya Rajapaksa’s presidency has started off predictably and disquietingly. 

Rajapaksa:

• After Ranil Wickremesinghe stepped down as Prime Minister the new president lost no time in appointing Mahinda as the new prime minister of a caretaker government. 
• Another brother, Chamal, has been appointed a minister in the government, which will hold fort until fresh parliamentary elections are held in March 2020.
• The present parliament can be dissolved before the end of its five year term next August. At the height of the previous Rajapaksa rule, there were 40 family members in government. 
• Mahinda, who was barred from the presidential election because he had already held the office twice, will run the country in close coordination with his brother. 

Constitution:

• The parliamentary configuration is not such as to allow the new dispensation to do away with progressive amendments to the Constitution made by the last government to check the powers of the executive presidency.
• It including the two-time bar.
• The Rajapaksas turned the clock back on these 2015 amendments when the opportunity arises.

State of polity:

• President Rajapaksa is confident of winning the 2020 parliamentary election. 
• A divided opposition, engaged in a tug of war between Wickremesinghe and Sajith Premadasa, is unlikely to put up a fight to the Rajapaksa. 
• Sri Lankan voters have seen that cohabitation, by which the president and prime minister are from different parties leads to paralysis of governance. 

From the perspective of India:

• India has communicated its desire for hastening national reconciliation in Sri Lanka. 
• In the post-war years, the rulers oversaw an unprecedented militarisation of the Sinhala Buddhist majority community. 
• Voters from the majority community have not forgotten that it was the Rajapaksas who crafted a victory over the Liberation Tigers of Tamil Eelam(LTTE). 
• This powered Gotabaya’s majoritarian victory in these elections. 

Conclusion:

• National reconciliation requires statesmanship of a tall order. 
• If Gotabaya, the newest majoritarian right wing leader to join the growing ranks of such leaders in the world, can pull it off.

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Prelims Questions: 

Mains Questions:

Q.1) Sri Lanka needs a politics of national reconciliation. It looks unlikely to get it. Critically examine the statement.

Telecom quick-fix: Relief on dues will help players survive (The Hindu)

• Mains Paper 3 : Economy 
• Prelims level : Telecom sector 
• Mains level : Key highlights about the debt in telecom sector 

Context

• The Centre’s decision to give a two-year moratorium to telecom operators on pending spectrum payment is a welcome move, given the financial stress being faced by them. 
• Having a financially strong telecom industry, one that is capable of operating a world-class communication network, is key to securing India’s digital future. 
• The moratorium in payments will help telecom companies avoid an immediate outflow of over ₹42,000 crore. 
• Players such as Vodafone Idea will be able to tide over immediate liquidity crunch and stay operational. However, the moratorium alone is not a long-term solution. The operators still have to pay the spectrum dues at the end of the two-year period. 

Highlights about the debt:

• The telecom operators collectively have debts of over ₹4 lakh crore. 
• Supreme Court ruling on Adjusted Gross Revenue has plunged the telecom sector further into a financial mess as incumbent operators stare at an additional payout of nearly ₹1.3 lakh crore of dues to the national exchequer. 
• As a result, telecom operators reported combined losses of ₹79,000 crore in the second quarter. 

Steps need to be taken:

• The Centre must step-in immediately to find a solution otherwise the digital revolution unleashed across the country could come to a grinding halt. 
• The demand of bringing down levies and taxes on telecom companies should be considered. Telecom companies pay nearly 30 per cent of their revenues to the government in addition to the upfront spectrum fees after each round of auction. 
• The concept of revenue share was introduced in 1999, when the spectrum was given on subscriber-based criteria. Since the upfront fee was waived by the then government, it made perfect sense to collect a share of the revenue as licence fee. 
• But since 2010, the operators are buying spectrum through an auction mechanism. 
• There is no reason to continue collecting licence fee or spectrum usage charge in the form of revenue share. 
• The reserve price for spectrum needs to be brought down to match the current market sentiments. 
• The very idea of conducting an auction is to allow market forces to determine the price, so there is no merit in keeping the last-discovered price as the floor price in the next round of spectrum auction.

Way ahead:

• The telecom industry should not try to circumvent regulation for selfish goals. 
• As the first licences were given out, operators have used lobbying powers to influence policy in their favour instead of advocating what’s good for the overall growth of the industry.
• These tactics, with a short-term view, have come to haunt them now. 

Conclusion:

• Consumers have also been largely been neglected, having to deal with poor quality of service and inefficient complaints redress mechanisms. 
• The current mess operators find themselves in is largely of their own making.

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Prelims Questions: 

Mains Questions:

Q.1) What are the steps needed to resolve the debt in telecom sector?

How to make coal mining sustainable (The Hindu)

• Mains Paper 3 : Economy 
• Prelims level : Coal production 
• Mains level : Coal production and sustainable development

Context

• Coal fuelled approximately three-fourths of the country’s electricity generation in FY 2018-19. 
• In addition to electricity generation, it is also a vital input for other core industries like steel and cement, which play a critical role in the country’s development. 

Coal production statistics:

• Despite being the world’s second-largest coal producer, India imported 235 million tonnes of coal at the cost of more than ₹1.7 trillion during FY19.

Impact of mining operation:

• Mining operations have positive economic impacts on the local area in terms of infrastructure development, provision of employment and business opportunities, adverse effects of coal mining on the ecology of the local area are also well known. 
• The changes in the ecosystem of the region are particularly significant in the case of open-cast coal mines, which account for approximately 94 per cent of the coal produced in India. 
• All mining operations entail a temporary diversion of land for mining and allied activities, after which the mine owner must rehabilitate the mined-out land for beneficial use of the local communities.

Steps taken by the government:

• The Ministry of Coal (MoC) mandates every owner of an open-cast coal mine to deposit ₹6,00,000 per hectare of the total project area in annual installments (to be escalated using the wholesale price index from August 2009 onwards) into an escrow account managed by the Coal Controller.

Final mine closure

• The Coal Mines (Special Provisions) Act, 2015, permits the government to auction coal mines to the private sector for captive and commercial purposes. 
• The government has auctioned 24 coal blocks to private companies till March 2019, and will be further auctioning coal blocks for commercial mining by both Indian and foreign companies.
• Government-controlled public sector companies may not have any difficulty in meeting their financial obligations related to the final mine closure. 
• There is a risk that some coal mines operated by private companies, or State government entities who outsource their coal mines to private entities, may be closed without having the necessary funds to complete the mine closure activities as per the approved Mining Plans.
• The ability to successfully rehabilitate mined-out areas is fundamental to the coal industry’s social license to operate. 
• The practice of releasing up to 80 per cent of the escrow amount after every five years, based on progress in indicative activities, may not ensure the availability of adequate funds for final mine closure.
• India needs more effective and efficient regulatory governance to streamline approvals while ensuring the adoption of advanced technologies for mining, environment protection, and reclamation.

Unified authority

• In 2014, a high-level committee appointed by the Central government recommended the creation of a National Environment Management Authority, including, inter alia, a special cell with appropriate expertise to deal with coal mining.
• Coal is a central subject, and government companies produce more than 94 per cent of the coal in India. 
• The government must set up an independent, multi-disciplinary unified authority on the pattern of the Director-General of Mines Safety, which is staffed with varied scientific and technological experts required to regulate all matters related to health and safety in the mineral industry.
• Such an authority must have in-house professional expertise in the ecological, environmental, geological, mine planning, hydro-geology, biodiversity, and social aspects of coal mine closure to consider all these facets in an integrated manner before granting all key statutory approvals for coal mines.

Official Code

• The Parliament must enact a “Sustainable Coal Mining Code” to consolidate all statutory provisions governing opening/closing and environment/forest matters related to coal mines. 
• This Code must empower the unified authority to ensure efficient and effective environmental governance of coal mines in the manner explained above.
• Since 1977, the Office of Surface Mining Reclamation and Enforcement (OSMRE) in the US has ensured that mine owners operate their open-cast coal mines in a manner that protects the local communities and the environment during mining, as well as rehabilitate the mined-out land for beneficial use post-mining. 
• Therefore, the OSMRE may also be a role model for the proposed unified authority.

Way ahead:

• A dynamic equilibrium between environment conservation and development for inter-generation equity is the need of the hour in India. 
• An empowered unified authority for coal mining can ensure effective compliance with all statutes related to mining, environment, forest, and mine opening/closure in coal mines by using remote sensing and GIS-based tools for remote surveillance in conjunction with quarterly inspections of each coal mine.
• This authority will also facilitate job creation and contribute to a reduction in coal imports by ensuring “ease of doing business” without compromising on forest and environment compliances.

Conclusion:

• Ultimately, this will contribute to the realisation of India’s Sustainable Development Goals and facilitate both energy security and sustainability for India during the ongoing energy transition.

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Prelims Questions: 

Mains Questions:

Q.1) How can we ensure that the coal sector incorporates sustainability with regard to social aspects, economic dependencies, and ecological sensitivities into the mining process, right from the planning stage?

(RESULT) UPSC COMBINED DEFENCE SERVICES EXAMINATION (I) 2019

When a shadow bank is too indebted to fail (Mint)

• Mains Paper 3 : Economy
• Prelims level : DHFL’s insolvency resolution
• Mains level : Mechanism required to address ILandFS

Context

• India finds itself struggling to plug a hole in its shadow banking industry that gorged on lending to a real estate sector where buyers have turned tail. 

Failure of financial corporations:

• The Reserve Bank of India is expected to refer Dewan Housing Finance Corp. Ltd (DHFL) for insolvency proceedings that have been hastily tailored for financial companies. 
• India’s bankruptcy mechanism is missing vital components that it had agreed to put in place after the global financial crisis. 
• The government last year withdrew the Financial Resolution and Deposit Insurance Bill from Parliament after an outcry over a clause that would have let depositors’ money get converted into equity in the event of a bank or credit company turning insolvent. 
• The bill’s timing was unfortunate; it was tabled in the middle of a bad loan clean-up of state-owned banks, and fears of pensioners losing their life savings were easy to whip up. 
• Adequate deposit insurance was the solution, and the Centre has finally gotten around to it, now that the collapse of Punjab and Maharashtra Co-operative Bank has caused so much distress.

Question around DHFL’s insolvency resolution

• We have a system that can preserve value for creditors who have lent the company ₹84,000 crore.
• India may not have the legislative apparatus in place, but it knows what needs to be done with collapsing financial institutions. 
• The Group of 20 financial stability recommendations were based on the premise that the market, not the state, must address stress in the system. 
• We may not yet have an overarching body like the US Federal Deposit Insurance Corp., which can identify and resolve financial stress expeditiously, but its toolkit is divided among India’s central bank and other financial sector regulators. 

Validity of legal framework

• As for the legal framework, such cases can now be referred to the National Company Law Tribunal for resolution. 
• The courts could also back the claims of underinsured depositors. Earlier this month, India’s top court upheld the standard hierarchy of claims (with secured lenders first in line) in bankruptcy proceedings, another issue that had held up the resolution of such firms.

Significant challenges for DHFL

• Its loan book looks largely healthy, especially its mortgage lending section. Buyers have shown interest in these assets and the insolvency process is expected to draw more. 
• Bondholders and banks have their credit secured by underlying assets, although charges of fund diversion could diminish recovery. 
• KPMG, the audit firm appointed by creditors, has flagged fraudulent transactions that could add up to about half the exposure banks have to DHFL. 
• If these charges are substantiated, banks may have to write off their loans to the beleaguered mortgage lender, and it would complicate any resolution plan involving a swap of debt for equity. 

Way forward

• DHFL is being investigated by the Enforcement Directorate on charges that, if upheld, could result in the attachment of its assets. 
• This would make it tougher for resolution professionals to find buyers for DHFL’s healthy loan portfolio.
• If its insolvency resolution does run aground, India would have no option but to subject its shadow banking industry to the same mechanism until it can put a more robust process in place. 
• Credit rating agency Moody’s Investors Service has flagged stress among non-banking financial companies as a key risk to India’s growth outlook.

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Prelims Questions: 

Q.1) With reference to the Credit ratings, consider the following statements:
1. It is assigned to debt instruments and equity instrument by a Credit Rating agency (CRA).
2. Credit rating agencies are regulated by SEBI under the SEBI (Credit Rating Agencies) Regulations, 1999.

Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: B

Mains Questions:
Q.1) What are the questions around DHFL’s insolvency resolution? What are the significant challenges for DHFL to revive?

The broken promise of decent and fair wages (Mint)

• Mains Paper 2 : Polity 
• Prelims level : Draft wages code
• Mains level : Significance of the draft wages code

Context

• The Ministry of Labour and Employment recently published the draft rules for implementing the provisions of Code on Wages, 2019 earlier given assent by the President.

What are the draft rules for?

• The Code on Wages replaces four laws: 

1.    the Payment of Wages Act, 1936
2.    the Minimum Wages Act, 1948
3.    the Payment of Bonus Act, 1965
4.    the Equal Remuneration Act, 1976

• It seeks to regulate wages and bonuses for all workers employed by any industry, trade, business or manufacturer.
• While the Code is now law, the Ministry has published the draft rules for implementing the provisions, seeking comments.
• Following the consultation, the Centre will notify the rules that will create the mechanisms to fix a floor wage.
• This would then materialise the minimum wages for different categories of workers - unskilled, semi-skilled, skilled and highly skilled.
• The States and Central government would then have to set and enforce them.

Why is the Code significant?

• Minimum wages are accepted globally to be a vital means to combat poverty.
• It equally crucially, ensures the vibrancy of any economy.
• The International Labour Conference’s Global Jobs Pact of 2009 identified the importance of wage regulation.
• It saw the regular adjustment of wages, in consultation with the social partners as a means of 
• reducing inequality
• increasing demand
• contributing to economic stability
• The Pact came in the aftermath of the 2008 global financial crisis and the erosion of purchasing power worldwide.

What are the key provisions of the code?

• The Code acknowledges that the aim in setting the floor wage is to ensure “minimum living standards” for workers.
• The draft rules incorporate criteria declared in a landmark judgment of the Supreme Court in 1992 as well as recommendations of the 15th Indian Labour Conference.
• These include the - 
• net calorific needs for a working class family set at 2,700 calories per day per consumption unit
• annual clothing requirements at 66 metres per family
• house rent expenses assumed at 10% of food and clothing expenditure
• expenses on children’s education, medical needs, recreation and contingencies
• A working class family is defined as the earning worker, spouse and two children or the equivalent of three adult consumption units.
• The rules, similarly, cover almost the entire gamut of wage-related norms.
• These include - 
• the number of hours of work that would constitute a normal working day (set at 9 hours)
• time interval for revision of dearness allowance
• night shifts and overtime
• criteria for making deductions
• A separate chapter of the draft rules deals with the payment of bonus.
• Also dealt in detail are the guidelines for the formation of the Central Advisory Board as well as its functioning.

What were the earlier recommendations in this regard? 

• A national minimum wage of Rs. 176 per day had been recommended in 2017.
• An expert committee had in 2019 recommended that a ‘need based national minimum wage for India’ ought to be fixed at Rs. 375 per day (Rs. 9,750 per month).
• Additionally, the committee had suggested payment of a city compensatory allowance averaging up to Rs. 55 per day for urban workers.
• Earlier, in 2015, the 7th Central Pay Commission had recommended setting the minimum pay for government employees at Rs. 18,000 per month.
• Recently, the Delhi government set a minimum wage of Rs. 14,842 per month for unskilled workers.
• This came after the Supreme Court ruled in favour of the local government, leaving aside the objections raised by many employers’ associations.
• The Economic Survey too emphasized on the importance of establishing an effective minimum wage system.

How will the code impact the economy?

• A lot will depend on the final floor wage or wages that the Centre will choose to set.
• A statutory national minimum wage would have multiple impacts including helping lift wage levels and reducing wage inequality.
• It would thus go a long way in ensuring inclusive growth.
• For India to reap the ‘demographic dividend’, robust wage expansion would be essential to help sustain consumption-led economic growth.

Way ahead

• Trade unions have voiced their reservations with multiple aspects of the Code and plan to submit detailed feedback.
• The points of contention include - the 9-hour working day definition, a lack of clarity in the rules on scope for upgradation of workers’ skill category, the lack of representation for trade unions in the wage fixation committee
• The ultimate success of the Code will be determined by the extent to which the minimum wage set is both fair and actually implemented.
• It would, ultimately, have to benefit the millions of workers in the unorganised sectors of the economy.

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Prelims Questions: 

Q.1) With reference to the “Swachh – Nirmal Tat Abhiyaan”, consider the following statements:
1. It is undertaken by Department of Drinking Water and Sanitation. 
2. Its objective is to make beaches clean and create awareness amongst about the importance of coastal ecosystems.

Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: B

Mains Questions:
Q.1) What is the Code on Wages draft rules for? Why is the Code significant? What are the key provisions of the code?

Maharashtra govt formation, tax buoyancy, and more (The Hindu)

• Mains Paper 2 : Governance 
• Prelims level : Tax buoyancy
• Mains level : Tax buoyancy and its determining factors 

Context

• Poor responsiveness of tax collection to economic growth poses new challenges for norms on sharing taxes with the states.
• In this regard, here is a look at tax buoyancy trend and its impact on tax devolution.

What is tax buoyancy?

• Tax buoyancy is one of the key indicators to assess the efficiency of a government’s tax system.
• Generally, as the economy achieves faster growth, the tax revenue of the government also goes up.
• Tax buoyancy explains this relationship between the changes in government’s tax revenue growth and the changes in GDP.
• In other words, it measures the responsiveness of tax mobilisation to economic growth.

What are the determining factors?

• Tax buoyancy depends largely on - 

1. the size of the tax base
2. the friendliness of the tax administration
3. the reasonableness and simplicity of the tax rates

• Look at just one year’s tax buoyancy to arrive at any conclusion on the tax system’s efficiency would be unfair.
• There are many other factors at play in either boosting or pulling down tax buoyancy.
• Also, there is a lag effect of taxation policies.
• This can be captured only by examining the trend over a longer period of time.
• Thus, tax buoyancy in a year may reflect the impact of an adverse set of developments during that year.
• However, usually, the longer-term trend of tax buoyancy during a period of about 5 years results from policy changes made a few years earlier.
• So, the lag effect of policy changes on tax buoyancy can hardly be ignored.

How has the trend been?

• The highest tax buoyancy rate for the Union government during the last 28 years after economic reforms was achieved in 2002-03.
• Tax buoyancy that year had risen to 2 at that time.
• This meant that the Centre’s gross tax revenues had grown at double the rate at which the Indian economy had grown in nominal terms.
• However, just a year before tax buoyancy hit the record high of 2, gross tax collections in 2001-02 actually declined.
• This was even as the economy had clocked a nominal growth rate of just over 8%.
• So, in the 5 years of 1999-2000 to 2003-04, there was poor tax buoyancy in 2 years and commendable tax buoyancy rates in the other 3 years.
• The period thus holds the record for both the highest and the lowest tax buoyancy rates in post-reforms India.
• During the 2004-05 to 2008-09 period, the first 4 years recorded tax buoyancy between 1.3 and 1.7, a creditable performance.
• In the fifth year (2008-09), there was a sharp fall in tax buoyancy to about 0.2.
• This was due to the impact of the global financial meltdown and the tax measures taken to alleviate its impact on the economy.
• Thus, tax buoyancy was fairly moderate between 1 and 1.3 in 4 of these 7 years between 1991-92 and 1997-98 and was poor in the remaining 3 years.
• But, the tax reforms undertaken during this period did help boost the tax buoyancy rate in the following decade.
• Similarly, the tax reforms during 1999-2004, particularly in the indirect taxes regime, helped tax buoyancy in the 2004-09 period.
• The period of 4 years between 2009-10 and 2011-12 saw tax buoyancy quite irregular.
• The 2014-19 period saw steady performance in tax buoyancy.
• In the first half of 2019-20, the Centre’s gross tax revenue grew by just 1.5% over the same period of 2018-19.
• However, tax buoyancy fell further to about 0.15.
• This is on the assumption that the nominal economic growth in the first half is 10%.

What does the slowdown indicate?

• Deterioration in tax buoyancy in the recent year is a cause of concern for the central exchequer.
• It can upset the government’s plans for fiscal consolidation.
• It can also provide a misleading basis for the 15th Finance Commission’s calculations on sharing the Centre’s tax revenues with the states.
• If the current low tax buoyancy is used to project the revenue growth for the next 5 years, revenue challenges for both the Centre and the states will only become more complicated.

Way ahead

• The task before the 15th Finance Commission is how it can arrive at a more reliable base for calculating tax buoyancy in the coming years.
• If it makes the wrong assessment now, the tax collection assumptions can become flawed, adversely affecting the new tax devolution formula.
• So, getting a sense of the long-term and sustainable trend of tax buoyancy will be crucial for the tax sharing recommendations of the 15th Finance Commission.

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Prelims Questions: 

Q.1) With reference to the International Treaty of Plant Genetic Resources for Food and Agriculture (ITPGRFA), consider the following statements:
1. It is a comprehensive international agreement for ensuring food security through the conservation, exchange and sustainable use of the world's Plant genetic resources for food and agriculture (PGRFA). 
2. The treaty was negotiated by the World Trade Organisation (WTO). 

Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: A

Mains Questions:
Q.1) What is tax buoyancy? What are the determining factors? What does the slowdown indicate?

On U.S. support to Israeli occupation (The Hindu)

• Mains Paper 2 : International Relations 
• Prelims level : US foreign policy 
• Mains level : Implications on U.S. support to Israeli occupation

Context

• The U.S. administration recently declared that the Israeli settlements on the West Bank are not illegal. 

What does this indicate?

• The decision is in line with President Donald Trump’s Israel policy, which has unconditionally favoured the Jewish nation.
• In December 2017, Mr. Trump announced that the U.S. would recognise Jerusalem, a disputed city, as Israel’s capital.
• This ignored the international consensus that the status of Jerusalem should be settled as part of a peace agreement.
• In March 2019, the US administration recognised the Golan Heights.
• Golan Heights was seized from Syria in the 1967 war by Israel which has occupied it ever since, as part of Israel.

What are the implications of the decision?

• The UN General Assembly, the Security Council and the International Court of Justice have all stated that the Israeli settlements on the West Bank are illegal.
• The UN Security Council has asked Israel to stall the settlement activities, but Israel has hardly paid any attention to international opinion.
• Israel’s defiance of international opinion on West Bank settlements is now finding U.S. support.
• The Trump administration’s declaration challenges international laws and consensus on the issue.

Way forward

• With its recognition of the Jewish settlements, US has strengthened Israel’s religious right, which wants the settlements to be annexed.
• It also complicates the already-stalled peace process between the Israelis and the Palestinians.
• If Israel goes ahead with annexation of the settlements, that will nearly put an end to the process towards the two-state solution.

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Prelims Questions: 

Q.1) With reference to the Jal Jeevan Mission (JJM), consider the following statements:
1. It aims at providing Functional Household Tap Connections (FHTCs) in rural areas by 2024.
2. Ministry of Rural Development is the implementing agency for the mission.

Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: A

Mains Questions:
Q.1) What are the implications on U.S. support to Israeli occupation?

Palm oil a ‘sustainable’ crop (Live Mint)

• Mains Paper 3: Economy 
• Prelims level: Palm oil
• Mains level : Making palm oil a ‘sustainable’ crop

Context

• The Malaysian Prime Minister’s allusive remarks on Kashmir have added a new controversy to the already turbulent world of palm oil. 

Largest producers scenario 

• Indonesia and Malaysia, the two largest producers, are already facing allegations of destruction of the world’s most bio-diverse forests to grow oil palm. 
• Other charges relating to the activities subsequent to deforestation and destruction of wild habitat, such as land clearing for plantations, release of mill effluents, burning and haze have been triggering debate about the environmental and social impacts of palm plantation. 
• India being the largest consumer of palm oil has a considerable stake in securing sustainable supply and it is high time such issues are addressed. 
• Palm oil comes from the fruit of oil palm trees and can be obtained either from the fleshy fruit or from its kernel. 
• Oil palm trees are native of Africa and were brought to Indonesia and Malaysia as ornamental plants. 
• Palm oil is an incredibly efficient crop, producing more oil per land area than any other equivalent vegetable oil crop. 

Importance of cropping Palm oil

• It is an important crop for many countries where millions of farmers depend on producing palm oil for their livelihood. 
• The fact that palm oil is also the common ingredient in packaged food, shampoo, toothpaste and cosmetics, makes the impact of the biofuel far bigger. 
• The world export of palm oil in 2018 was $30.35 billion. Indonesia and Malaysia are the major exporters with exports of $26.2 billion and $14.9 billion, respectively. 
• As much as 86 per cent of the world’s requirement of palm oil is fulfilled by these two countries. The major importers are India, China, Pakistan and the Netherlands ( it is used as a biofuel the Netherlands). 

How can we make palm oil plantation sustainable with minimum harm to the environment? 

• This calls for devising a sustainable framework across the palm value chain. It means having a set of environmental and social criteria at each stage of the value chain which must be complied with in order to produce sustainable palm oil. 
• The palm oils thus produced would be certified ‘sustainable palm oil’. 
• The certification norms would ensure adequate protection of the environment and the local communities. 
• RSPO (Roundtable on Sustainable Palm Oil) is one such global effort that represents third-party standard for the more sustainable production of palm oil. 

The Indian scene 

• The production of palm oil in India started in 1991 with five thousand tonnes which increased to two lakh tonnes in 2018. 
• The current consumption of palm oil is more than 9.3 million tonnes, which is expected to double by 2030. Since the domestic production is limited, large scale imports are inevitable. 
• About 90 per cent of the palm oil is used as cooking oil and the rest in personal care and cosmetics. 
• The major cooking oil users are the government (for public distribution), hotels and restaurants, middle-class consumers (use branded blends) and lower middle-class consumers (use ‘loose’ or unbranded palm oil). 
• As palm oil producers, Indonesia and Malaysia have come up with their own version of RSPO, tweaked to their national requirements, to be a part of this sustainable initiative. 

What India needs to take on that mantle as the user industry?

• Imports: A customs duty benefit can be apportioned for sustainable palm oil. Since there is a high dependence on palm oil, the import requirements could be strengthened over five to eight years with further consignment-based restriction for non-sustainable palm oil.
• Development of infrastructure: A phased application of these measures may start from one end of the value chain. However, before directly jumping into implementation, a year or so could be devoted to modifying ‘sustainability criteria’ and building support infrastructure responsible for its implementation. 
• Producers: Once infrastructure is ready, all farm-holders could be brought into the loop of producing sustainable palm oil aided by the government. Big corporates who are already contributing to sustainable palm oil could adopt small/large farm-holdings and develop them under their CSR initiatives.
• Millers and refiners: Since the produced palm oil will call for a premium in the market, a discount/subsidy could be given to them for purchasing sustainable palm oil from the producers. 

Way ahead

• The percentage of sustainable palm oil that they purchase could be mandatorily increased over time till the input to the mills and refineries is 100 per cent sustainable. 
• The government will also need to ensure that palm oil being distributed through the public distribution system is sustainable without passing on the cost to beneficiaries. 
• However, one of the challenges would be converting ‘loose’ or unbranded palm oil to sustainable palm oil. This category will be the last in the segment to be converted to sustainable palm oil and will be market driven. 

Conclusion 

• With high import dependence, bringing the domestic production chain to manufacture sustainable palm oil will be possible only if the compliance cost outweighs the cost of imports. 
• It is clear that a timeline for implementation of a sustainability framework for palm oil must be drawn. A campaign for making consumers aware of the need to consume ‘sustainable’ palm oil would be a must for making the initiative successful.

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Prelims Questions: 

Q.1) With reference to World Standards Day, consider the following statements:

1. It is an international day celebrated internationally each year on 14 October.
2. This year theme is “Video Standards create a global stage”. 
Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: C

Mains Questions:
Q.1) Rather than spending time to develop environmental and social criteria, India could use the existing global norms for imports. Critically analyse the statement.
 

The pills within reach (Live Mint)

• Mains Paper 2: Health  
• Prelims level: Not much 
• Mains level : Medicine availability 

Context

• India’s government is reportedly planning to allow local retail outlets to sell common drugs. 
• As per the proposal, the Centre would let regular shops retail over-the-counter medicines such as paracetamol, a popularly used pill for which people currently need to visit a pharmacy. 
• Crucially, these drugs would contain key information on side effects and the appropriate dosage in local languages.

Availability of these medicines

• The wide availability of these medicines would offer relief to people living in far-flung areas where pharmacies are few and far between.
• In India, self-medication is highly prevalent, particularly in the rural areas. This is due to several reasons. There aren’t just enough qualified doctors in the country.
• The situation is grimmer in the rural hinterland. Reports suggest that about two-thirds of all doctors in India cater to urban areas. 
• Moreover, going to a doctor proves to be time-consuming and expensive for rural folks. 
• If non-prescription drugs can be bought at a local corner shop, it could help lower treatment costs for millions of people who have no chemist closeby.

Way ahead 

• The proposal, though, alarms observers who insist on strict regulation of who is allowed to dispense medicines. 
• The popping of pills without any medical authorization or knowledge could pose an immediate health risk.
• Easy availability could also result in an overuse of some over-the-counter drugs, compromising people’s health over a longer span of time. 
• This has already happened in the case of antibiotics, whose rampant overuse has turned several strains of disease-causing bacteria resistant to these drugs. 

Conclusion

• Yet, given the ground conditions in India, the benefits could outweigh those worries.

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Prelims Questions: 

Q.1) With reference to the LOTUS-HR project, consider the following statements:

1.    It was launched by Ministry of Earth Sciences
2.    It aims to demonstrate a novel holistic (waste) water management approach that will produce clean water which can be reused for various purposes.

Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: B

Mains Questions:
Q.1) What are the key benefits and challenges of the selling of common drugs in India?

Strangle in telecom sector (The Hindu)

• Mains Paper 3 : Economy 
• Prelims level : Telecom sector 
• Mains level : Liberalisation in telecom sector 

Context

• The recent Supreme Court judgment on upholding the definition of Adjusted Gross Revenue (AGR) to include all revenues earned by the licensed Telecom Service Providers (TSPs), and just those of core services, appears to be the death knell for TSPs. 

Liberalisation in telecom sector 

• Telecom has been one of the brightest spots in India’s liberalisation journey, with the country being the second-largest in mobile subscribers and even mobile broadband subscriber base, next only to China and beating the US. 
• Telecom and broadband Internet have string multiplier effects on the economy, leading to large-scale digitisation of consumer-facing services — including digital finance and commerce platforms — thus augmenting transparency, reducing information asymmetry, and most importantly, allowing for nurturing of the digital start-ups and innovation ecosystems in the country. 

Regulatory fee

• The annual LF of 8 per cent which includes a 5 per cent Universal Service Levy (USL) is high compared to the international average. 
• The USL since its implementation in 1999 has contributed more than ₹1,00,000 crore to the exchequer, of which there remains an unspent balance of about ₹50,000 crore in the book of accounts. 
• Our rural penetration has improved, thanks partially due to the state-owned BSNL as well as efforts of the private operators. 
• It is time the government looks at reducing the USL, thereby providing some relief to the TSPs.

Operator services

• The on-going price war between new entrants and the incumbents, which is also a cause of worry for the industry. 
• TRAI has not intervened in tariff until now, the DoT seems to be mulling over fixing a floor price for telecom services. 
• This shifts the burden to the weary consumers. In a sector with about four operators, the TSPs should be wise enough to adjust their pricing and revenue-earning strategies, so that they don’t incur loss. 
• The list of burning issues is the Interconnect Usage Charge, especially the Mobile Termination Charge (
• MTC) which is to be paid by the originating carrier to the terminating carrier for voice calls. 
• While TRAI has re-initiated the consultation process on its plan to reduce the MTC from the current level of 6 paise per minute, the ecosystem in the country will not permit MTC reduction to zero any time soon. 
• Unless the penetration of mobile broadband nears 100 per cent (from the current level of about 30 per cent), reduction of costs for mobile termination cannot be brought down. 
• Even if it is a pure packet-switched call, the marginal cost of terminating it cannot be ignored due to the associated spectrum and infrastructure cost. 

Planned merger

• The decision taken to merge BSNL and MTNL has been a right one, considering the loss incurred due to MTNL’s diseconomies of scale. 
• With the merger and the financial support given by the government, the new BSNL-MTNL entity should be mandated to compete effectively against the private operators, fulfilling their national goal of connecting rural and semi-urban areas of the country. 
• Procurement policies of the entity should be made less stringent, so that it can deploy infrastructure especially 4G mobile broadband network quickly to overcome the lost time. 
• Effective utilisation of the large assets of the combined entity across the country should commence so that it can become EBITDA-positive soon.

Conclusion 

• With the merged BSNL-MTNL entity providing effective competition to private operators, the telecom market will soon become vibrant. 
• But unless the underlying telecom and broadband services improve both in price and quality, a Digital India is a pipe dream.

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Prelims Questions:

Q.1) According to the data tabled in the Lok Sabha by the Ministry of Environment, which of the following species are considered extinct in India?

1. Pygmy hog
2. Sumatran rhinoceros
3. Pink-headed duck
4. Cheetah

Which of the statements given above is/are correct?

A.   2 and 4 only
B.   1, 2 and 3 only
C.   2, 3 and 4 only
D.   1 and 2 only

Answer: C

Mains Questions:
Q.1) Do you think the stiff licence fees and spectrum usage charges will impair the capacity of telecom majors to invest in infrastructure? 

Expedient exit (The Hindu)

• Mains Paper 3 : Economy 
• Prelims level : Disinvestment 
• Mains level : Reason behind disinvestment 

Context

• Recently the Cabinet has decided to approve strategic disinvestment of the government’s shareholding in five public sector enterprises including Bharat Petroleum Corporation Limited, Shipping Corporation of India and the Container Corporation of India.
• In this context, it is necessary to understand the meaning of disinvestment, its need, issues and way forward.

What is disinvestment?

• Public Sector Enterprises have Government shareholding not less than 51% and disinvestment is the process of reducing the government shareholding in such companies.

What are the reasons for this decision?

• The government has a ₹1.05 lakh crore disinvestment target of which, only ₹17,364 crores has been realised till now.
• A massive shortfall in revenue and capital receipts — as of September 30, net tax revenue had only reached 36.8% of the budget estimate of ₹16.5 lakh crore for the full year, while non-debt capital receipts(disinvestment etc.) were at 17.2% of the fiscal’s target of about ₹1.2 lakh crore according to the Controller General of Accounts.It is aimed at helping the government narrow the yawning fiscal gap.

What are the underlying issues?

• It is alleged that the lack of an explanation for the logic behind the move also hints at politics taking precedence over any economic interest.

Way forward

• Thus it is opined that only 4 more months left in the present fiscal year, the government needs to move ahead with its decision of disinvestment fast.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Prelims Questions: 

Q.1) With reference to the Pliosaur, consider the following statements:

1. They were the largest aquatic carnivorous reptiles that have ever lived and are often dubbed “sea monsters”.
2. Recently its remains were discovered in the Polish village of Krzyzanowice.
Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: C

Mains Questions:
Q.1) What is disinvestment? What are the reasons for this decision? What are the underlying issues?

Gloom deepens (The Hindu)

• Mains Paper 3 : Economy 
• Prelims level : Index of industrial production
• Mains level : Present issues in Industrial Production

Context

• The latest index of industrial production (IIP) estimates from the NSO show that output shrank by 4.3% in September, with all three component sectors in the index — manufacturing, mining and electricity — posting contractions

What is the Index of Industrial Production?

• It is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
• The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period which presently in India is 2011-12.
• It is compiled and published monthly by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.

What are the present issues?

• Consumer durables also posted a fourth straight contraction, with the 9.9% decline appearing in stark contrast to September 2018’s 5.4% growth.
• 17 of the 23 industry groups that comprise the manufacturing sector contracted.
• Motor vehicles industry posted a 25% contraction.
• Manufacturing having a weight of almost 78% in the IIP, the latest report from IHS Markit gives little room for optimism. The survey based Purchasing Managers’ Index revealed continuing manufacturing sector weakness in October as weakening demand hurt new orders and business sentiment

What are the reasons for the dip?

• Low rural demand
• Low investors’ confidence

What are the measures taken in this regard?

• The Centre’s announcement of a funding initiative to help stalled housing projects ought to provide some fillip in the coming months.

Way forward

• Thus it is opined that the demand needs to be increased by the help of structural reforms while the Central Bank needs to lower interest rates for the revival in the time being.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) With reference to the Innovations for Defence Excellence (iDEX), consider the following statements:

1. It will be funded and managed by NITI Aayog. 

2. It primarily aims at creation of an ecosystem to foster innovation in Defence and Aerospace by engaging Industries including MSMEs, start-ups, individual innovators, R&D institutes & academia. 

Which of the statements given above are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: B

Mains Questions:
Q.1) What is the Index of Industrial Production? What are the present issues?