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If farmers are to be paid remunerative rates, the best way to do it isn't through distorting but by literating the markets

Mains Paper: 3 | Agriculture 
Prelims level: PM-AASHA
Mains level:  By increasing MSP not only help to increase farmers income but also help in economy too. 

Introduction 

• The  recent hiked minimum support prices (MSP) of crops to levels covering at least 1.5 times their estimated production costs.
• The Narendra Modi government seems to be tying itself in knots to implement the decision. 
• There is hardly a month to go for commencement of the kharif marketing season, but it is an ominous sign that most crops — from moong, urad and groundnut to bajra and jowar — are selling at below MSPs even before mandi arrivals are to peak. 
• Initiatives  taken by Devendra Fadnavis administration in Maharashtra forcing even private traders to buy at MSPs, or face a one-year jail term, has had to be withdrawn for its sheer imprudence. 
• Now, the Union Cabinet has approved a new initiative called PM-AASHA.

What is about PM-AASHA

• In short for Pradhan Mantri Annadata Aay Sanrakshan Abhiyan, it basically combines three schemes —

a)    one existing (Price Support Scheme, in which MSP-based procurement of pulses and oilseeds is done by central agencies such as Nafed),
b)    one tried out by Madhya Pradesh and Haryana with limited success (Price Deficiency Payment Scheme), and 
c)    one new (Pilot of Private Procurement and Stockist Scheme, in which private players have also been enlisted for MSP operations).

Outlook of this scheme 

• The intention behind PM-AASHA or even the new 1.5-times-cost MSP formula, the question, however, is again with regard to implementability. 
• When market prices today are consistently ruling below MSPs, it only means that the latter do not reflect supply-demand fundamentals. 
• The responsibility for making purchases at MSP and incurring both sale as well as storage losses would be solely on government agencies.
• How much can these agencies buy and store? 
• Moreover, how will they dispose of these stocks? 
• Nafed is now struggling with the roughly 6.5 million tonnes of pulses and oilseeds it bought in 2017-18 and which is currently being offloaded back into the market at below MSPs. 
• The private corporates are entrusted with procuring on the government’s behalf, they will have to be compensated for losses and not merely paid a service charge of up to 15 per cent on the MSP. 
• And how does the Modi government plan to put in place all these procurement mechanisms under PM-AASHA in the next one month?

Way forward

• If farmers are to be paid remunerative rates, the best way to do it is not through distorting but by liberating the markets.
• Let the farmer grow any crop based on market signals and sell anytime at the going price that traders are willing are pay.
• Simultaneously, introduce competition by allowing anybody from anywhere to buy from any mandi within India, while doing away with all storage and movement restrictions. 
• A truly national market for agricultural produce, coupled with a flat per-acre government payment independent of the crop being grown, is the need of the hour.

UPSC Prelims Questions: 

Q.1)  With reference to Minimum Support Price (MSP), consider the following statements:
1. It is a market intervention by the government to protect farmers against any sharp fall in prices of agricultural produce.
2. It is fixed on the basis of recommendations of Cabinet Committee on Economic Affairs.
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:  A

UPSC Mains Questions:
Q.1) How increasing MSP not only help to increase farmers income but also help in economy too?
 

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A higher policy burden

Mains Paper: 2 | Education 
Prelims level: Institute of Eminence 
Mains level:  Autonomy to the education institution 

Introduction :

• Top-down, centrally managed policies oppress India’s education sector. More autonomy, radical restructuring of goals, enlightened leadership are necessary for a turnaround.
• Two recent events seem like missteps in India’s efforts to chart a mature and productive path in the realm of higher education. 
• The first of these events is the effort of the government to produce an education policy and the second is its intent to foster “institutions of eminence”.

Restructuring the education institution :

• The IITs were created with exactly the same intentions and in a similar manner. 
• But the performance of the IITs has been largely uninspiring. 
• Three factors can be blamed for this situation — too much government control, largely mediocre faculty and no programme or activity to connect with India’s challenges and needs so as to inspire students.
• As an example of government meddling, consider this amusing two-line cryptic resolution adopted for all the IITs a year ago by the IIT Council
• The public at large perceives an IIT to be a sort of super institution meant for talented children.
• And they do attract very smart students too.
• But smart students must be matched by highly inspiring faculty, and by creating programmes of learning that are in tune with societal challenges.
• Further, these institutions must be given time, freedom and an enlightened leadership to mature.
• In the initial phase, the IITs failed to meet the urgent need of grasping the special aspirations and requirements of an independent India.
• They failed to invent and innovate to address the country’s needs. Not one IIT aided our space or nuclear programmes.
• When it came to building bridges, roads or dams, there was hardly any creative input from any IIT.

About IIT education policy :

• Each of the first five IITs was, in the initial years, tethered to a well-known institution abroad and did adopt in limited ways some aspects of a reasonable curriculum. 
• But it was not done in a well-thought out manner that would have allowed originality to flourish in the Indian context.
• The one change, dictated by the American model, which the IITs adopted to break the colonial mould, was to have a semester system. 
• But they failed to allow their students to truly imbibe and flourish under a trans-disciplinary system, which the semester system can allow with greater ease than an annual mode of examination.
• Over time, the faculty tended to settle into harmonious mediocrity with the usual, but few, outstanding exceptions. 
• The tragedy is these exceptions failed to create lasting and great traditions.
• Also, the IITs and the government neglected to put in place a major virtue of the American system that attracts, recognises and rewards good faculty at the global level. 
• The IITs also failed to recognise that diversity is the key to survival and they could not develop outstanding qualities and features that would distinguish one IIT from another. 
• Because the IITs have a joint entrance examination that looks for identical attributes and abilities in every aspirant. 
• The entrance examination does not differentiate between any special qualities that would make the abilities required of a civil engineering aspirant stand out and be recognised as different from the abilities needed of an electrical engineering aspirant.

Indian institution comparison with global ones :

• Contrast this with MIT, Harvard and Caltech, which admit students into their respective engineering programmes but through differing selection processes even while relying a great deal on SAT. 
• Incidentally, SAT itself has come under criticism in recent times. 
• Another illustration of their diversity is how these notable US institutions teach freshman calculus, but in ways that differ from each other. 
• Has any of our IITs created an economically powerful entrepreneurial ecosystem in its immediate neighbourhood or elsewehere? 
• No path-breaking knowledge-based idea of practical import, such as the search engine Google, seems to have emerged from the IITs. 
• They are largely teaching institutions and if someone of the stature of N R Narayana Murthy bemoans the inadequacies of IIT graduates, then we need to be worried.

Indian universities are underperforming :

• Indian universities have an even more disappointing track record. 
• Their only major innovation in recent years is the adoption of a semester mode exemplified by the fact that, more often than not,
• The courses they teach have been mechanically split from an annual mode into two halves. 
• It would have been a magical transformation had they taken advantage of the semester system to breed a pedagogy that engenders trans-disciplinary learning blended with project-based activities for real-world knowledge acquisition and creation. 
• The best way to gauge the lackluster quality of Indian universities is to ask if any Nobel laureate from any part of the world has ever expressed willingness to join any of our universities as faculty.
• The restrictive and overbearing policies of government agencies have made true innovation and experimentation near impossible. 
• For instance, the choice-based credit system, a mutilated version of an American concept, has forced universities to collectively drop diversity and adopt a largely common curriculum imposed from above, compelling them to sink to abysmal levels. 
• Universities are failing at an alarming pace in their responsibility to foster research.
• India has consistently put its money on specialised research institutes that lack students and do not deliver the way a university can, as in the US. 
• Though India has not paid attention to is the use of government funding agencies to raise and foster high quality research. 
• These funding agencies have not nudged research in the universities towards the needs and challenges of the nation, and of society, as much as they could have.

Way forward :

• We must not fail to recognise that the American system of higher education has generated its own set of serious problems and drawbacks. 
• So, India must chart its own original path. Some valuable lessons could be imbibed from our own heritage.
• In modern times, much can also be learned from the Indraprastha Institute of Information Technology at Delhi. 
• It is truly autonomous, serves the society well, has good and wise leadership and faculty and students to match.
• Its outstanding record may be because two successive state governments wisely left it alone and did not burden it with any policy.

UPSC Prelims Questions: 

Q.1)  Which of the following is the main objective of Rashtriya Avishkar Abhiyan (RAA)?
(a) To promote Research and Development in higher educational institutions.
(b) To inculcate love for science and mathematics among school children.
(c) To increase the number of women scientists in the country.
(d) To promote scientific temper among all people.
Answer:  B

Mains Questions:
Q.1) More autonomy gives the more improvement to the higher education institution in India.— examine the statement.

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Cleaning Ganga

The government of India is intended to expedite the process of cleaning river Ganga in mission mode. Prime Minister launched Namami Gange, which involve cleaning of Ghats, ridding the river of biological contaminants, improving rural sanitation and promoting afforestation in the river basin.  The NMCG has a ₹20,000-crore, centrally-funded, non-lapsable corpus and consists of nearly 288 projects.

 
 River Ganga flows through five states of India. The states include Uttarakhand, Uttar Pradesh, Bihar, Jharkhand and West Bengal. Around 80% of the pollutants in Ganga is due to untreated sewerage and 20% is because of industrial pollutants from tanneries in Kanpur and paper mills in UP.

Slow Progress :

• The CAG report titled "Performance Audit of the rejuvenation of river Ganga" revealed the deficiency in financial management, planning, implementation and monitoring. The report stated that the government failed to achieve 100% target of "Open defecation Free" villages in the river basin area.
• Only 35 of the proposed 86 sewerage treatment plants (STP) have been completed. The report noted that this meant unusually high level of fecal coliform in the water.
• An amount of Rs. 20, 601 crores had been sanctioned under the program for 193 projects. Only 20% of this amount was actually spent. 
• The river flow has decreased because dams have been built on its tributaries like Alaknanda, Mandakini and Bhagirathi, in the upper reach. Another reason for this is that water is diverted towards Delhi at Haridwar and exploitation of ground water in river basin for irrigation  by building lift canals continues to be unabated. 
• Recently National Green Tribunal (NGT) pulled up the government for its insufficient efforts and declared the flow between Haridwar and Unnao unfit for drinking and bathing. 

Way Forward :

It is a high time that the government should take a comprehensive look at the interconnection between policies such as subsidies, electricity consumption, power use patterns, industrial development and urbanization plans. All of this takes creativity, innovation, discipline, transparency and strong leadership. The cleanup of the Thames in London and Rhine in Europe suggest that it is possible. The Ganga's water will ultimately depends on the actions of millions of Indians who depends on it for nutrition, electricity and spiritual fulfilment.  

Multiple Choice Question

Q. Which of the following is true regarding National Mission for Clean Ganga (NMCG)?
a. NMCG is the implementing agency is the implementation wing of National Council for Rejuvenation, protection and management of river Ganga.
b. It was established in 2015 as a registered society under Societies Registration Act, 1860.
1. only a
2. only b
3. Both a and b
4. Neither a nor b
 
Answer- 1 (only a).

Hint- NMCG was established in 2011 as a registered society. 

There is a chance of a question related to cleaning Ganga in GS paper 2. The format may be--
 
Q. Discuss the Namami Gange and National Mission for Ganga (NMCG) programs and causes of mixed results from the previous schemes. What quantum leaps can help preserve the river Ganga better than incremental inputs?
 
Hint- This question has been asked in UPSC Mains 2015 examination. Here we have to inclined towards solution more than problems. Start with the Namami Gange project and then switch towards the problems river Ganga face in different states and then talk about solution. 

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Who really creates value in an economy?

Mains Paper: 3 | Economic Development 
Prelims level: 2008 global financial crisis 
Mains level:  Indicators create the value in an economy. 

Introduction  :

Value is determined collectively, by business, workers, strategic public institutions, and civil society organizations.

• After the 2008 global financial crisis, a consensus emerged that the public sector had a responsibility to intervene to bail out systemically important banks and stimulate economic growth. 
• But that consensus proved short-lived, and soon the public sector’s economic interventions came to be viewed as the main cause of the crisis, and thus needed to be reversed. 
• This turned out to be a grave mistake. In Europe, in particular, governments were lambasted for their high debts, even though private debt, not public borrowing, caused the collapse. 
• Many were instructed to introduce austerity, rather than to stimulate growth with counter-cyclical policies. 
• The state was expected to pursue financial-sector reforms, which, together with a revival of investment and industry, were supposed to restore competitiveness.

Is the any significant development after the crisis?

• There is too little financial reform actually took place, and in many countries, industry still has not gotten back on its feet. 
• The profits have bounced back in many sectors, investment remains weak, owing to a combination of cash hoarding and increasing financialization, 
• With share buybacks to boost stock prices and hence stock options also at record highs.
• Growth requires a well-functioning financial sector, in which long-term investments are rewarded over short-term plays.
• In Europe, a financial-transaction tax was introduced only in 2016, and so-called patient finance remains inadequate almost everywhere. 
• As a result, the money that is injected into the economy through, say, monetary easing ends up back in the banks.
• The predominance of short-term thinking reflects fundamental misunderstandings about the state’s proper economic role.
• Contrary to the post-crisis consensus, active strategic public-sector investment is critical to growth. 
• That is why all the great technological revolutions were made possible by the state acting as an investor of first resort.

To address the problem 

• The popular assumption is that the state facilitates wealth creation, but does not actually create wealth. 
• Business leaders, by contrast, are considered to be productive economic actors—a notion used by some to justify rising inequality. 
• Because businesses’ (often risky) activities create wealth— and thus jobs—their leaders deserve higher incomes. 
• Such assumptions also result in the wrong use of patents, which in recent decades have been blocking rather than incentivizing innovation.
• The patent-friendly courts have increasingly allowed them to be used too widely, privatizing research tools rather than just the downstream outcomes.
• If these assumptions were true, tax incentives would spur an increase in business investment. 
• Instead, such incentives —such as the US corporate-tax cuts enacted in December 2017—reduce government revenues, on balance, and help to fuel record-high profits for companies, while producing little private investment. 
• In 2011, Warren Buffett pointed out that capital gains taxes do not stop investors from making investments, nor do they undermine job creation.
• A net of nearly 40 million jobs were added between 1980 and 2000,” he noted. 
• These experiences clash with the beliefs forged by the so-called Marginal Revolution in economic thought, when the classical labour theory of value was replaced by the modern, subjective value theory of market prices. 
• In short, we assume that, as long as an organization or activity fetches a price, it is generating value.
• When value is determined not by specific metrics, but rather by the market mechanism of supply and demand, value becomes simply “in the eye of the beholder” and rents (unearned income).
• It become confused with profits (earned income); inequality rises; and investment in the real economy falls.

Conclusion 

• A decade after the crisis, the need to address enduring economic weaknesses remains. 
• That means, first and foremost, admitting that value is determined collectively, by business, workers, strategic public institutions, and civil society organizations.
• The way these various actors interact determines not just the rate of economic growth, but also whether growth is innovation-led, inclusive, and sustainable. 
• It is only by recognizing that policy must be as much about actively shaping and co-creating markets as it is about fixing them when things go wrong that we may bring this crisis to an end. 
• Yet we continue to romanticize private actors in innovative industries, ignoring their dependence on the products of public investment. 
• The only way to revive our economies fully requires the public sector to reprise its pivotal role as a strategic, long-term, and mission-oriented investor. 
• It is vital to debunk flawed narratives about how value and wealth are created.

UPSC Prelims Questions: 

Q.1)  With reference to economy, what does the term de minimis level refer to?
(a) It is the minimum level of special drawing rights (SDRs) that has to be maintained by IMF memebers.
(b) It is the minimal amounts of domestic support that are allowed even though they distort trade.
(c) It is the minimum level of capital required for a foreign bank to operate in India.
(d) It is the minimum amount of trade required for a country to get status of Most Favoured Nation (MFN).
Answer:  B

UPSC Mains Questions:
Q.1) Who really creates value in an economy?

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(VIDEO) New India of Atal BJP (अटल भाजपा का नया भारत )- Lok Sabha TV Insight Discussion

Topic of Discussion: New India of Atal BJP (अटल भाजपा का नया भारत )- Lok Sabha TV Insight Discussion

(VIDEO) Harmful Drugs Banned : Rajya Sabha TV Big Picture Debate

Topic of Discussion: Harmful Drugs Banned : Rajya Sabha TV Big Picture Debate

Kerala Flood

Kerala bears to brunt of heavy rainfall and flood in August this year. This rainfall is considered as the highest August rainfall in the living memory. 
However, if we see it in larger meteorological event, this year's rainfall amount is decreasing over the last decade. Contrary to this, frequency of extreme rainfall events is increasing. The primary reason for the increase in extreme events are global warming and climate change. 

Reasons of Kerala flood : 

1. August in Kerala is regarded as the month of declining monsoon, saw a distinct peak, the highest over Long Period Average (LPA). This is one of the primary reasons for extensive flooding and associated damages.
2. The frequent formation of pressure lows and depressions over the north-west Bay of Bengal, their movement over the mainland and their further intensification caused an increasing flow of westerly and South-western winds over the Arabian sea along and off the Kerala coast. In addition, the frequent formation of low pressure over the mainland cause flow of equatorial monsoon winds towards the land. These strong wind interact with western ghats and caused rainfall.
3. On contrary to the IMD's forecast of neutral or negative Indian Ocean Dipole (IOD), the occurrence of positive IOD causes heavy downpour in the end of July.

4. Another major factor is a positive Equatorial Indian Ocean Oscillation (EQUINOO).
5. Until the end of July, reservoirs were close to the full reservoir level. When the fresh onslaught of rain began, reservoirs had no buffer storage capacity to accommodate fresh inflows. 
6. There was also a lack of appropriate water management strategy. 
7. Unlike the other river basins elsewhere, Kerala's rivers are minor and unlike having a few days to take appropriate actions elsewhere, here the banks began to be breached within a day of the discharges and caused flooding.
8. Kerala does not figure in the Central Water Commission's (CWC) flood forecasting network of stations. Water, being a state subject, CWC does not establish a station unless a state makes a request to the center for the same.
9. Human causes-- Haphazard urban growth, destruction of the ecology of the western ghats, that added to this by landslides. 

Why this Havoc :

According to the Chief Minister of Kerala, there are three reasons why the disaster causes more problems in Kerala than any other state--
 
i. The high population density of Kerala which is 860, way larger than the national average of 382.
Ii. Over 10% of the area in Kerala lies below sea-level: 41 rivers flow into the Arabian sea.
Iii. There are 80 dams and separate catchment for each of them.

Way Forward :

Eminent ecologists Madav Gadgil who headed the western Ghat Ecology Expert Panel (WGEP) recommended to bring several areas in Kerala under Ecologically Sensitive Zone (ESZ). These are the areas which were recently ravaged by floods and landslides.
The Gadgil panel recommended a slew of measures for the preservation of natural environment in the ecologically fragile western Ghats, including mining, timber felling, quarrying and on the use of land for non-forest purpose.
There is a need to revisit the recommendations of Gadgil panel. Besides, proper water management strategy need to develop by considering the specificity of landscape in Kerala. In the long run, Paris Agreement need to be followed strictly at global level, so that the repercussions of the climate change can be dealt with. 

Multiple Choice Questions :

Q. What happen in the event of Positive Equatorial Indian Ocean Oscillation (EQUINOO)?
i. In the event of EQUINOO there is decrease in cloud formation in eastern part of India.
Ii. In the event of EQUINOO, there is increase in cloud formation in eastern part of India.
Iii. In the event of EQUINOO, there is decrease in cloud formation in western part of African coast.
Iv. In the event of EQUINOO, there is increase in cloud formation in western part of African coast.
Answer- iv.

Hint- Try to learn these geographical terms through map. 

Q. Recently, Central Water Commission (CWC) joined hand with which giant for flood forecasting and dissemination of flood related information to masses.
i. Microsoft
Ii. Google
Iii. IBM
Iv Yahoo
Answer- ii.

Hint- Easy Current affair topic. There is an increase in the number of these questions in Prelims.

Kerala flood is an important topic in GS III paper mains.

Q. The havoc of Kerala flood is both natural and man made event. What are the causes of Kerala flood?  Examine.
 
Hint-- One can easily write a good answer by going through this article. Try to make a map and include committee names. That will provide one with edge in writing. 

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The importance of trials in stem cell drugs

Mains Paper: 2 | Health 
Prelims level: stem cell drugs
Mains level:  India offering a range of untested and unproven stem cell drugs.

Introduction

• The Federation of Asian Biotech Associations forecast an annual growth rate of around 15%. 
• The new amendments to the Drugs and Cosmetics Rules of India will be in effect from 13 September. 
• The controversies, allegations of irregularities and protests by health workers against the consent and compensation policies for people undergoing clinical trials,
• A new drug policy was overdue to facilitate clinical trials in the country.
• The clinical trials will get quick permissions under the new setup. 
• The fact that only 1.4% of the world’s total clinical trials are carried out in India, despite the country having 17% of the population and 20% of the disease burden of the world, is both disheartening. 
• It also presents a stumbling block to the government’s efforts to overhaul healthcare in the country.
• It is also decidedly strange given that conducting clinical trials is a billion-dollar business field.

The new rule highlights 

• It seeks to regulate stem cell-based products as drugs, excluding autologous stem cells, where individual’s own stem cells are collected and minimally treated before infusing them back into the patient. 
• There are maybe around 300 self-styled clinics offering a range of untested and unproven stem cell drugs in India.
• Now, they will have to first be backed by clinical trials to prove the safety and efficacy of the drugs, and will then require licences to manufacture and sell.
• This maybe a milestone in the history of healthcare in the country.
• Stem cells may be separated from fat tissues of the human body, and then re-introduced into the patient’s body to treat disorders such as arthritis, heart problems, autism, multiple sclerosis and Alzheimer’s. 
• The treatment is often costly, maybe a few lakh rupees in India, and $5,000-$30,000 in the US.

About Pharmaceutical company

• Pharmaceutical company needs to conduct a clinical trial and satisfy the regulatory body of the country concerned with the result in order to get permission to market a new drug. 
• A clinical trial is experimentation involving a new drug in comparison with an existing one or a placebo, which is a treatment with no effect.
• The drug is eventually approved if it is proved to be more effective than the existing treatment (or placebo), and is also more or less safe.
• A clinical trial, ideally having four phases of experimentation, might take a few years to complete. 
• The cost might be millions of dollars, but offers a potential market of billions quite often. Phase I.
• It usually carried out on human volunteers, tests for the safety of the drug, to determine the appropriate dose level for phase II. 
• Both safety and efficacy are tested on patients in phase II, and only the potentially safe drug doses are passed on to phase III.
• After phase III, if the company finds the drug dose to be fairly safe and effective, it submits the report containing details of the three phases, including statistical analyses, to the regulatory body of the country concerned. 
• If the regulatory body is satisfied with the details, it allows the drug to be commercially manufactured. 

About Indian stem cell industry

• A 2012 study by Yes Bank and the Federation of Asian Biotech Associations forecast an annual growth rate of around 15%. 
• According to the India Stem Cells Market Forecast and Opportunities, 2020 report, by the pharma and healthcare consultant Phamaion, 
• The stem cells market in India is anticipated to grow at a compound annual rate of over 28% between 2015 and 2020 because of government and private investments, growing industry focus on stem cell research, rising awareness about stem cell banking, and evolution of new stem cell therapies. 

Conclusion 

• Stringent regulations might curtail the growth rate initially, and clinical trials for the therapies will certainly need substantial time and money.
• However, safe and efficacious therapies will evolve more efficiently, and potentially unsafe and non-efficacious ones will vanish from the market. 
• The desired ethical purpose would be served.

UPSC Prelims Questions: 

Q.1)  Differentiation potential of stem cells specifies
A.    stochastic differentiation
B.    asymmetric replication
C.    potency
D.    self-renewa

Answer:  C

UPSC Mains Questions:
Q.1) What are the importance of trials in stem cell drugs?

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The lesson not learnt after the financial crisis

Mains Paper: 3 | Economy 
Prelims level: global financial crisis
Mains level:  Preventing a financial crisis

Introduction 

• The 10th anniversary of Lehman Brothers filing for the largest-ever bankruptcy in the US. Few economies were unaffected by the subsequent global financial crisis (GFC) and India was no exception.
• A quick review of India’s pre- and post-crisis experience would be instructive in order to focus on a key issue currently affecting the rupee.
• This issue appears to have escaped the collective wisdom of Indian policymakers.
• The GFC punctuated India’s best-ever multi-year growth performance beginning in 2003. 
• Economic growth broke away from the trend by jumping to 8.1% in 2003-04 (India’s fiscal year ends on 31 March), and averaged a stunning 9.2% annually between 2003-04 and 2007-08.
• It peaked at an unprecedented, and unsustainable, 10.2% in FY08.

From India’s point of view

• The unexpected jump in India’s growth was powered by a propitious mix of strong global growth, surge in global liquidity (thanks partly to dollar depreciation), and India’s favourable domestic factors. 
• India wasn’t the only economy to post impressive growth in the years running up to the GFC.
• The International Monetary Fund (IMF) calculates that world gross domestic product (GDP) growth averaged an unprecedented 5.1% annually in 2003-07, with all regions, including Sub-Saharan Africa, posting acceleration in growth. Essentially, the mother of all global liquidity cycles lifted all economies, 
• In despite of a manifold increase in international crude oil prices. 
• India’s impressive investment-led growth collapsed to 4.2% in 2008-09 as the full impact of the GFC was captured. 
• The  healthy fiscal and external balances offered room for a coordinated aggressive mix of fiscal and monetary response. This, along with improving global risk appetite following unconventional quantitative easing by key central banks, pushed up growth to 8.8% and 10.8% in FY10 and FY11, respectively. 

Important highlight of growth factor 

• The rebound was unsustainable and growth plunged, to 6.7% in FY12. 
• The timely and sufficient withdrawal of the expansionary fiscal-monetary mix that had cushioned the hit from the GFC contributed to sharply higher inflation and a related rush to hoard gold (best thought of as a form of capital flight). 
• The current account deficit (CAD) blew out, to an unsustainable high of 4.8% of GDP in FY13, despite the deceleration in growth in FY12 and FY13.
• Policymakers ignored the glaring warning sign of unsustainably high CAD being financed substantially by volatile capital inflows. 
• This set the stage for the rupee to visit the ICU during “taper tantrums” in 2013. The rupee recovered following the Reserve of India’s (RBI’s) cloyingly sweet lollipop to non-resident Indians (NRIs). 
• Frankly, few would have anticipated the current talk of raising money from NRIs so soon after the 2013 debacle. 
• While India is in better shape today than 2013, why is there nervousness over the rupee’s depreciation and why does it fall out of bed every few years? 
• Global factors alone, often the first line of defence for politicians, don’t offer the complete answer. 
• The rupee dynamics since 2003 have been an interplay of global liquidity, crude prices, and India’s GDP growth and inflation relative to its trading partners.
• Between 2003 and 2007, the rupee was under tremendous pressure to appreciate despite a dramatic jump in crude prices. 
• As India’s subsequent experience proved, such an outcome cannot be relied upon. 

Liquidity effect 

• Liquidity cycles balloon gradually and it is a mug’s game to precisely time their event-driven sudden reversal. 
• Consequently, countries that run chronic CAD have to be particularly careful. 
• Their policymakers must avoid being swayed by propaganda of a new paradigm that prompts adopting a riskier strategy to achieve the “entitlement” of higher growth. 
• The current palpitations over the rupee’s outsized, but necessary, depreciation is largely a script that has played out before: 
• A widening CAD, nearing 3% of GDP, that is inadequately financed by long-term stable foreign capital.
• This mix makes the economy vulnerable to a reversal in capital inflows. 
• That the widening in CAD deficit is in the absence of a sustained upturn in investment makes the situation more precarious.
• Policymakers, bureaucrats and politicians need to appreciate that the rupee’s depreciation is part of the solution, not part of the problem. 
• As preventing depreciation or tapping NRI money whenever the rupee comes under meaningful pressure misses the basic point that the problem isn’t just a one-time issue of availability of dollars. 
• India’s macro stability in recent years has been a warrant on crude prices and global liquidity. 

Way forward

• Macro stability isn’t just a fair weather outcome.
• The challenge for India is to finance aspirational growth of 8% or higher on a sustained basis while ensuring macro-prudential stability, including by limiting CAD to, say, 2-2.5% of GDP with stable financing.
• This doesn’t appear to have been in focus or else policymakers wouldn’t be caught off-guard by the hit to the rupee. 
• Rupee’s depreciation ride isn’t over even if it finds some near-term respite. 
• Tightening in global liquidity is on the cards, as is improvement in India’s growth trajectory. 
• The twin deficits are already heading in the wrong direction, and the inflation risk in the next couple of years is being underappreciated.
• The RBI will need to respond with a series of rate hikes. The latest punch to the rupee is just yet another wake-up call.

UPSC Prelims Questions: 

Q.1)  Which of the following economic reforms would help in curtailing 'unnatural inflation', which arises due to supply side constraints?
1. GST act
2. Model APMC act
3. FDI in multibrand retail
Select the correct answer using the codes given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer:  D

UPSC Mains Questions:
Q.1) The rupee is yet another wake-up call to reassess sustainable growth dynamics. Critically examine the statement.

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Sage advice: on Raghuram Rajan's suggestions 

Mains Paper: 3 | Economic Development 
Prelims level: Non-performing assets
Mains level:  Preventing a financial crisis 

Introduction 

• Former RBI Governor Raghuram Rajan’s note of caution on the next financial crisis that could be building up needs to be taken in all seriousness. 
• In his note to Parliament’s Estimates Committee on bank non-performing assets (NPAs), Mr. Rajan has flagged three major sources of potential trouble.
• Mudra credit, which is basically small-ticket loans granted to micro and small enterprises; lending to farmers through Kisan Credit Cards; and contingent liabilities under the Credit Guarantee Scheme for MSMEs, run by the

Small Industries Development Bank of India. 

• The disbursement under Mudra loans alone is ₹6.37 lakh crore, which is over 7% of the total outstanding bank credit. 
• These loans have been sanctioned under the Pradhan Mantri Mudra Yojana, which aims to ‘fund the unfunded’, and is a signature scheme of the NDA government. 
• Given that these are small loans up to ₹10 lakh each, with the borrowers mostly from the informal sector, banks have to monitor them very closely.
• It is debatable whether banks have the resources and manpower to do this when they are chasing the bigger borrowers for business and, increasingly these days, recoveries. 
• The risk is that these small-ticket loans will drop under the radar and build into a large credit issue in course of time.
• Mr. Rajan’s advice on loan waivers has been made by him and others in the past. But the political class has chosen to turn a deaf ear to this advice, vitiating the credit culture and creating a moral hazard where farmer-borrowers assume that their loans will invariably be waived off. 

Restructuring the banking policy 

• The former RBI Governor has strongly defended the RBI against criticism.
• He rightly termed as “ludicrous” the allegations that the economy slowed down because of the RBI.
• Recognition is the first step in a clean-up, and unless banks are cleaned of their non-performing loans, they cannot make fresh loans. 
• The Central government should also take note of some forward-looking statements that Mr. Rajan has made on the governance of banks. Among his suggestions to avert a recurrence of the current mess are, professionalising bank boards with appointments done by an independent Banks Board Bureau.
• By inducting talent from outside banks to make up for the deficit within; revising compensation structures to attract the best talent; and ensuring that banks are not left without a leader at the top. 
• It is a comment on the state of our polity that despite the important issues that Mr. Rajan raised, political parties have chosen to pick only the points that are convenient to them.
• It’s about the period when these bad loans were made and the purported inaction over a list of high-profile fraud cases highlighted by him.

UPSC Prelims Questions: 

Q.1)  Which among the following are steps taken by the Government of India to promote financial inclusion?
1. Promoting Basic savings bank deposit accounts (BSBDAs)
2. Business Correspondent-Information and Communication Technology (BCICT) transactions
3. Atal pension yojana
4. Pradhan Mantri Mudra Yojana
Select the correct answer from the codes given below.
(a) 1 only
(b) 1 and 2 only
(c) 1, 2 and 4 only
(d) 1, 2, 3 and 4

Answer:  D

UPSC Mains Questions:
Q.1) What are the suggestion made by Raghuram Rajan to prevent a financial crisis?

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Topic of Discussion: Public Interest litigation (PIL) Under Scrutiny : Rajya Sabha TV Big Picture Debate

Avoidable suspense: on Indian-origin FPIs 

Mains Paper: 3 | Economic development and orgranisation 
Prelims level: Foreign portfolio investors
Mains level:  SEBI could have handled better the issue of Indian-origin foreign portfolio investors. 

Introduction 

• Foreign investors in the Indian market are used to unexpected twists in the regulatory landscape, but they seldom talk tough in the public domain.
• It was unusual for a group of foreign portfolio investors (FPIs) to openly appeal to the Prime Minister for an urgent intervention last Monday. 
• The Asset Managers Roundtable of India (AMRI) warned that India’s booming stock markets will be in for a tight bear-hug and the embattled rupee.
• It could face even greater pressure if an April 10 diktat from the Securities and Exchange Board of India is not scrapped.
• The SEBI circular, they argued, disqualifies about $75 billion of portfolio investments into India made by FPIs backed by domestic institutions, NRIs, Persons of Indian Origin and Overseas Citizen of India card-holders. 
• The total portfolio investments in India’s financial markets are estimated at $450 billion. The circular, issued to enhance the Know Your Client norms for FPIs, ended up imposing a blanket ban on certain types of investments where NRIs, PIOs or OCIs were investors (beyond a threshold) or even served as senior managing officials of these funds. The circular delegates the task of identifying high-risk jurisdictions, with tighter KYC norms, on custodian banks.

Recommendations by SEBI 

• Last week, SEBI called AMRI’s warning as “preposterous and highly irresponsible”. 
• Yet, by the weekend the H.R. Khan Committee set up by SEBI recommended changes that may be made to the regulator’s directive, addressing most of the concerns raised by the FPIs.
• The panel’s report clarified that NRIs, OCI card-holders and resident Indians can manage the investments of any FPI registered with SEBI and, more importantly, hold up to 50% of an FPI’s assets under management. 
• It would be determined by SEBI while applying the beneficial ownership test. 
• The committee said the deadline for complying with the circular, which was already extended from August 31 to December 31, must be extended further, and funds with investments breaching the final thresholds that the regulator decides upon should be granted 180 days to unwind positions.

Way forward 

• SEBI has now announced public consultations before it finalises these norms, and in the process created some breathing space for such funds to remain invested on Dalal Street. 
• No one should have a grouse with attempts to curb round-tripping of illegal domestic wealth into the Indian market through the foreign investments route. 
• But treating all FPIs with Indian-origin managers as potential conduits of illicit money is unwise. 
• SEBI could have managed all of this as an independent regulator had it held a timely dialogue with stakeholders before framing these norms. 
• Such policy uncertainty and sharp about-turns will do little to enhance India’s credibility among global investors.

UPSC Prelims Questions: 

Q.1)  With reference to the Market Intervention Scheme (MIS), consider the following statements:
1. It is a price support mechanism for procurement of perishable and horticultural commodities in the event of a fall in market prices.
2. It is implemented on the request of State Governments.
3. It is implemented when there is at least 10% increase or decrease in production over the previous normal year.
Which of the statements given above are correct?
(a) 1, 2 and 3
(b) 2 and 3 only
(c) 1 and 2 only
(d) 1 and 3 only

Answer:  A

UPSC Mains Questions:
Q.1) How SEBI could have handled the issue of Indian-origin foreign portfolio investors to more effectively?

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Encouraging young minds 

Mains Paper: 2 | Issues relating to Education From UPSC perspective, the following things are important:
Prelims level: Education ecosystem 
Mains level:  Exploring scientific ideas is difficult in India’s education ecosystem 

Introduction

• Education system in India hardly played any role in moulding the child prodigy and this was also rather the case with Manjul Bhargava (Fields medal 2014).
• Subhash Khot, won the Rolf Nevanlinna Prize in 2014, had more of an Indian education — a bachelor’s degree in computer science at IIT Bombay.
• The question, therefore, is, why has our education system not produced any Fields medalists, especially when there is no dearth of talent?

Loopholes in education system 

• The the opportunities and training that these talents receive — or fail to receive rather the lack of these.
• India devoted to training students of mathematics and identifying and nurturing talent is the Mathematics Training and Talent Search, which was started 25 years ago,
• In 1993. There are also programmes that train students to compete in the Mathematics Olympiad.
• Mr. Khot is a two-time International Olympiad silver medallist.

India and France a comparison

• France population close to 6.5 crore, has about 3,000-4,000 scientists.
• It also boasts of 12 Fields medallists.
• This is comparable to the U.S., which has much more in terms of resources, according to Sinnou David, a mathematician and professor at Sorbonne University, France. 
• The existence of schools like the École normale supérieure, in Paris, where a number of Fields medallists were trained.
• But one cannot simply create such schools out of thin air. 
• They must be nested in a balanced network of universities, teacher education systems, and most importantly, a solid base in school education.

Conclusion

• It’s claiming that such honours are not what India needs now. 
• It while top prizes are not themselves a solution to all problems that beset education in India,
• They remain a characteristic of a healthy educational ecosystem. 
• Only such an ecosystem can create enough space for young minds to explore abstract mathematical and scientific ideas freely and in turn challenge the boundaries of existing knowledge.

UPSC Prelims Questions: 

Q.1)  With reference to Integrated Child Development Services (ICDS) scheme,consider the following statements:
1. It aims to improve the nutritional and health status of children in the age-group 0-6 years.
2. Pregnant and lactating mothers form a target group of the scheme.
3. District health centres are used for providing all services under the Scheme.
Which of the statements given above are correct?
(a) 1, 2 and 3
(b) 1 and 2 only
(c) 1 and 3 only
(d) 2 and 3 only

Answer:  B

Mains Questions:
Q.1) Exploring scientific ideas is difficult in India’s education ecosystem.

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No, chief minister

Mains Paper: 2 | Governance From UPSC perspective, the following things are important:
Prelims level: National Register of Citizens
Mains level: Insensitively implemented in Assam, extension of NRC to other states would only magnify a disturbing situation.

Introduction

• Honorable Chief Minister of Assam Sarbananda Sonowal has called for the National Register of Citizens to be extended to other states.
• There is no logical basis for broadening its scope, since the demographic change and social and political effects of large-scale migration across a porous border are not as keenly felt elsewhere.

What are the effects by implementing this?

• The only effect of CM Sonowal’s appeal, which he made at a seminar in Delhi, might be to turn a regional matter into a national issue for the general elections. 
• Moreover, his was not a standalone intervention.
• In the span of 48 hours, this was the third notable statement highlighting the NRC with a view to elections. 
• The day before, at the BJP national executive, party president Amit Shah had reportedly praised the work done by the Assam government and the Centre towards implementing the NRC.
• This is  the diametric opposite of the soothing noises emanating from the government, promising ample scope for citizens to establish their bona fides.

Lesson from Assam 

• The people of Assam have just cause to be sensitive to illegal immigration, and its government has a duty to address their concerns.
• However, the exercise is being conducted in an insensitive manner, and the extension of the NRC to other states.
• The public have not articulated anxieties about immigrants, would amplify a local embarrassment into a national disgrace.
• Giving people the right to prove their citizenship is not as large-hearted as it sounds, since they are presumed guilty until they can make their case. 
• Not everyone has the ability or the wherewithal to do that.

Conclusion 

• Apart from humanising the appeal process, the BJP must also try to be of one mind on the matter.
• It cannot have the chief minister of Assam giving assurances against summary deportation while office-bearers in Delhi threaten to deport ruthlessly. 
• Assam has many other problems besides illegal immigration, which the chief minister may wish to apply himself to, instead of offering the NRC to the rest of India.
• The nation has a surfeit of election issues, which demand the attention of the voters. 
• There is really no need to inflict yet another issue on them, especially one that has little meaning outside Assam.

UPSC Prelims Questions: 

Q.1)  With respect to the Preventive detention, which of the following statements is/are not correct?
1. The Constitution provides protection against arrest under a preventive detention law only to the citizens.
2. Both the Parliament and state legislatures can make a law regarding prevention detention.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer:  A

UPSC Mains Questions:
Q.1) What are the pros and cons if NRC will implement to others states like Assam?
 

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National Register of Citizens (NRC)

India has a large swathe of land that make border with many countries. Due to uneven landscape it is virtually impossible to fence or seal the border completely. In past, the porous border causes lots of illegal migration from various countries, especially from Bangladesh and Myanmar to Assam. The National Register of Citizens (NRC) tries to deal with the major problem of illegal migration from Bangladesh in Assam. 
NRC takes into account the exact number of outsiders in the population of the state. The idea of getting rid of "outsiders" has two implications-
1. By adoption of the draft NRC, the illegal migrants would be chucked out.
2. Those in the draft get the stamp of identity from what is considered a due and impartial process.

Outsiders in NRC:

• A section believe that NRC endorses "son of soil" act that would harm not only the legal identity, but also the dignity and sense of autonomy, thereby questioning their place in larger world. 
• There is a question of morality and humanity with regards to outsiders in NRC is unresolved. The term other is a problematic word.  

Who are outsiders? :

• Citizenship Amendment bill, 2016 lets those from the other side is based on their religion. This bill declares Hindus, Sikhs, Buddhists, Jains, Parsi and Christians fleeing religious persecution from Afghanistan, Pakistan and Bangladesh as not being illegal migrants for the purpose of the Citizenship Act, 1955. It also reduces the time requires for such persons from these countries to obtain citizenship by naturalization from 11 years to 6 years. 
• A Large section believe that this bill tries to remake the notion of Indian citizenship from a secular conception to a religious one and goes against Art 14 of Indian constitution. It is argued if the union govt was genuine about sheltering vulnerable minorities, it should include Baha'is, Shias and Ahmadias, among others, who face persecution in Sunni Muslim majority countries for insufficiently or improperly Islamic. 

Role of Supreme Court:

• Supreme Court has decided that it will judicially oversee the process of updating the NRC which is supposed to help identify Indian citizens residing in Assam in accordance with the Citizenship Act, 1955 and Assam accord. 
• The first draft published in 2017 include only 1.9 crore names (less than 60% of state's population), causing panic among masses but averted on the promise that more names to come. 
• A section considers it non-transparent and questioned the neutrality of presiding judge, Justice Ranjan Gogoi , who himself hails from Assam. 
• It has led to a court that has discarded procedure, caused grievous injury to vulnerable communities and diminished its own credibility through its overreach on matters. 

Way Forward :

• NRC should be made public and create an orderly mechanism for those aggrieved by exclusion to exhaust judicial remedies in accordance with law, without prejudicing their rights in any matter whatsoever. 
• NRC is not a new concept in Asia, and the region saw many crisis in the name of illegal migrants issue. There is a need to include basic human rights alongwith the constitutional mandate. India should present the picture of a peaceful and tolerant nation from the draft. All the stakeholders need to be given a voice, so that an inclusive draft can be made.                                                                                      

Multiple choice Question

Q. What is true regarding NRC
1. The NRC updated periodically since 1951, when it started.
2. NRC being implemented as per the provision of Citizenship Act, 1955 and Citizenship Rule, 2003. 
3.  NRC is being updated in time bound manner after Supreme Court judgment (2014) to incorporate Assam Accord of 1985 in order to tackle the issue of illegal immigration.
 
i. Only 1
ii. Only 1 and 2
iii. Only 1 and 3
Iv. Only 2 and 3
 
Hint-- Sometimes, it matters that you should eliminate the wrong answer. If you don’t know all the things, only by knowing the wrong point one can attempt a question. Here, Only by eliminating 1 point we can get right answer i.e. iv.  Questions related to NRC can also be asked in GS 1 or GS 2 mains examination. There may be a question like--
Q. The implementation of NRC would encourage the "Son of the soil" Act in Assam that will work against Article 14 of the Indian constitution. Examine.
 
Hint-- One can easily write the answer after going through this article. Just try to stick over the demand of the question. And try to end in positive note like the Article do. 

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The problems with India’s land market distortions

Mains Paper: 3 | Agriculture 
Prelims level: Agricultural growth 
Mains level:  Broadening the tax base will not only enable India to improve efficiency in resource use and accelerate growth, but it will also make growth more inclusive.

Introduction 

• India is one of the fastest growing economies in the world.
• Its growth potential has been compromised by resource misallocation, especially when it comes to land.
• India is one of the most land-scarce countries in the world, and demand for land has accelerated with the increase in the pace of industrialization and urbanization.
• But huge distortions in land markets have slowed the pace of growth.
• If these resources could be used more efficiently, India has the potential to achieve double-digit growth.

India Vs U.S. a comparison 

• Indian firms differ enormously in productivity growth compared to the US. 
• The productivity of a US firm in the top decile is twice as high as that of a firm in the bottom decile in manufacturing industry. 
• This is five times greater in India.
• The differences in productivity growth across firms reflect factor market distortions that enable less efficient firms to access more resources.
• It is estimated that productivity growth could increase by more than 50% in India if factor market misallocation in India could be brought down to US levels.
• Firms use three factors of production—labour, land and capital—to produce output. 

Which factor market is most distorted? 

• Conventional wisdom has focused on the labour market as being the most distorted in India. 
• But there are even bigger distortions in the other factor markets.
• Distortions in land markets are much bigger than those in labour markets.
• A comparison of factor misallocation indices at the district level has shown that an increase in the misallocation of all factors is associated with a huge decrease in output per worker in the manufacturing sector. 
• Most of this decline originates from the misallocation of land and buildings.
• This appears to be at the root of much of the misallocation of output, and it accounts for a large share of the differences in productivity.

Does this have repercussions on capital allocation through financial markets? 

• Most bank loans require some form of collateral to guarantee the loan. 
• Land is simply the best form of collateral due to its immobility (i.e. the debtor can’t run off with land).
• While borrowers can often pledge 80% of the land value against loans, for most other forms of fixed investment, 
• The loan-to-collateral value ratio is also substantially lower.
• Misallocation in labour market inputs had no adverse impact on the allocative efficiency of financial loans. 
• The consequent degree of financial misallocation has only worsened over time as large manufacturing firms have moved out from cities and into rural areas in search of more land. 

Other factors 

• Financial misallocation is far greater in the organized manufacturing sector than in the unorganized.
• However, most services tend to be less land intensive compared to manufacturing industry.
• So land distortions have not constrained productivity growth in services. 
• This explains India’s success in services relative to manufacturing. 
• India has many more service tech start-up companies than anywhere else in the world, except the UK and the US.
• The rapid globalization of service, and the fourth industrial revolution, provide new opportunities for India to scale up and achieve explosive growth.
• This does not mean, however, that policy makers can ignore land market distortions in India. 
• The country’s land scarcity is reflected in its land density (people per square kilometre of land areas), which is 450 in India, compared to 148 in China, 36 in the US, and an average of 58 globally.

Land markets is a major issue 

• Distorted land markets are a breeding ground for crony capitalism and political subsidies.
• While the policy focus on improving land administration and regulation is well placed.
• There are bigger growth benefits that can be derived from shifting the policy focus from reducing land “regulatory tax” to increasing land revenue tax.
• This will enable more efficient firms to grow faster and increase the budgetary revenue to maximize finance for development, and additional revenues needed for investments in infrastructure, urbanization, housing, and social

programmes.

• Property taxes share some of the characteristics of land taxes, but generate small revenue.
• In most municipal corporations in India, property tax contributes less than 20% of municipal revenue. In most major cities, nearly 50% of the properties do not pay any tax. 
• It is estimated that non-linear and progressive property and land taxes could almost quadruple revenue to 1% of gross domestic product (GDP) from currently 0.15–0.2%.
• As land and property are visible, land taxes are in principle more difficult to evade than taxes on consumption, income or goods.

Conclusion 

• Broadening the tax base will not only enable India to improve efficiency in resource use and accelerate growth, 
• But it will also make growth more inclusive.
• India is one of most unequal countries in the world. 
• The richest 1% in India own 53% of wealth compared to the richest 1% in the the US who own 37.3% of wealth. 
• Reducing land market distortions is a key step towards making growth more inclusive and achieving double digit growth.

UPSC Prelims Questions: 

Q.1)  Which among the following factors have led to increase in outsourcing of jobs to India?
1. Growth of fast modes of communication
2. Availability of skilled manpower in India
3. Low wage rates of workers in India

Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer:  D

Mains Questions:
Q.1) How removing land market distortion and broadening tax rate can improve India’s growth? 

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The one who reached out to China: On Atal Bihari Vajpayee 

Mains Paper: 2 | International Relations 
Prelims level: India-China relations
Mains level:  In the evolution of India-China ties, Atal Bihari Vajpayee’s contribution was seminal 

Introduction 

• India-China relations have come a long way from the period of enmity and bitterness that followed the 1962 war. 
• Both countries handled the Doklam crisis last year shows that the ties between New Delhi and Beijing are now based on a sound realisation that neither can ignore, much less antagonise, the other. 
• Rather, comprehensive mutual cooperation between India and China is increasingly being seen as an imperative for peace, stability and progress in Asia and the world.

Change in attitude

• In this evolution of India-China ties, one leader who made a seminal contribution was Atal Bihari Vajpayee. 
• A politician in the non-dogmatic mould, Vajpayee was open to learning the lessons of history and, thus, revising his own views from the standpoint of India’s national interests.
• As a swayamsevak of the Rashtriya Swayamsevak Sangh, Vajpayee’s views on Pakistan and China in the 1950s were quite negative.
• As Prime Minister, Vajpayee was a changed man.
• He had come to firmly believe that for India to emerge as a major global power, it must normalise relations with Pakistan (which meant finding a permanent and amicable solution to the Kashmir dispute) and comprehensively improve relations with China (which meant resolving the vexed border problem in the spirit of mutual compromise).

Diplomacy by former PM Atal Bihari Vajpayee

• Vajpayee’s visit to China in February 1979 ended the chill created by the 1962 war.
• It was the first high-level political contact between the two countries after 17 long years. 
• His ice-breaking meeting with Deng Xiaoping, then China’s paramount leader, started a new chapter in India-China relations that has continued till date.
• In a tribute to Deng on his birth centenary in 2004, Vajpayee recalled: “I have pleasant memories of my meeting with Deng Xiaoping. 
• The unfortunate military conflict in 1962, caused by the border dispute, had left a scar on the centuries-old affinity between the two great nations of Asia and the world. I called on him in the Great Hall of People in February 1979.
• I must say that the genuine warmth with which Deng Xiaoping received me — I too reciprocated that warmth in equal measure — helped in overcoming the psychological barrier and looking forward with optimism to a positive new chapter in our bilateral relations.”

A positive approach taken by him 

• The creative solution that Vajpayee and Deng discussed to resolve the vexed border dispute.
• In a nutshell, this: Do not let normalisation of bilateral relations become a hostage to the resolution of the border dispute. 
• Develop bilateral relations in an all-round manner. 
• Simultaneously, try to resolve the border dispute through dialogue and by ruling out the use of force to change the status quo along the Line of Actual Control (LAC).
• In December 1982, when a delegation from the Indian Council of Social Sciences Research called on him in Beijing, Deng referred to his meeting with Vajpayee and reiterated his pragmatic view on the border problem: “When I met your former foreign minister in 1979, I put forward a ‘package solution’ to the problem.
• If both countries make some concessions, it will be settled... The problem between China and India is not a serious one... The problem we have is simply about the border. 
• Both countries should make an effort to restore the friendship that existed between them in the 1950s.
• As long as we go about it in a reasonable way, I think it will be easy for us to settle our border question. Because this question has a long history, you have to take into account the feelings of your people, and we also have to take into account the feelings of our people. 
• But if the two sides agree to the ‘package solution’, they should be able to convince their people.”
• The next major milestone in India-China rapprochement was Prime Minister Rajiv Gandhi’s visit to China in December 1988. 
• Deng told Gandhi, “Welcome... my young friend. Starting with your visit, we will restore our relations as friends. There was unpleasantness at each other. 
• Let’s forget it. We should look forward. Do you agree with me?” Gandhi responded: “Yes.”

A different China

• Vajpayee’s visit to China in June 2003, when I had the honour of accompanying him, witnessed a big breakthrough in bilateral relations. 
• The China he saw this time was very different from what he had seen in 1979. Nowhere was this difference more striking than in the Shanghai skyline. 
• Vajpayee and his delegation went on a boat ride along River Huangpu and what we saw on Pudong district, facing the historic Bund on the other side of the river, were glistening skyscrapers.
• During this visit, India recognised for the first time that the “Tibet Autonomous Region is an integral part of the People’s Republic of China”. 
• Some foreign policy experts, including some serving diplomats, were not in favour of this recognition. 
• They felt it would prevent India from using the “Tibet Card” against China. 
• But the realist in Vajpayee was convinced that his decision, apart from being in line with the unchangeable situation on the ground,
• It was a helpful step towards improving bilateral relations. 
• On its part, the Chinese side recognised Sikkim as a State of the Indian Union.
• The visit also saw an important breakthrough in trade relations — bilateral trade started rising rapidly thereafter.

Conclusion 

• An important upshot of the visit was the decision to fast-track the talks on the border dispute by initiating the framework of Special Representatives of the two Prime Ministers driving the dialogue.
• Accordingly, Vajpayee’s trusted National Security Adviser Brajesh Mishra and China’s State Councillor Dai Bingguo were appointed as the two special representatives. 
• Vajpayee and Premier Wen Jiabao also agreed that the joint work on the clarification of the LAC should continue smoothly, which helped in maintaining peace along the LAC. 
• After Vajpayee’s demise, Wen Jiabao sent a heartfelt condolence, calling Vajpayee an “outstanding politician”.

UPSC Prelims Questions: 

Q.1)  Which of the following best describes tariff and non-tariff barriers?
(a) Tariff is a tax on imports and exports whereas non-tariff is free entry of goods.
(b) Tariff is a general restriction on imports and exports whereas non-tariff is a tax on listed goods and services.
(c) Tariff is a tax on imports and exports whereas non-tariff is a form of non-tax restrictions on trade.
(d) Tariff is for country‟s internal trade whereas non-tariff is for international trade.

Answer:  C

UPSC Mains Questions:
Q.1) Atal Bihari Vajpayee views on India China relations.

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Clemency question: The Rajiv Gandhi assassination case 

 Mains Paper: 2 | Judiciary
Prelims level: Not so important
Mains level:  The release of life convicts should be settled on legal principles alone 

Introduction 

• The seven convicts in the Rajiv Gandhi assassination case released by exercising its statutory power to remit life sentences.
• The AIADMK government in Tamil Nadu has taken recourse to a possible constitutional remedy.
• It has decided to invoke the Governor’s clemency power under Article 161 of the Constitution. 
• The earlier attempt in 2014 to remit the sentences under the provisions of the Code of Criminal Procedure was stayed by the Supreme Court, which ultimately held that the Centre had primacy in according remission to life convicts in a case that involves consultation between the Centre and the State. 
• The Centre formally declined to concur with the State’s proposal in April 2018, saying it would “set a very dangerous precedent and lead to international ramifications”.

Matter of sovereign clemency 

• There is no doubt that the sovereign clemency power vested in the President and the Governor is quite wide, but the Supreme Court has in the past cautioned against its use for political considerations.
• Tamil Nadu Governor Banwarilal Purohit will now have to take a call on the advice of the State’s Council of Ministers and decide whether he is bound by it. 
• The moot question is whether he will pause to consider the Centre’s opinion against releasing those involved in a “diabolical plot” hatched by “a highly organised foreign terrorist organisation” and either reject the proposal or

seek its reconsideration. 

• The Tamil Nadu government believes there is no legal bar on the convicts getting the benefit of Article 161, even though the mercy petitions of some of them have been rejected by both the Governor and the President.
• But the issue has thrown up a number of questions that relate to process. 
• What happens to the four Sri Lankan nationals among the convicts? 
• Will they remain in India or be repatriated? 
• Also, shouldn’t there be a case-by-case evaluation for releasing those sentenced for life? 

Conclusion 

• The idea of locking away a person for life, without so much as a sliver of hope of freedom, is not in keeping with the ideals of a truly modern society. 
• However, it is impossible to ignore the impact of such a decision on capital punishment. 
• When lifelong imprisonment is regarded as a humane alternative to capital punishment, releasing life convicts may only strengthen the demand for the imposition of the death penalty, which would be retrograde.
• Although there are many political considerations behind the move to release the convicts, this case must be decided on the basis of legal principles alone.

UPSC Prelims Questions: 

Q.1)  States and Union territories and their territorial spread are dealt in which of the following Schedule of Indian Constitution?
(a) First Schedule
(b) Second Schedule
(c) Fourth Schedule
(d) Fifth Schedule

Answer:  A [Appointment, posting and promotion of district judge in a state are made by the Governor in consultation with the High Court]

UPSC Mains Questions:
Q.1) Rajiv Gandhi assassination case is a matter of clemency. ~Critically examine. 

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