Reviewing the Competition Act

Mains Paper: 2 | Constitution 
Prelims level: Competition Act
Mains level: Network economies, virtual markets, the internet of things and the like call for a modern regulatory framework

Context 

• The Union ministry of finance has constituted a panel of experts to review the Competition Act/rules/regulations. 
• Periodic reviews of the Competition Act are important. 
• There has been no review of the current Act (2002) since its enactment. 
• The Raghavan Committee that formulated the need for a proactive competition law in lieu of the Monopolies and Restrictive Trade Practices Act (MRTP), 1969, is of 1999 vintage.
• In fact, the review is overdue if the Act has to remain relevant. 

Crucial highlights about reviewing the Competition Act 

• Network economies, platforms, virtual markets, the internet of things, the increasing importance of non-tangible capital like patents.
• These call for a modern regulatory framework “in view of changing business environment” as the press release points out. 
• A few illustrations of the constraints imposed by the Act would help show how the prevailing legal framework can be a barrier when it comes to applying the economics of modern business to antitrust abuse.
• It is a major concern for the kind of globalized knowledge-based economy that India wishes to be. 
• The Raghavan Committee had highlighted competition and consumer welfare as the twin objectives of the Act, the preamble, in asserting competition and consumer interest, includes the rider, ‘keeping in view the economic development of the country”. 
• Innocuous as the statement is, it is open to interpretation in a way that protects domestic producers. 
• This is strengthened by the definition of consumer in section 2(f) of the Act. 
• The section includes both producer and the end consumer in the category of ‘consumer’ when a purchase is either for commercial use or for personal use. 
• Consequently, most cases of antitrust abuse roughly over 50%, in fact have been filed by producers. 
• To claim that these filings are on behalf of the end consumer is stretching the definition. 

Intervention in market pricing structures may end up protecting the competitor

• It has encouraged producers to ‘fire from the shoulders of the Commission’ as a strategy for meeting competition. 
• It has led to the emergence of perverse situations where ‘maximization of producer welfare’ is equated with maximization of total welfare. 
• This is against the well-established tenet of competition economics, maximization of consumer welfare. 
• As a result, pricing schemes, be they predatory or unfair pricing, (MCX-SX Vs NSE), are viewed from the perspective of a producer rather than that of the benefits/harm accruing to end consumers. 
• The optimal pricing solution is best arrived at by the interaction of demand and supply.
• The revenue model for an aggregator is from advertising. 
• Intervention in market pricing structures by the authority may end up protecting the competitor at the cost of competition. 
• To associate market power with dominance rather than look for the presence of entry barriers is a sure way to kill the emergence of business on platforms.
• Domination need not be associated with anti-competitive behaviour given the rapidly changing nature of technology where new innovation may disrupt the entire existing ecosystem.

Way forward 

• The Act defines dominance and market power in terms of the “ability to operate independently of competitive forces prevailing in the relevant market” (section 4 explanation) while section 19 (4) lists 13 factors that define dominance.
• It including any other factor the Commission wishes to consider. Seen with section 4, the operative section for ‘Abuse of Dominance’ the conditionality for market power is reduced to one of mere dominance. 
• If an enterprise is dominant, market power is considered inevitable. 
• This is dangerous for investment flows to digital markets where dominance is the norm. 
• Arguments of dominance ultimately depend on defining the ‘relevant market’ of antitrust abuse. 
• The relevant market (product) is with reference to substitutability or inter-changeability in terms of characteristics, their prices and intended use (section 2(t)). 

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UPSC Prelims Questions: 

Q.1) Which of the following is/are administered by the Ministry of Corporate Affairs?
1. Insolvency and Bankruptcy Code, 2016
2. Competition Act, 2002
3. Companies Act, 2013
Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
Answer: D

UPSC Mains Questions:
Q.1) Is a detailed Act necessary when business conditions are so fluid?
 

Amritsar disaster: avoidable tragedy

Mains Paper: 2 | Governance 
Prelims level: Amritsar disaster
Mains level: Responsibility must be fixed for the Amritsar disaster. Political spats won’t help 

Context 

• The ghastly Dasara disaster at Amritsar that has left 59 people dead is a harsh reminder, if any were needed, that government departments have not yet taken official protocols for safety at mass gatherings seriously.
• In the aftermath of the entirely preventable carnage, in which spectators crowding a railway track to watch burning of effigies were mowed down by a train.
• There is a frantic effort to pin responsibility on agencies and individuals, and, deplorably, to exploit public anger for political ends.
• Amritsar points to the basic failure of the district administration and the police, which should have ensured law and order.
• If the organisers of the event had obtained a no-objection certificate from the police, as reports suggest, what role did the law enforcement machinery play in crowd control?
• The Municipal Corporation in Amritsar has tried to distance itself, claiming that its permission was not sought, although almost everyone in the city knew it was taking place. 
• The magisterial inquiry ordered by the Punjab government should examine the actions of the revenue authorities and the police in organising the event, and whether rules were ignored to favour the organisers who claimed proximity to some politicians. 

Analysing the history 

• Major religious festivals in India are often overshadowed by deadly incidents such as stampedes and fires.
• The National Disaster Management Authority has responded to these horrors by creating a guide for State governments and local bodies, laying down a clear protocol to be followed for mass gatherings and festivals. 
• Whether this was followed by the Amritsar authorities in the planning of the Dasara celebrations is one of the questions that must be addressed. 
• There should be a transformation of the way such events are organised, with a lead agency in each State and district empowered to issue instructions, and in turn be accountable for public safety.
• There is a serious deficit of common spaces in cities, towns and villages to conduct spectacular events safely. 
• This is incongruous in a populous country with a tradition of festivals and cultural gatherings. 

Way forward 

• The Punjab government, wiser after the fact, says it will draw up guidelines for the future. At Amritsar, trespass on the track was the prime reason for the accident.
• A campaign to educate the public that railway tracks cannot be treated as commons, and vigorous enforcement, will reduce the probability of such incidents. 
• The Railways must identify hazard spots for train movement in heavily built-up areas and prevent trespass by barricading them. A culture of safety can take root if governments imbibe it first. 

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UPSC Prelims Questions: 

Q.1) Consider the following statements regarding Amritsar declaration. It’s about 

A.    The delegates from nearly 40 countries and leading groupings like EU participated in conference.  Indian delegation was led by Union Finance Minister Arun Jaitley.
B.    The theme of this edition of the conference was “Addressing Challenges, Achieving Prosperity.
C.    The three big issues of the conference were (i) countering terrorism to create stability in Afghanistan, (ii) Providing Afghanistan connectivity to strengthen economic activities and (iii) the development which is essential for its progress.
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 1, 2 and 3
(c) 3 only
(d) 2 and 3 only

Answer: B

UPSC Mains Questions:
Q.1) To what extent governments are responsible for Amritsar Disaster. Give your arguments in the answer.

We have failed our children

Mains Paper: 2 | Social Justice 
Prelims level: Human Capital Index
Mains level: While ‘Right to Education’ vastly expanded enrolment of children, not enough attention was paid to the quality of the schools, the teachers and the instruction. 

Context 

• According to some surveys, most people living in India report that they are happy. 
• The sense of contentment is despite the fact that jobs are scarce, the air is polluted, the water is unfit for drinking, the roads (except select national highways) are terrible, the law and order situation is alarming, and mob violence and mob justice seem to be the new normal.
• In approximately 49 crore children born and living in India who can claim a birth year in the 21st century.

Education and Health

• The World Bank publishes the World Development Report every year. 
• The 2019 report has constructed the HCI for 157 countries. 
• It is a measure of “the amount of human capital that a child born today can expect to attain by age 18”. 
• The index is measured in terms of the productivity of the next generation of workers relative to the benchmark of complete education and full health. 
• An economy in which a child born today can expect to achieve complete education and full health will score a value of 1 on the index.”

Crucial highlights about the data 

• Singapore occupies the first rank with an HCI of 0.88.
• The first 10 countries score over 0.80. They are Singapore, Republic of Korea, Japan, Hong Kong, Finland, Ireland, Australia, Sweden, the Netherlands and Canada. 
• The ranks of the Big Five are good but not great: the United Kingdom (HCI 0.78) is at 15, France (0.76) at 22, the United States (0.76) at 24, Russia (0.73) at 34 and China (0.67) at 46.
• Ninety-six out of the 157 countries have an HCI score of over 0.51, which is a measure of the progress made by humankind as a whole.

Head Buried in Sand

• Among the remaining 61 countries that have an HCI of 0.50 or lower is India.
• India’s HCI is 0.44 and rank is 115. 
• That places India in the bottom third of the world. 
• The Government of India has decided to ignore the HCI and will continue to undertake its pathbreaking programme for human capital development aiming to rapidly transform quality and ease of life for all children.
• Nobody has accused the NDA government of being solely responsible for the low HCI. 
• All governments since Independence bear responsibility. What upset me is the unwillingness to admit to the shortcomings.
• The HCI is not a number plucked out of the air. It is based on six factors, each getting a score. In the case of India, given the average household income, the probability of a child surviving to the age of 5 is satisfactory at 0.96. The adult survival rate is reasonable at 0.83.
• What pulls India down are the ‘Learning adjusted years of school’ and ‘Fraction of children under 5 not stunted’. The score on the former is 5.8 years at school. On the latter, it is 0.62, meaning that 38 per cent of children under 5 years of age have a low height-for-age.

Cruel Negligence

• The HCI must be read along with the Global Hunger Index (GHI) published by Deutsche Welthungerhilfe and Concern Worldwide.
• One out of seven children in India is undernourished; two out of five are stunted (low height-for-age); and one out of five is wasted (low weight-for-height). 
• The cause is undernutrition. On the one hand we have mountains of wheat and paddy and, on the other, we are unable to provide enough food to each child. 
• At the prodding of the National Advisory Council, the UPA acknowledged the need for State intervention and devised the MGNREGA and the Right to Food Security law. 
• The result is low HCI, high GHI (score 31.1, indicating ‘serious hunger’) and a low rank of 139 among 189 countries in the Human Development Index.

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UPSC Prelims Questions: 

Q.1) Consider the following statements with reference to Global Human Capital Index:
1. The index captures the full human capital potential profile of a country among five distinct age groups.
2. India ranks lowest among the BRICS countries.
3. It is released by World Economic Forum.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: D

UPSC Mains Questions:
Q.1) While ‘Right to Education’ vastly expanded enrolment of children, not enough attention was paid to the quality of the schools, the teachers and the instruction. Critically examine the statement. 
 

(VIDEO) Regulating Anonymous Donations : Rajya Sabha TV Big Picture Debate

Topic of Discussion: Regulating Anonymous Donations : Rajya Sabha TV Big Picture Debate

L'affaire Khashoggi 

Mains Paper: 2 | IR
Prelims level: Jamal Khashoggi
Mains level: There are limits to Saudi Arabia’s defiance even within the ambit of narrow national interest 

Context 

• The gory, gruesome and ghastly details of the last few moments in the life of Saudi Arabian journalist Jamal Khashoggi.
• As reported in the government-controlled Turkish media, have reaffirmed the continuing validity of the universal truth: the pen is mightier than the sword.

Tokenism in reactions

• Saudi Arabia is defiant. It has warned all those who may be thinking of isolating or even moving sanctions against the regime with dire consequences. 
• Some token action is being taken by some western governments such as demanding a thorough, impartial inquiry into the incident. 
• The chief of the International Monetary Fund, Christine Lagarde, has cancelled her participation at the ‘Davos in the Desert’ Conference, in Riyadh. 
• The U.S. Treasury Secretary has joined the boycott. 
• The outrage is universal in the developed world, though the developing countries seem to have decided their own counsel. 
• The Bretton Woods institutions will still need Saudi funding.

India’s deck of cards

• India does not have the kind of money to throw around as the Saudis have.
• If India needs their oil, they also need to sell it. 
• They need to sell as much oil as they can to continue with their disastrous misadventure in Yemen. 
• If India is forced to reduce the import of Iranian oil to zero in the next few weeks, India does not have to worry about alternate sources of which there are plenty, as the Union Minister for Petroleum and Natural Gas has assured us.
• Saudi Arabia has no choice but to continue to make up the shortfall, first, because it needs to sell its oil, but second and more important, it must do all in its power to weaken and destroy its mortal enemy, the leader of the Shias of the world. 
• As King Abdullah of Saudi Arabia told the U.S. a few years ago, “the head of the snake needs to be cut off”. If it becomes useful to befriend India in its relentless campaign against Iran, it will be a small price to pay.

Way forward 

• There is yet one more weapon that India can selectively use. 
• The U.S., France, Russia all have only one interest in India  to sell their extremely expensive war material. 
• They not only earn money, they even earn our gratitude. 
• The principle of national interest can run into conflict with respect to other higher principles especially in democracies. 
• Thus, the Khashoggi affair might eventually result in action in the U.S. Congress which the President then will have no option but to abide by.
• This is what happened in Congressional action against Russia and which Mr. Trump then had to follow. Vox populi will on occasion trump narrow national interest.

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UPSC Prelims Questions: 

Q.1) Famous Journalist Jamal Khashoggi is belongs to which Country? 
A.    Turkey
B.    Iran
C.    Saudi Arabia 
D.    Iraq
Answer: C

UPSC Mains Questions:
Q.1) Is there a lesson for India in the Saudi Arabian stance of defiance? 
 

Taliban surge: on Kandahar attack

Mains Paper: 2 | IR
Prelims level: Kandahar attack
Mains level: With the Kandahar attack, the militants strike a blow to Afghan election and peace processes 

Context 

• The attack on a high-level meeting inside the Governor’s compound in southern Kandahar on Thursday, killing top security officials, is yet another reminder of the sharply deteriorating security situation in Afghanistan. 
• In recent years, the Taliban had shown its capability to infiltrate official meetings and attack any government building, notwithstanding claims by the authorities of heightened security. 
• A year ago, the Kandahar Governor’s office had come under attack by militants, resulting in the death of a Deputy Governor, the Ambassador of the United Arab Emirates and members of Parliament.
• Thursday’s assault happened at a meeting that was attended by General Austin ‘Scott’ Miller, the top U.S. commander in Afghanistan. 
• U.S. troops later said he was unhurt, while Gen. Abdul Raziq, the Kandahar police chief, and Abdul Momin, the Kandahar intelligence chief, were killed. 

Consequences behind this attack 

• The Kandahar attack happened two days ahead of the much-delayed parliamentary election. 
• From the day the election dates were announced, the Taliban had warned those participating in the process. 
• The security situation is so dire in the country that one-third of the polling stations will not open on Saturday, election day.
• The Taliban has repeatedly targeted election offices and gatherings, killing at least 10 candidates and dozens of their supporters. 
• Afghan security forces will now have to deal with the fallout of the Kandahar strike. 
• The attack is a setback for the U.S. plan for direct talks with the Taliban as a way out of the 17-year-long conflict. Zalmay Khalilzad, the American special envoy to Afghanistan, recently met Taliban representatives in Qatar. 
• The push for talks comes from a realisation that the war has drifted into a stalemate and an outright military solution could be impossible. 
• The U.S. is trying to turn up pressure on the militant group through Pakistan. But this strategy will work only if the Afghan forces and their allies make some advances on the ground, and bring the Taliban under military pressure. 
• What is actually happening, as incidents such as the Kandahar attack suggest, is the opposite. 
• Both the U.S. and Afghan forces appear to be clueless about how to stop the Taliban’s advances.

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UPSC Prelims Questions: 

Q.1) Which among the following sites are associated with Ashokan art and architecture/inscriptions?
1. Dhauli
2. Maski
3. Kandahar
4. Girnar
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 4 only
(d) 1, 2, 3 and 4

Answer: D

UPSC Mains Questions:
Q.1) Recent attacks in Kandahar is matter of concerns for Afghan government and to destabilize the peace process. Critically examine the statement 
 

Keep the peace: on Sabarimala 

Mains Paper: 2 | Polity 
Prelims level: Sabarimala temple issue 
Mains level: The immediate task is to dial down the tensions over Sabarimala 

Context 

• The Sabarimala temple in Kerala in the last few days ought to persuade everyone, irrespective of where they stand on the Supreme Court’s recent verdict, of the importance of one thing: to keep the peace. 
• There is no dispute that the Supreme Court judgment allowing into the shrine the entry of all women, irrespective of their age, is the law of the land. 
• The popular protests that have consumed Kerala following the Supreme Court judgment have suggested there is a sizeable section of devotees of both sexes that believes women in the age group of 10 to 50 should not be permitted into the shrine. 
• This is no basis for devotees to prevent the implementation of the Supreme Court order, by threats and the unseemly use of force. 
• Not one woman has managed to enter the temple, with two of them being turned away just 500 metres from the shrine. 
• Faced with a threat by the head priest that the shrine itself would be closed if any of the women entered it, the police advised a woman journalist and an activist to turn back. 

Measures need to be taken 

• These developments do not augur well.
• Located in forest terrain, the shrine is accessible only from a few points, rendering it easy for protesters to stop vehicles and check for women in the 10 to 50 age group. 
• It transpires that two of the women who tried to enter the temple were activists.
• The State government has now declared that its protection is available only to genuine devotees and not those trying to make a statement. 
• Activists and non-devotees are legally entitled to visit the shrine, but in such a volatile atmosphere, little is gained and a lot is lost by merely attempting to score a point. 
• Everyone would do well to await the outcome of the review petitions before the apex court, even if the same issues resurfaced were the court to reiterate its verdict. 
• The State government, the Travancore Devaswom Board and the devotees should discuss ways of implementing the Supreme Court order instead of frittering away their energies on managing protests and conflicts on a daily basis. 

Way forward 

• If no solution is found soon, there is a risk that incidents may recur on any day when the shrine is open. 
• Next month, the temple will open again for a longer season, placing a question mark on the possibility of peaceful and incident-free worship for devotees.
• It is important that everyone works together to ensure that such fears are unfounded.

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UPSC Prelims Questions: 

Q.1) Sabarimala in kerala is a famous place that devoted to?
A.    Kotilingeshwara 
B.    Muthappan
C.    Aiyanar
D.    Ayyappan 
Answer: D

UPSC Mains Questions:
Q.1) What is the Sabarimala issues? What are the measures need to taken up by temple authority to resolve the issue? 

The end of digital history

Mains Paper: 3 | Science and Technology 
Prelims level: Indigenization of technology
Mains level: Indigenization of technology and developing new technology. Awareness in the fields of IT, Space, Computers, robotics, nanotechnology, biotechnology 

Introduction 

• One of the digital planet’s many pleasures is that it has many distinct mountaintops.
• Different locations have offered different advantages: The US, Europe, China and India. 
• But that era might be coming to an end. 
• We may be en route to digital unipolarity as all the others cede the high ground to China. 
• Chances are, we are witnessing a phenomenon I shall call the end of digital history. 
• If digital history were the process by which we converge towards a technological utopia of algorithmic efficiency, social order and productivity, then we might be approaching this end as well. 
• This time the end-state might be one exemplified by an emerging China.

Analysing the situation 

• The world’s digital topography thus far. 
• The US, of course, is the pinnacle of digital innovation.
• In addition to its free-wheeling spirit, it is abundant in dorm rooms and garages, and college dropouts who abandon the former for the latter. 
• It also has many venture capitalists eager to throw money at a college dropout as long as every other venture capitalist is doing the same. 
• Europe, on the other hand, has always been the place where people have a healthy respect for history: Cathedrals and cobblestones over “smart” streetlights and self-driving cars. 
• The Europeans could be relied on to ensure that we didn’t let all this delirium about innovation overtake an old-fashioned concern for privacy and placing controls on the wanton generation, consolidation and harvesting of data. 
• By making the early move with a data protection framework, Europe had claimed the privacy mountaintop. 
• At the other end of the planet, China has people, and lots of them. 
• With 800 million of its citizens on the internet, the Chinese are wantonly generating, consolidating and harvesting data. 
• In turn, this data is digital fuel for the artificial intelligence machine that will power China’s ride up to its own mountaintop.

From India’s perspective 

• India’s hill climb has always been a more complex one to describe. It has people, poverty and phones resident in a noisy democracy. 
• While its e-commerce potential may be mouthwatering for investors, its true contribution may well be a framework that balances digital empowerment and digital productivity; this is a balance that has proven elusive elsewhere. 
• As the country’s top tech visionary, Nandan Nilekani, has written recently in Foreign Affairs, India’s intent is to give its citizens “technical and legal tools required to take back control of their data”.

The empowerment toolbox components  

• A digital infrastructure designed as a public good; users with ownership of their data; “data fiduciaries” who are consent managers acting in the users’ interest; a “stack”,
• The world’s largest applications programming interface that would allow developers and entrepreneurs, public and private, to build products and services.
• Aadhaar, a foundation enabling efficient verification of each user’s identity. 
• With 1.2 billion people signed up to this biometric identity system, India seemed poised to climb its mountain. 
• The other grand nationwide initiatives, however, the execution fell shy of the vision. 
• The identity database has not proven to be secure and has raised fears of abuse by those in power or exploited for commercial use. 
• It has already failed in several instances, for a host of reasons from technical difficulties to the biometrics being hard to read.

Way forward 

• India is not alone in ceding its digital high ground. 
• China may set new standards in privacy protection as long as you overlook the notion that the state knows everything. 
• Beijing is reportedly reproducing aspects of Europe’s data protection rules, but it is going further by requiring that its citizens’ data be held within China.
• Europe, in the meantime, will focus on compliance and regulation and continue to struggle to re-establish an innovative mindset, one it has lost for two decades. 
• China is laying the groundwork for beating the US at its own game. 
• The US; it produces 4.7 million STEM graduates versus 5,68,000 in the US each year.
• Chinese-origin authors produce anywhere between a quarter to a third of all scientific papers; and, most importantly, it has a government that plans two steps ahead and a president who has a job for life without the annoying disorderliness of democracy. 
• The US, in the meantime, is struggling to deal with its growing angst about its digital companies and their many foibles while its government has all but abandoned investing in innovation for the long term.
• The digital planet’s high points US, Europe, India  are losing ground to China. 
• Unless governments, visionaries and entrepreneurs in each of these locations wake up and smell the coffee.
• A digital planet with a mountaintop in a single location doesn’t seem like a particularly exciting place, especially one that works with clockwork precision under the watchful eyes of a central planner. 
• It would be the end of digital history. Francis Fukuyama, the end-of-history progn

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UPSC Prelims Questions: 

Q.1) With reference to Bitcoins, consider the following statements:
1. The value of the Bitcoins is based on a basket of currencies.
2. In India, only the entities approved by the Reserve Bank of India can transact in Bitcoins.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: D

UPSC Mains Questions:
Q.1)  Increasing protectionism in the West and the rise of new digital technologies pose challenges and opportunities for India’s IT services industry. How should India weather these challenges? Examine.

The anatomy of banking frauds

Mains Paper: 3 | Banking  
Prelims level: NPA 
Mains level: Issues relating to improving the banking system 

Introduction 

• The latest Financial Stability Report of the Reserve Bank of India (RBI) shows, the Indian banking system reported about 6,500 instances of fraud involving over ₹30,000 crore in the last fiscal. 
• The state-run lender took a hit of about ₹12,000 crore. 
• Several other cases of large banking frauds were reported subsequently, which raised questions about the ability of banks, especially in the public sector, to contain them. 
• It is in this context that the analysis of the top 100 banking frauds by the Central Vigilance Commission (CVC), released this week, is important.

What CVCs are looking for?

• The CVC needs to be commended for this as it will help improve the general understanding of banking frauds. 
• It analyzed frauds in different sectors and has also suggested measures that will help avoid such unscrupulous activities in the future.
• The most audacious among the cases mentioned was that of the fixed deposit (FD) fraud. 
• The fraudster presented himself as a bank representative to companies and government organizations. 
• For banks, he became a financial advisor of those organizations and managed to mobilize large bulk deposits.
• He gave fake term deposit receipts (TDRs) to depositors. 
• The miscreant later opened loan accounts in the name of the depositors by giving fictitious documents and original TDRs and took the money away.

Improving the banking intelligence and other technology system 

• Most frauds show that banks did not do proper due diligence, both before and after disbursing loans. 
• The FD fraud, for example, shows the poor level of checks and balances in the banking system. Therefore, in order to check frauds, banks will need to improve their due diligence capabilities. 
• This will lead to better credit appraisal and also help contain non-performing assets (NPAs). As the financial system evolves, expands and gets more sophisticated, banks will need to be better prepared to avoid frauds. 
• It is also important that banks leverage technology to detect frauds and improve the sharing of information. 
• Further, like the PNB fraud, it is likely that in some cases bankers may have been complicit in frauds.
• However, law enforcement agencies should tread with care so that they don’t end up creating an environment of fear, affecting the flow of credit to productive sectors.

Way forward 

• By improving capabilities in the banking system, accountability of third-party service providers such as auditors and lawyers should also be fixed.
• India needs a system where auditors and other professionals vetting fake documents are not able to escape. 
• This is necessary as large frauds can increase reluctance in the banking system to lend, affecting the flow of credit.
• In this context, the CVC has rightly noted: “Bank must immediately delist such third valuers, Chartered Accountants/ Chartered engineers, Advocates etc. who have questionable credentials/ have been negligent in their professional duties or have caused financial loss to the bank by their willful acts of omission/ commission/dishonesty.”
• Some of the recent frauds and the accumulation of NPAs in the system show that Indian banks need significant improvements in operation and governance standards.
• Both the government and the regulator would do well to work with banks to improve the overall structure.

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UPSC Prelims Questions: 

Q.1) Consider the following statements about the Central Vigilance Commission:
1. Central Vigilance Commission consists of chairperson and not more than two members.
2. Salary, allowances and other conditions of services of the Central Vigilance Commissioner are similar to those of chairperson of UPSC.
3. The jurisdiction of the CVC does not extend to managers and above in general insurance companies.
Which of the above statements is/are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 2 only
d) 3 only
Answer: A

UPSC Mains Questions:
Q.1) How to Improving the banking intelligence and other technology system to lower down the NPAs and stabilize the banking system as well? 
 

A game theory take on sexual harassment

Mains Paper: 1 | Society 
Prelims level: #MeToo
Mains level: Game theory and behavioural science can provide nuance to the wider discussion on #MeToo and gender roles    

Introduction 

• Over the past year, India has witnessed an upheaval of sexual harassment and assault allegations through social media and anonymous reporting. 
• The women from the media, performing arts and other professions have come forward with accounts of inappropriate conduct and sexual harassment at the hands of ‘powerful’ men. 

From the perspective of game theory 

• Consider a two-person sequential game, where a male in the first stage chooses between two actions: Harass (H), or do not harass (NH) a woman.
• In both cases, the woman has two subsequent choices—report (R), or do not report (NR). 
• To  reporting to be disclosing to the public, which could include posting on social media, filing a formal complaint with officials, or to an internal complaints committee. 
• Now, consider all four combinations: 
• The game terminates in two cases, both when the woman chooses NR.
• The simplest case (intuitively), is the one where the man chooses NH and the woman chooses NR, where they are both neither better nor worse off.
• However, when the man chooses H and the woman chooses NR, she undergoes significant emotional and mental damage, and therefore, a negative payoff.
• The man receives a positive payoff, as he is assumed to derive utility from harassing women. 
• It could be on account of pluralistic ignorance: A woman considering R is deterred because she wrongly believes that all other women also strictly prefer NR to R.

The man will always choose to harass women since the onus is on them to prove the allegations

• When a woman chooses R, preceded by NH (i.e. a false allegation), both face a negative payoff (more so for the man than the woman owing to the reputational damage); but when preceded by H, both face an equally negative payoff. 
• H followed by R damages potential economic opportunities for a man, but also costs the woman who is seen with suspicion, potentially deprived of employment, or stigmatized by reliving the incident ad nauseam. 
• When she chooses R, males can choose two actions: To either Admit (A), or to Fight the allegation (F). 
• The game continues if and only if the man chooses F, following which the game places the responsibility squarely on the woman to either Prove (P) or remain Unproven (UP). 
• Again, consider the two points at which the game terminates: When the male chooses to admit (A). 
• However, if he plays A when the allegations are true, then he faces the same negative payoff as he would if he chose F—i.e. the man is indifferent between fighting and admitting when he has actually harassed the woman.

Effect of the subgame perfect equilibrium

• The subgame perfect equilibrium of this game suggests a solution that resonates with what has been unfolding on social media. 
• For men, action H strictly dominates NH, since he knows that a woman will strictly prefer NR to R.
• Since the game assumes common knowledge, common and perfect information, all players know exactly how the game will play out and, hence, choose their dominant strategy. 
• The man will always choose to harass women because he knows that she knows the onus is on them to prove their allegations, which she will have to do.
• The man always prefers to fight allegations than simply admit to them, regardless of whether he has actually harassed her or not. 

Way forward 

• This analysis is aimed to be a bare-bones attempt at clarifying the gender roles at play while dealing with cases of sexual harassment. 
• Their elegant economic model explains repeat offences and delays in reporting of sexual misconduct. 
• It suggests using a novel online system called ‘Callisto’ to discretely and privately transmit reports of sexual harassment, applied to the case of academic institutions. 
• This must be considered in developing countries like India where stigma still remains the prime hurdle in reporting sexual harassment.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

UPSC Prelims Questions: 

Q.1) Government of India implements the Integrated Child Development Scheme (ICDS) via
a) Anganwadi centres
b) Krishi Kiosks
c) Common Service Centres (CSCs)
d) Single Window Facilitation Centres (SWFCs)

Answer: A

UPSC Mains Questions:
Q.1) How Game theory and behavioural science can provide nuance to the wider discussion on #MeToo and gender roles?

UPSC IAS Mains Previous Years Public Administration Solved Exam Paper (ii) - 2016

Paper-2: Section-A

Q.1) Attempt all of the following questions in about 150 words each:

a) “The Regulating Act of 1773 not only introduced value in administration but also laid the foundation on centralized administration in India.” Explain. (for Answer Join Public Administration Online Coaching)

b) Do you think that some of the ideals enshrined in the Preamble of the Constitution remain only on paper even today? Critically evaluate. (for Answer Join Public Administration Online Coaching)

c) Examine the efficacy of the measures taken to redefine and execute cooperative federalism in India. (for Answer Join Public Administration Online Coaching)

d) Evaluate the performance and efficacy of the Maharatna, navratna and Miniratna type of Public Sector Undertakings in the context of Liberalization, Privatization and Globalization (LPG). (for Answer Join Public Administration Online Coaching)

e) “The growing prominence of NGOs in development areas is strongly related to the declining legitimacy of the State.” Explain. (for Answer Join Public Administration Online Coaching)

Q.2) “In contemporary times, Kautilya’s Arthashstra is relevant more in the field of international relations than in economic affairs.” Analyse the statement. (for Answer Join Public Administration Online Coaching)

b) “Dominant centralized administration is correlated with decisive and authoritative leadership provided by the Prime Minister’s office.” (for Answer Join Public Administration Online Coaching)

c) “A significant legacy of the Mughal rule in India is a well-organized revenue administration at the State and District Levels.” Comment. (for Answer Join Public Administration Online Coaching)

Q.3) a) What factors have led to the expansion of the role of the Ministry of Home Affairs? How can it coordinate its affairs more effectively with the Ministry of Defence? (for Answer Join Public Administration Online Coaching)

b) “Introduction of G.S.T. (Goods and Services Tax) no doubt has economic benefits, but tends to compromise the States’ ” IN this context, comment on the changing nature of Union-State financial relations. (for Answer Join Public Administration Online Coaching)

c) “Planning in India has failed to meet the challenges of economic development and social change.” Discuss the statement in the context of the emergence of NITI Aayog. (for Answer Join Public Administration Online Coaching)

Q.4) a) “The absence of congruence of views on appointments to judiciary between the Supreme Court and the Union Government has had an adverse impact on the judicial system.” In the light of the above statement, examine the proposal to constitute an All India Judicial Service. (AIJS). (for Answer Join Public Administration Online Coaching)

b) “The separation between regulatory and development functions in many development administration.” Critically examine the need to relook at this policy. (for Answer Join Public Administration Online Coaching)

c) “Legislatures have become a place for infighting rather than for proper policy making.” Comment in the context of the working of State Governments.  (for Answer Join Public Administration Online Coaching)

SECTION B

Q.5) Attempt all of the following questions in about 150 words each:

a) “Autonomy granted to higher civil servants tends to increase their creativity and productivity.” Argue the case to make the civil service more accountable as well as innovative. (for Answer Join Public Administration Online Coaching)

b) Justify the budgetary support to nationalized banks to overcome the crisis resulting out of Non-Performing Asserts (NPA). (for Answer Join Public Administration Online Coaching)

c) “National Green Tribunal is viewed by many critics as a hindrance to economic development” Evaluate the statement and give arguments in support of the your answer. (for Answer Join Public Administration Online Coaching)

(VIDEO) Genie of Parali and Pollution (पराली और प्रदूषण का जिन्न) - Lok Sabha TV Insight Discussion

Topic of Discussion: Genie of Parali and Pollution (पराली और प्रदूषण का जिन्न)- Lok Sabha TV Insight Discussion

(VIDEO) New H1B Visa norms : Rajya Sabha TV Big Picture Debate

Topic of Discussion: New H1B Visa norms : Rajya Sabha TV Big Picture Debate

A flawed defence procurement policy

Mains Paper: 3 | Internal Security 
Prelims level: Rafale controversy
Mains level: The Rafale controversy reflects a larger underlying problem in decision-making, transparency and consistency of public policy

Introduction 

• The recent Rafale controversy is the symptom of a larger underlying problem in decision-making, transparency and consistency of public policy. 
• The Defence Procurement Procedure, 2016, (DPP) recognises the need to ensure that procurement is undertaken in a manner that takes India closer to the goal of developing a world-class domestic defence and aerospace industry. 
• However, the offset requirements under the DPP are not helping it achieve this goal. The recent Rafale controversy is the symptom of a larger underlying problem in decision-making, transparency and consistency of public policy. 

Challenges for government 

• Under Indian law, government procurement is treated as distribution of largesse by the state and, hence, must be fair, transparent and equitable.
• There can be no favouritism or nepotism in the award of public contracts. 
• Offsets, however, operate in a strange netherworld.
• On the one hand, they are financed by Indian taxpayers, but on the other, award of contracts by foreign suppliers are not subject to public procurement safeguards. 
• The DPP even seems to indicate that the foreign supplier has complete discretion on choice of the Indian offset partner (IOP). 
• It would result in a moral hazard at the outset and, by extension, would permit the Indian government to avoid public procurement rules when taxpayer money is routed through a foreign supplier towards “offsets”. 
• It would be disingenuous for the government to require foreign suppliers to have IOPs and yet not have a say in the choice of offset partner or its investments. 
• If this were true, the offset regime would be inherently open to abuse by the foreign supplier. 

Government procurement is treated as distribution of largesse by the state and must be fair

• The DPP covers for this by providing the government with extensive control over selection of the offset partner. 
• It has the power to bar any entity from becoming an offset partner.
• The government also retains the power to evaluate offset proposals received in response to procurement tenders and conclude offset contracts.
• The DPP also provides that all offset proposals will be approved by the Union minister of defence, regardless of their value. 
• During the period of the contract, any change in the Indian offset partner also requires government approval. 
• Therefore, it is unlikely that the government of India has nothing to do with the selection of Indian offset partners. 

How DPP can be restructured? 

• The defence procurement should be subject to transparent processes that ensure that Indian companies, big and small, compete on a level playing field. 
• The selection of a large (and failing) conglomerate with no prior experience.
• Rafale would not have been possible if the government had directly procured under a sophisticated award process. 
• If it is not possible or desirable under a direct procurement regime, it is difficult to argue that it is desirable under an offsets regime. 
• The procurement policy recognizes the need for domestic private partnership, it does not mandate a fair and diverse procurement process for offsets. 
• Given the large contract values involved, this makes it likely that foreign suppliers will partner with just one or two large industrial groups to discharge their offset obligations. 
• The definition of IOP is flawed. IOPs are defined as Indian enterprises engaged in making eligible products and/or services. 
• If the objective is to build a domestic defence sector, the focus should instead be on direct investments. 
• In other sectors where India has succeeded, foreign technology and know-how has followed investments, irrespective of ownership. “Indian” ownership does not necessarily contribute to the growth of a sector, as much as investments within Indian shores. 
• Focussing on investments will ensure that companies of all sizes, including foreign companies who wish to manufacture in India, are permitted to grow and flourish. 
• This regulations will restrict foreign investments in the defence sector require a dose of reform. 

Way forward 

• More importantly, transparency is essential in procurement contracts. 
• While national security arguments may withstand scrutiny in outright sales (regarding, say, specifications and customization) or where specific components or technology transfer are involved, they do not stand scrutiny in relation to offsets.
• In the interest of fairness, foreign suppliers should be free to invest in India, yet at the same time, offset investments/procurement must be subject to safeguards along the lines of those that govern public procurement, because after all, they are expending public funds. 
• Without substantive reforms in the DPP, there are likely to be more controversies and perceptions of crony capitalism. 
• The substantial amount of taxpayer’s money is meant for the development of an indigenous defence sector might not find its way back that make worse.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

UPSC Prelims Questions: 

Q.1) LCA Tejas, recently in news, is a/an indigenously designed
a) Combat aircraft
b) Electric motor vehicle
c) High Performance Diesel
d) Solar Cell
Answer: A

UPSC Mains Questions:
Q.1) If the intention is to create a free, open and competitive market, and yet at the same time, ensure that Indian taxpayers aren’t taken for a ride, are the offset guidelines satisfactory?