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THE GIST of Editorial for UPSC Exams : 13 September 2018 (The importance of trials in stem cell drugs)


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 GIST of Editorial for UPSC Exams : 13 September 2018 (The lesson not learnt after the financial crisis)


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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THE GIST of Editorial for UPSC Exams : 13 September 2018 (Sage advice: on Raghuram Rajan's suggestions)


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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(VIDEO) Public Interest litigation (PIL) Under Scrutiny : Rajya Sabha TV Big Picture Debate

(VIDEO) Public Interest litigation (PIL) Under Scrutiny : Rajya Sabha TV Big Picture Debate

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

THE GIST of Editorial for UPSC Exams : 12 September 2018 (Avoidable suspense: on Indian-origin FPIs )


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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THE GIST of Editorial for UPSC Exams : 12 September 2018 (Encouraging young minds)


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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THE GIST of Editorial for UPSC Exams : 12 September 2018 (No, chief minister)


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) : Important Topics for UPSC Exams

 


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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(VIDEO) HIV & AIDS Act, 2017 : Rajya Sabha TV Big Picture Debate

(VIDEO) HIV & AIDS Act, 2017 : Rajya Sabha TV Big Picture Debate

Topic of Discussion: HIV & AIDS Act, 2017 : Rajya Sabha TV Big Picture Debate

THE GIST of Editorial for UPSC Exams : 11 September 2018 (The problems with India’s land market distortions)


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? 

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

THE GIST of Editorial for UPSC Exams : 11 September 2018 (The one who reached out to China: On Atal Bihari Vajpayee)


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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General Studies Pre. Cum Mains Study Materials

THE GIST of Editorial for UPSC Exams : 11 September 2018 (Clemency question: The Rajiv Gandhi assassination case)


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. 

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

(VIDEO) Internet Addiction : Rajya Sabha TV Big Picture Debate

(VIDEO) Internet Addiction : Rajya Sabha TV Big Picture Debate

Topic of Discussion: Internet Addiction : Rajya Sabha TV Big Picture Debate

THE GIST of Editorial for UPSC Exams : 10 September 2018 (The rupee is falling and India should let it)


THE GIST of Editorial for UPSC Exams : 10 September 2018 (The rupee is falling and India should let it)


Mains Paper: 2 | Economic Development 
Prelims level: Currency valuation 

THE GIST of Editorial for UPSC Exams : 10 September 2018 (Bail over jail: on due process)


THE GIST of Editorial for UPSC Exams : 10 September 2018 (Bail over jail: on due process)


Mains Paper: 2  | Governance
Prelims level: On due process

THE GIST of Editorial for UPSC Exams : 10 September 2018 (Dak babu as bank-teller)


THE GIST of Editorial for UPSC Exams : 10 September 2018 (Dak babu as bank-teller)


Mains Paper: 3 | Economic Development 
Prelims level: IPPB 

(VIDEO) ISRO: New Frontiers : Rajya Sabha TV Big Picture Debate

(VIDEO) ISRO: New Frontiers : Rajya Sabha TV Big Picture Debate

Topic of Discussion: ISRO: New Frontiers : Rajya Sabha TV Big Picture Debate

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