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John Bolton goes: On the sacking of U.S. National Security Advisor (The Hindu)

Mains Paper 2: International Relations
Prelims level: Not much
Mains level: Major changes in USA foreign policy in recent years

Context

• Recently, the US National Security adviser has been removed from the office by the President. In this presidential term of Donald Trump, three NSAs, two secretaries of Defence and one secretary of state have been asked to step down.

Key changes in the USA foreign policy

• The USA foreign policy have perceived following major changes since 2017;
• Hostilities with Iran
• Sanction on Russia
• Trade war with China
• Talk with North- Korea
• The US exits from the Human Rights Council and UNESCO.
• The outgoing NSA of the USA is considered for the abovementioned shift in the USA policy.
• The USA was in the process to get the Taliban to accept the ceasefire but it failed, on the other hand, there is no sign of a better relationship with North Korea.

Form India’s perspective

• On the bilateral front, India must build its strategic and economic relationship with the U.S. with a keener eye on the transactional thinking that now prevails in Washington.
• As Prime Minister Narendra Modi heads to the U.S. this month, with a plan to meet the U.S. President, it may be best to keep in mind the words of Mr. Pompeo, a contender for the NSA position; asked about the impact of Mr. Bolton’s exit on U.S. foreign policy, he said the only person who determines who works for Mr. Trump, and what that means for the policy of the U.S., is Mr. Trump himself.
• India would do well to not allow its bilateral relationship with the U.S. or other relationships to be determined by such a fluid dynamic (by the dynamics of the Trump regime).

Way ahead

• However, the secretary of state has indicated a major shift in the US policy towards Iran. He mentioned that the US President may meet Iran President Hassan Rouhani on the sidelines of the United Nation General Assembly session in New York. But this is something Israel does not want.
• In this unpredicting situation, on the bilateral front, India must build its strategic and economic relationship with the U.S. with a keener eye on the transactional thinking that now prevails in Washington.

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Why sedition law has lost meaning (Indian Express)

Mains Paper 2: Polity
Prelims level: Sedition law
Mains level: Validation of sedition law

Context

• Justice Deepak Gupta, a sitting judge of the Supreme Court, noted how the provision in the IPC provides for punishment for seditious speech is misused often than not.
• He wondered whether the time is ripe to have a relook at the law.

Defining freedom of speech

• Article 19(1)(a) of the Constitution guarantees freedom of speech and expression.
• It is subject only to Article 19(2) which saves any law that imposes “reasonable restrictions” on the limited grounds of interests of the sovereignty and integrity of India, the security of the state, friendly relations with foreign states, public order, decency or morality or in relation to contempt of court, defamation etc.

What is the Sedition Law?

• Section 124A of the IPC defines sedition. It makes every speech that “brings or attempts to bring into hatred or contempt or excites or attempts to excite disaffection towards the Government” a criminal offence.
• Such an offence is punishable with a maximum sentence of life imprisonment.
• It is classified as “cognisable” — the investigation process can be triggered just by filing an FIR. A judicial authority need not have to take cognisance.
• It is also “non-bailable” — the accused cannot get bail as a matter of right, but is subject to the discretion of the sessions judge.
• An explanation to the provision clarifies that mere “disapprobation of the administrative or other action of the Government without exciting or attempting to excite hatred, contempt or disaffection, do not constitute an offence under this section.
• A five-judge constitution bench decision of SC in Kedarnath v. State of Bihar (1962) read down Section 124A to mean that only those expressions that either intend to or have the tendency of causing violence are punishable under Section 124A.
• The Court reiterated the Kedarnath law in 2016 in Common Cause v. Union of India and directed all authorities to follow the Kedarnath dictum.

Scope of Fundamental Rights expanded

• The jurisprudence of fundamental rights was expanded through several decisions in R C Cooper v. Union of India (1969), Indira Gandhi v. Raj Narain (1975), Maneka Gandhi v. Union of India (1978), I.R. Coelho v. State of Tamil Nadu (2007) and, in Puttaswamy v. Union of India (2017).
• Each of these decisions establishes that fundamental rights in the Constitution are not to be read as isolated silos but are to be read as if the content of each fundamental right animates the other.
• They tell us that the entire chapter on fundamental rights has also to be read “synoptically”.

Kedarnath judgement

• In Kedarnath case, the court merely tested the intent of the provision under the exceptions to the freedom of speech under Article 19(2) of the Constitution. It did not take into consideration the effect of the right to equality (Article 14) or due process (Article 21).
• Reading of Articles 14, 19 and 21 has evolved jurisprudence of testing legislation curtailing fundamental rights on substantive and procedural reasonableness, necessity and proportionality.
• The requirement of “necessity” comes from India ratifying the International Covenant on Civil and Political Rights in 1976.
• Article 19 of the ICCPR requires speech-limiting state action to be backed by law and to be necessary on the grounds of respect for the rights and reputations of others, national security etc.
• Court also did not examine the provision for “chilling effect” on speech it causes. State action causing psychological barriers in the free exercise of the right to free speech.
• Only in 2018 (Navtej Johar v. Union of India), the court found that pre-constitutional legislation have no legal presumption of constitutionality.

Way forward

• The new thought focuses on understanding “necessity” of state action limiting fundamental freedoms.
• The burden is on the state to establish that such a limiting measure is “necessary in a democratic society”
• “Proportionality” should inform the understanding of “reasonableness” of restrictions in Article 19.

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A milestone in greater transparency, accountability (The Hindu)

Mains Paper 2: Governance
Prelims level: Jan Soochna Portal
Mains level: Significance of the Jan Soochna Portal

Context

• The Jan Soochna Portal launched by the government of Rajasthan is a remarkable achievement in furtherance of RTI, especially Section 4 of the RTI Act that deals with proactive disclosure of information.

Importance of Transparency and Accountability

• Transparency must be accompanied by accountability.
• JSP places the power of making the State government accountable to everyone who accesses the information made available on the portal.
• A National Judicial Data Grid was launched keeping transparency in the justice delivery system in mind. This gave information about all pending cases across the country.
• A year-wise break up of pending cases was given on the grid and it was found that more than 70,000 cases were pending for over 30 years.
• The justice delivery system was asked to account for the enormous delay in such a large number of cases.
• Chief Justices and Registrars in many courts appreciated the fact that they needed to answer questions relating to such enormous delays.
• Many courts have begun to concentrate on the disposal of old cases with considerable success.
• This is a good example of transparency accompanied by accountability brought about by civil society.

About JSP

• It details of every activity of the government such as availability of food grains and ration shops and their distribution, implementation of various schemes and their beneficiaries and a variety of other information are available on a real-time basis.
• It is a virtual Janta Information System.
• The portal has been arrived at through a regular and rigorous consultative process between government officials, IT professionals and civil society.
• Since the information is available on the Internet, every citizen, right down to the municipal ward and panchayat, has access to the information. For example, if identified persons in a particular area had not availed themselves of any rations, they can be easily contacted.
• The portal gives the details of every farmer in every bank branch whose loans have been waived, along with the amounts.
• Another significant piece of information is about mining leases. This portal gives the list of mines in every district, provides geographical coordinates, and the area where mining has been permitted, including the land deed identifiers. It also provides details about pollution and environment clearances.It provides details of production and royalties and taxes paid.
• This kind of information can facilitate a progressive partnership between the government and citizens for a cleaner society.
• With the use of technology and digitisation of records and information, this information is made freely available on the JSP.
• There is no need for anyone to take recourse to the RTI Act and await a response.

Key challenges

• There are huge challenges with regard to maintenance issues and ensuring that there is no let-up in the availability of information.
• The draft guidelines have been framed for the development and maintenance of the JSP. Once implemented, this will ensure that the information system continues uninterrupted.
• Various departments of the government of Rajasthan, called Line Departments, have been given a set of obligations that they are expected to fulfil.
• In addition, the Department of Information Technology will serve as the nodal department for the development, operationalisation and maintenance of the JSP.
• This department has been informed of its obligations, which includes adherence to the norms and standards laid down by a digital dialogue advisory group.
• To ensure that the responsibilities are carried out, the advisory group will be the monitoring agency.
• Grievance redressal officers will be appointed so that citizens can make the State government truly accountable.

Training for citizens

• The government of Rajasthan has also taken steps to train citizens so that they are aware of the facilities available.
• This by itself may not be enough.
• Therefore, it has been decided to host the JSP in decentralised locations, right down to the municipal ward and panchayat levels.
• They will have access to welfare schemes, revenue activities such as mining, and other service delivery issues such as health and education.

Conclusion

• It would be wonderful if all other State governments follow the Rajasthan government’s initiative, which aims to make people, including the marginalised sections, a part of the governance process.

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One year after ‘Navtej Johar’, imagining an equality law (The Hindu)

Mains Paper 2: Polity
Prelims level: Navtej Johar
Mains level: Right to equality law

Context

• The Supreme Court’s decision in Navtej Johar v. Union of India had decriminalised same-sex intercourse which has been recognised as a step towards equality and freedom of gender
  orientation.
• But it has been observed that the stigma with respect to the people belonging to the LGBTQ community has remained as such though it has been decriminalised statutorily.

Imagining an equality law

• The only statute having a closer purpose is the Rights of Persons with Disabilities Act, 2016. But, it only addresses discrimination against persons with disabilities in the public sector and does not address the private sector.
• Legislation such as the Scheduled Caste and Scheduled Tribes (Prevention of Atrocities) Act, 1989 and the Protection of Civil Rights Act, 1955 make certain caste discriminatory acts criminal offences but do not provide civil remedies of injunctions or damages for acts of discrimination.
• The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, is limited to sexual harassment at work.
• The Transgender Persons (Protection of Rights) Bill, 2019 does not cover the rights of equality and non-discrimination on the ground of sexual orientation. Thus it is required to have a bill covering all the rights and needs of the LGBTQ community.

Way forward

• Thus there is a need for a legislation that guarantees equality to all persons on the basis of sexual orientation, gender identity and expression, sex, caste, religion, age, disability, marital status, pregnancy, nationality and other grounds.
• The law should impose obligations of equality and nondiscrimination on all persons, public and private, and in the areas of education, employment, healthcare, land and housing and access to public places.
• It should provide for civil remedies including injunctions to stop discriminatory behaviour, costs and damages, and positive action to make reparations.
• Finally, it is suggested that along with equality there should be liberty ensured to the people of LGBTQ Community.

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Are public universities under threat? (The Hindu)

Mains Paper 2: Governance
Prelims level: Not much
Mains level: Autonomy to the public institutions

Context

• Recently, Romila Thapar and 11 others were asked to submit their CVs so that a committee appointed by Jawaharlal Nehru University (JNU) could evaluate their body of work and decide on their continuation as Professors Emeriti.
• In this context, it is necessary to understand the pressures Indian universities face today.

Highlights of the problems with universities:

• It is suggested that Public universities are important for the education of people of every stratum of society and also to have liberal ideas flourish without interference from outside pressures of politics etc.
• It is generally seen that there has been the opposition of such liberal ideas within the universities which has been criticised and puts the idea of a university as an institution of learning in danger.
• Also, the curriculum and topics taught have been altered to suit the interests of the incumbent government.
• Sometimes politicians become part of Committee responsible to select the Vice-Chancellor which has been criticized.
• Jawaharlal Nehru University has been established by Jawaharlal Nehru University Act, 1966 and the people appointed as Emerita are done by flowing due process and thus need no re-verification.

Conclusion

• Thus it is suggested that there must be minimum political interference in the universities and they must be allowed to have liberal thoughts prosper.

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The Power play (Mint)

Mains Paper 3: Economy
Prelims level : Ujwal DISCOM Assurance Yojana
Mains level : Reforms in Power Sector

Context

• In a welcome move, public sector companies NTPC and Power Grid Corporation of India have formed a joint venture to set up a national electricity distribution company.
• The decision paves the way for a central public sector entity to enter the power supply business, which up until now has been largely the preserve of state distribution companies.
• Coming at a time when state discoms are struggling to contain their losses, the move is likely to have far reaching ramifications for the distribution segment.

Background

• Over the years, successive governments have tried to address issues plaguing the power distribution segment, but in vain.
• The segment is the weakest link in the power chain, and its poor health affects the entire power sector.
• In 2015, the NDA government had launched the Ujwal DISCOM Assurance Yojana (UDAY) to turn around the fortunes of beleaguered state discoms.
• But almost four years later, discoms continue to struggle, plagued by a host of issues ranging from inadequate tariff hikes, to high aggregate technical and commercial losses, inadequate and untimely subsidy disbursements, among others.
• Their flagging fortunes have not only affected power generation companies, but have also caused stress in the banking sector.
• The creation of a national electricity distribution company, which also serves as a central electricity buying agency, could potentially address several of these issues.
• It could bring relief to power producers, bring stranded capacity back to life, ensure timely payment and address the issue of stressed assets in power generation.
• The new entity could also procure electricity at competitive rates, the benefits of which could then be passed on to end consumers.

Implications from this move

• The move to create such an entity also signals the possibility of another round of reforms in power distribution, especially the separation of content and carriage: Carriage refers to distribution, while content refers to electricity supply.
• Separating them would allow consumers to buy electricity from a power company of their choice.
• In a market that is currently characterised by geographical monopolies, this would help usher in competition.
• Such measures along with the creation of a national distribution company also raise the possibility of rationalising the power tariff structure across the country.
• Currently, the power market in India is highly fragmented. Different state discoms charge different tariffs to different customers.

Conclusion

• These moves could potentially bring about a rationalisation in tariffs by providing national pricing benchmark across different categories of customers.
• However, these moves may face resistance from state discoms, as they could lose their better-paying customers to more competitive entities.

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The country’s population can be an asset: it is not a liability (Mint)

Mains Paper 2: Polity
Prelims level : Not much
Mains level : Populations and associates issues

Context

• In his address to the nation on Independence Day, Prime Minister said that a “population explosion”—posed a formidable challenge to our future.

What’s suggested?

• Responsible citizens with small families, who contribute to their own welfare and to the good of the nation are seen as role models.
• Parents should think about their capacity to provide for education and healthcare before extending their families.
• Small families are in the national interest.
• Governments, at the Centre and in the states, should bring supportive schemes.

Key Challenges with the view

• This is a belief system that dominated thinking 50 years ago. Family planning was the buzzword.
• Governments provided proactive support.
• The Emergency culminated in the compulsory sterilization program. It led to widespread resistance and resentment among people.
• Such thinking did not recognize the economic or demographic factors underlying rapid population growth.
• It is important to understand the population issue in a new context.

Old thinking

• The belief that India will remain poor because its population is growing is based on a simple logic of arithmetic.
• The larger the population, as a denominator, the smaller the per capita availability of everything.

New thinking

• This reasoning does not recognize that India’s population might be growing too rapidly because it is poor.
• For the poor, children are a source of supplementing family income when parents are young, and of financial support in old age.
• High infant mortality rates only strengthen the motivation for more children.
• Population growth rates are always high in the early stages of development because of demographic factors. As death rates drop because of improvements in public health systems that eliminate epidemic diseases, birth rates do not because poverty and illiteracy persist.
• As income levels rise, poverty is reduced and literacy spreads, birth rates also come down.
• As development leads to higher income levels, birth rates decline further to levels that merely replace the existing population.
• Such demographic transitions are integral to development processes.
• At later stages, in rich countries, birth rates might drop further so that their population declines.

India: A case study

• The demographic transition in India has been much slower than elsewhere in Asia because poverty and illiteracy persist and the public provision of education and healthcare has been grossly inadequate.
• The average annual rate of population growth, which was 2.1% in 1951-1971 and 2.2% in 1971-1991, dropped to 1.8% in 1991-2011 and 1.3% in 2011-2016.
• Birth rates dropped from 37 in 1971 and 29 in 1991 to 22 in 2011 and 19 in 2016, while fertility rates dropped from 5.2 and 3.6 to 2.4 and 2.3, respectively.
• Projections in the Economic Survey 2019 suggest that average annual population growth in India will slow progressively to 1.1% during 2011-2021, 0.7% in 2021-2031 and 0.5% in 2031-2041.
• The fertility rate will drop to 1.8 in 2021 and 1.7 in 2031.
• The natural replacement level fertility rate is 2.1 – an Indian woman would have to give birth on average to 2.1 children for the population size to remain constant.
• In India, given the sex ratio, with more men than women compared to the natural level, the replacement rate would need to be higher.

India’s hope about future

• India’s population will continue to grow at progressively slower rates because of the relatively high proportion of young people in our population.
• Though our population will begin to age significantly in about a decade, the number of working-age people (20-59 years) and their share in the total population will continue to increase for more than two decades and peak at 59% in 2041.
• For low-income countries with high underemployment, a large population is an asset rather than a liability.
• The high proportion of young people in the population will mean an increase in our workforce if a higher proportion of women enter the workforce.
• It will also mean an increase in savings rates for some time, as young people save while the old do not.
• This source of economic growth will not be available to many Asian countries as their workforce contracts. They would have to rely on productivity increases to sustain growth.

Way forward

• We can harness this demographic dividend only through education that creates capabilities among our people.
• We should focus on providing education and healthcare.

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Futile fines: On traffic violation penalties (The Hindu)

Mains Paper 2: Polity
Prelims level : Motor Vehicles (Amendment) Act 2019
Mains level : Argument behing implementing Motor Vehicles (Amendment) Act, 2019

Context

• The steep penalties for violation of road rules that came into force on September 1 under the Motor Vehicles (Amendment) Act, 2019 have produced a backlash, with several State governments opting to reduce the quantum of fines, or even to reject the new provisions.

Reactions made by various state governments

• Gujarat has announced a substantial reduction in the fines, West Bengal has refused to adopt the higher penalties, Karnataka and Kerala are studying the prospects to make the provisions less stringent, and others are proceeding with caution.
• Motorists have reacted with outrage at the imposition of fines by the police, obviously upset at State governments pursuing enforcement without upgrading road infrastructure and making administrative arrangements for issue of transport documents.
• Union Transport Minister Nitin Gadkari has reiterated that it is left to the States to choose the quantum of fines, since it is their responsibility to bring about deterrence and protect the lives of citizens.
• Mr. Gadkari’s argument is valid, and the intent behind amending the Motor Vehicles Act cannot be faulted. After all, India has some of the deadliest roads in the world, and 1,47,913 people died in road accidents only during 2017.
• The question that has arisen is whether enhanced fines can radically change this record when other determinants, beginning with administrative reform, remain untouched.

Core of reform lies behind the provision

• The core of reform lies in Section 198(A) of the amended law, which requires any designated authority, contractor, consultant or concessionaire responsible for design or construction or maintenance of the safety standards of the road to meet those laid down by the Central government.
• This provision, which prescribes a penalty for a violation leading to death or disability, can be enforced through litigation by road users in all States.
• Since the standards are laid down, compliance should be ensured without waiting for a road accident to prove it.
• Until infrastructure meets legal requirements, fines and enforcement action are naturally liable to be challenged in courts; the condition of roads, traffic signals, signage and cautionary markings which affect motorists, cyclists and pedestrians, would all fall within its ambit.
• State governments also cannot escape responsibility for failing to reform their Regional Transport Authorities, since these offices are generally steeped in corruption.
• The Transport Ministry could well have made electronic delivery of RTO services mandatory, something that a lapsed UPA-era Bill promised. It should act on this now.

Conclusion

• Ultimately, ending the culture of impunity that allows government vehicles and VIPs to ignore road rules will encourage the average citizen to follow them.
• Mr. Gadkari should lose no time in forming the National Road Safety Board to recommend important changes to infrastructure and to enable professional accident investigation.

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Lynching, not murder: On Tabrez Ansari killing (The Hindu)

Mains Paper 2: Polity
Prelims level: Tabrez Ansari Case
Mains level: Requirement of Anti Lynching laws

Context

• The decision of the Jharkhand police that the killing of Tabrez Ansari, 24, in June did not amount to murder is quite debatable.
• They have chosen to charge the 11 men arrested for his lynching with blameworthy homicide that does not amount to murder.

Key highlights about the incident

• To the layman, it would seem strange that those who labelled Ansari a thief, tied him to a pole and assaulted him for hours at night, are not going to be prosecuted for murder.It is not clear if the police are going to include accounts that claim he was forced to chant ‘Jai Shri Ram’.
• This aspect may help establish a clear sectarian motive on the part of the crowd to turn into a lynch mob and attack him.
• It is known that it was only the arrival of the police that ended the assault on him. That the police have chosen to prosecute them for homicide shows that the causal link between the assault on his person and his death has been established.
• It is true that the line between homicide and murder is thin. It is the courts that usually assess the circumstances in which a homicide took place and decide whether it amounted to murder or not.

Charges of murder

• Murder is punishable under Section 302 with death or life imprisonment, while forms of culpable homicide attract either a life term or 10 years in prison under Section 304 of the IPC.
• The official explanation for concluding that it was not murder is unconvincing. The two-pronged first argument is that the medical report gave the cause of death as ‘cardiac arrest due to stress’, and the fact that the victim did not die immediately, but died some days later.
• The police also say a second opinion from forensic experts was that the death was caused due to a combination of heart attack and the injuries he suffered. It is quite obvious that merely attributing death to a heart attack is meaningless without referring to the trauma caused by the physical assault.
• It may not make a legal difference to the prosecution whether the accused are given a life term for murder or mere guilty homicide not amounting to murder.

Way forward

• However, invoking only the offence of guilty homicide not amounting to murder may make it easier for the defence to claim that their offence lacked premeditation or intention.
• Instead, they could claim that they were deprived of their self-control by the “provocation” given by the victim. The narrative in recent lynching incidents that it was the victim who was at fault may come in for needless reiteration unless the prosecution decisively makes a case of murder.
• The suspicion that the charge is being diluted underscores the need for a special anti-lynching law.
• Such a law could cover acts of group violence, whether spontaneous or planned so that those who join lynch mobs do not gain from any ambiguity about their intentions.

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Eradicating malaria by 2050 (Indian Express)

Mains Paper 2: Health
Prelims level: Malaria
Mains level: Eradicating malaria by 2050

Context

• A report in The Lancet concludes that it is possible to eradicate malaria as early as 2050 or within a generation with the right strategies and sufficient funding.
• The report, published by The Lancet Commission on malaria eradication, used existing evidence with new epidemiological and financial analyses.

Lower incidence, many cases

• Since 2000, global malaria incidence and death rates declined by 36 and 60 per cent, respectively. In 2017, 86 countries reported 219 million cases and 4,35,000 malaria deaths, down from 262 million cases and 8,39,000 deaths in 2000. Today, more than half of the world’s countries are malaria-free.
• However, there are over 200 million cases of malaria reported each year, claiming nearly half a million lives. Malaria cases are rising in 55 countries in Africa, Asia and Latin America.
• There is also inequity, with 29 countries (27 in Africa) accounting for the large majority of new cases and 85 per cent of global deaths in 2017. Two countries (Nigeria and Democratic Republic of Congo) account for 36 per cent of global cases. On the other hand, 38 countries had incidences of fewer than ten cases per 1,000 population in 2017 and reported just 5% of total malaria deaths.

Modelling a world free from malaria

• The report used new modelling to estimate plausible scenarios for the distribution and intensity of malaria in 2030 and 2050.
• Analyses indicate that socioeconomic and environmental trends, together with improved coverage of malaria interventions, will create a world in 2050 with malaria persisting in pockets of low-level transmission in equatorial Africa.

Three ways to accelerate the decline in malaria cases

• To achieve eradication by 2050, the report identifies three ways to accelerate the decline in malaria cases.
• First, the world must improve implementation of malaria control programnes.
• Second, they must develop and roll out innovative new tools to overcome the biological challenges to eradication.
• Third, malaria-endemic countries and donors must provide the financial investment needed.

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Shades of green (Indian Express)

Mains Paper 3: Environment
Prelims level: UNCCD
Mains level: Land degradation and climate change

Context

• PM Modi’s announcement, at the ongoing 14th Conference of Parties (CoP) of the United Nation’s Convention to Combat Desertification (UNCCD) in Greater Noida.

Impact

• It is significant for India’s global environmental commitments.
• This move will now restore 26 million hectares by 2030. That is 5 million hectares more than what is pledged at the Paris Climate Change Meet.
• This also acknowledges the growing crisis of desertification. According to ISRO’s Desertification and Land Degradation Atlas, nearly 30% of land in the country is degraded.

Landscape restoration

• The plan is to reverse degradation by adopting a landscape-restoration approach.
• This needs a shift from plantation-oriented afforestation schemes to recognising the importance of ecosystem services of land and forests such as watershed management, biodiversity conservation and improving soil health.

Increasing forest cover

• Over the past two decades, the Forest Survey of India has reported a consistent increase in the country’s forested area.
• But the question of how forests have not been impacted by pressure on land is not answered.
• The answer lies in a methodological problem with the FSI’s audits: it uses satellite images to identify green cover as forest and does not discriminate between natural forests and plantations.
• Several studies show the limitations of monoculture plantations in sequestering GHG emissions. A study published in the journal Science in 2016 found that the capacity of the green areas in Europe to absorb CO2 has come down significantly despite recording an increase in such areas over the past 250 years.

Land degradation and climate change

• A report of the IPCC elucidated the links between global warming and land degradation.
• Climate change not only exacerbates many of the well-acknowledged land degradation processes, but it becomes a dominant pressure that introduces novel degradation pathways in ecosystems.
• PM Modi’s announcement at the UNCCD meet signals the country’s intent to meet this challenge.

Conclusion

• India’s environment establishment now needs to re-evaluate the methods to measure the country’s green cover.

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Striking a blow for investigative credibility (The Hindu)

Mains Paper 2: Polity
Prelims level: Criminal justice system
Mains level: Key highlights of the changing the nature of criminal investigations

Context

• These are highly contentious times for India’s criminal justice system. With sensational criminal cases, controversy erupts almost every day.

About Criminal justice system

• The judiciary enjoys a certain insularity. It is not required to be overly communicative. Thus it can stay away from direct confrontation with others.
• Prosecutors and investigators face an issue of trust.
• In the defence team, a few private lawyers hired by influential accused persons enjoy an immunity.
• In all this, investigators have no mechanism to air their grievances.
• The prosecution lawyers and investigating officers are in an unequal battle against the defence.

Key highlights of the SCs judgement

• A bench of the Supreme Court recently observed that probe agencies such as the Enforcement Directorate and the Central Bureau of Investigation (CBI) needed a free hand to conduct their investigations.
• Recently certain defence lawyers requested that courts should scrutinise every piece of evidence collected by the agencies before passing any orders, including ones related to the granting of bail.
• The court believed that investigators should not be pressured to compromise on the confidentiality of evidence they have gathered during the process of data collection.

Changing the nature of criminal investigations

• In the early 1980s and 1990s, arrests were rare.
• Now, given the volume and complexity of investigative processes linked to multi-layered economic crime and pressure from the public and the executive, the pressure that the CBI should produce instant results is telling.
• The charge against the CBI is that it has been selective in its targets, pursuing a campaign of a vendetta at the behest of its political masters.
• Two issues were flagged in court recently: the right of an accused to get bail and another the need for custodial interrogation by probe agencies.
• Although the maxim that ‘bail is the rule, and jail is an exception’ was held since Justice V.R. Krishna Iyer, the growing volume of crime and the dexterity of offenders have induced a change in judicial thinking.
• Courts at all levels now believe that granting bail cannot be a routine and mechanical process and that certain cases deserve an application of mind while ordering bail.
• This has led to lengthy hearings before a bail application is disposed of. While the application of an ordinary offender is summarily rejected, the rich and the famous are able to persuade judges to devote several sittings to decide on the bail application.
• Courts now demand and peruse prosecution documents to satisfy themselves that no injustice has been done to a bail applicant.
• Neither the prosecution nor those accused can complain of judicial caprice or arbitrariness in the matter.

Custodial interrogation process

• There is a controversy over the need for custodial interrogation of an accused person.
• The complexity of present-day crime and the ease with which the many details of a crime can be hidden enhance the need for the custodial examination.
• While courts are convinced of its utility they sparingly grant such custody.
• This could also lead to possible misuse in questioning under controlled conditions.
• Police custody is a serious responsibility for the investigating officer. Any pressure tactics or attempted physical violence on the person in custody is fraught with serious consequences.
• There are reasonable guarantees including accountability to the judiciary for civilised treatment of an accused in police custody.

Conclusion

• Criminal law and its contours are evolving.
• It is easy to criticise and accuse police agencies charged with efficient solving of crime with arbitrariness.
• The attempt should not be to choke them. There’s a need for allowing them more freedom to be professional without diluting the controls that are already in place.

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A case for a differential global carbon tax (The Hindu)

Mains Paper 3: Environment
Prelims level: Robin Hood Tax
Mains level: Initiatives towards environmental impact assessment

Context

• Climate change is a global problem, and a global problem needs a global solution.

Background

• The most recent IPCC report suggests that we might have just over a decade left to limit global warming.
• It says total global emissions will need to fall by 45% from 2010 levels by 2030 and reach net zero by 2050.
• If these targets are not met, tropical regions of the world, which are densely populated in the global South are likely to be most negatively affected because of their low altitudes and pre-existing high temperatures.
• Some impact of this was already felt during the Tamil Nadu water crisis this year.

Sharing the burden

• The global South has historically contributed less to the problem and even at present its per capita carbon emissions are much smaller in comparison to the countries in the global North.
• But they happen to be at the receiving end of the lifestyle choices made by the global North.
• Though time is running out, a genuine global consensus on the mitigation of this problem is missing.
• In the absence of a collective agreement, the environment is becoming a casualty.
• Both worlds need to contribute to averting this danger in their self-interest.
• The burden of adjustment cannot be equal when the underlying relationship between the two worlds has been historically unequal.
• A just approach would involve a global sharing of responsibility among countries according to their respective shares in global emissions.
• Currently, the most accepted model of mitigating strategy has been the carbon trading process. It has its own limitations.

Just Energy Transition (JET)

• It is premised on a sense of global justice in terms of climatic fallouts and the respective contributions of the countries.
• It will also help the resource-poor developing countries to make the energy transition without having to worry about finances unduly.
• A new way for Climate Financing
• Fundamentally change the energy infrastructure. It requires massive investments for the green energy program across the world.
• On the top of the funnel, apart from funding their own energy transition, countries should partially support the transition for the countries at the bottom.
• This sharing of the burden of development should be done in a way that inverts this injustice funnel.
• Countries have to spend around 1.5% of their GDP.
• Global energy transition should be financed through a system of the global carbon tax. Total global carbon emissions are 36.1 billion metric tonnes of CO2. This amounts to a global carbon tax of $46.1 per metric tonne.
• Those at the receiving end of climate injustice are duly compensated for even as the entire world transitions to greener earth as a result of this process of carbon tax sharing.
• Currently, the global average of carbon emissions is 4.97 metric tonne per capita. All the countries with emissions above this level are “payers” to finance energy transition for ‘beneficiary’ countries which are emitting below this level.
• The total amount of “carbon compensation” made by the payer nations comes to around $570 billion. The distribution of this amount across the payer countries is based on their distance from the global average.
• Compensated countries and the distribution of this fund across them is also based on how to lower their emissions are in comparison to the global average.
• Once you add (subtract) the carbon compensation amount to (from) each of the countries, you get the effective carbon tax for them.
• The two top ‘payer’ countries in terms of absolute amounts of transfers are the U.S. and China since their emissions are higher than the global average.
• The effective tax rate for the Chinese is lower than the possible universal tax rate of $46.1 per metric tonne and that’s because their own energy transition (1.5% of China’s GDP) plus the global compensation they make requires a tax rate only of $34.4 per metric tonne.
• The burden of adjustment is only partially falling on their shoulders and only because they emit more than the global average.

What is Robin Hood Tax?

• In terms of ‘compensated’ countries, India comes at the top due to its population size and its distance from the global emissions’ average. India has per capita emissions of 1.73 metric tonnes.
• Countries like France, Sweden, and Switzerland are also in the compensated list. Even high-income countries that have currently kept their per capita emissions low are beneficiaries of this globally-just policy.

Conclusion

• It wants all nations to climb down the emissions ladder without necessarily having to give up on their standard of living. It’s a global green Robin Hood tax.

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Can legislative action change the behaviour of a country? (Live mint)

Mains Paper 4: Ethics
Prelims level: Not much
Mains level: Human behavior and emotions

Context

• There are many instances when legislative action has been an utter failure in changing the behaviour of a nation.
• Attempts to make citizens stop drinking alcohol by introducing prohibition have failed across the world, from the US to the Indian states of Gujarat and Kerala.
• Every time a law tried to curb alcohol consumption, consumption disappeared from the mainstream of society to its underbelly.
• This created even bigger problems for the state.

Case study in US

• Several laws have been passed in the US to end racial discrimination.
• Despite these, discrimination based on race is still a reality in that country.
• In a study among Airbnb customers, researchers at Harvard Business School found that African Americans were 16% less likely to be accepted as guests than Caucasians.
• The study could not find any variable beyond race to explain this attitude.

Background

• But there are also cases where legislation has gone on to create fundamental changes in social behaviour.
• Several measures, including health warnings, were used to curtail smoking. But one factor that has demonstrably contributed to a sustained decline in smoking was a ban on it in public places.
• One of the first pieces of legislation to curb smoking in public places followed an order of the Kerala high court, way back in 1999.

Role of legislation in changing behavior

• Cognitive biases are short cuts the brain takes to go about its day-to-day affairs. But some of these systematic deviations tend to create a tendency or prejudice toward or against something or someone.
• Many of the biases are implicit and escape conscious detection. It is almost impossible for legislation to erase deep-rooted biases about race, gender, ethnicity, etc.
• So, legislation alone will not be enough to create equality for women, especially when it comes to issues involving religion.
• Several other behavioural interventions will have to be introduced in organizations and society to achieve gender parity.

Interventions needed beyond legislation

• To change social norms, we need interventions beyond legislation.
• There has been a greater transformation of attitudes towards gay rights in the past 30 years in the US than there has ever been in recorded attitudes on any other issue.
• This dramatic shift did not happen because of any legislation, but the knowledge that someone within one’s personal world family or friends’ circle may have this sexual orientation.
• Research has shown that people who got acquainted with at least one gay person were more likely to later change their minds, and become more accepting of gay and lesbian people in general.
• Similarly, the solution to the Kashmir problem lies in the government’s ability to get ordinary Kashmiris to interact with others outside their state.
• Legislation has a higher chance of success when it is trying to manage a public behaviour.
• Many a time, an individual’s action in a public place can have an impact on others too.
• This wider impact of an individual’s action on the larger society can be used as a valid excuse to instil more responsibility in the individual’s action.
• The success of the ban on public smoking can be attributed to this facet.

Conclusion

• Humans tend to make judgements on whether to engage in a prohibited activity based on the expected cost of that behaviour.
• If the severity and probability of punishment exceed the expected benefit or pleasure of the act, then the actor will refrain from that behaviour.
• Now that the law has been amended, the fines for bad behaviour are steep enough to cause significant pain to the offender.
• With stricter traffic policing, the likelihood of getting caught and punished goes up as well.
• In all, the loss caused by stiff fines is likely to leave a deep imprint on the memory of the offender. This will surely deter future offences.

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Seize the pact

• The RCEP is a proposed free trade agreement between the 10 ASEAN countries and their FTA partners, namely India, China, Japan, Korea, Australia and New Zealand.
• Trade ministers from the 16-nation regional comprehensive economic partnership (RCEP) group pledged to resolve their issues on the proposed free trade agreement (FTA) by November, when their leaders meet next for the ASEAN summit.

Background

• The Indian government has been cautious about joining this trade block. But, as pressure from RCEP members mounts, the government will have to carefully think through its strategy on trade pacts.
• Given the nature of global trade, joining these FTAs will not only gradually facilitate the country’s integration with global value chains, but provide greater opportunities for investment as well.

Key proposal for RCEP

• The RCEP is a proposed free trade agreement between the 10 ASEAN countries and their FTA partners, namely India, China, Japan, Korea, Australia and New Zealand.
• Once concluded, it will account for 25 per cent of the global GDP and 30 per cent of global trade.
• Part of India’s reluctance to join this trade pact stems from the view that the country has not benefited from its FTAs with countries like Korea, Malaysia and Japan.
• After these pacts came into effect, imports from these countries surged, while exports did not risen commensurately, leading to a widening of the trade deficit.
• India already runs a trade deficit with most of the 16 RCEP countries.
• Opening up its market further could worsen the situation.
• Large sections of India Inc are concerned that being part of RCEP would lead to an influx of more competitively priced Chinese products in both the consumer goods and industrial segments.
• Thus, eliminating tariffs for a significant section of traded goods is bound to face resistance from domestic industry. A slowing economy will only exacerbate such fears.

Conclusion

• To be sure, India should negotiate concessions and safeguards for sensitive sectors.
• Further, the proposed tariff reductions could be phased over a five to ten-year period which will give time to the industry to adapt.
• But the costs of not going forward with the trade pact, under pressure from industry, will be great. India must seize this opportunity to hook into global value chains, while addressing the deeper issues that afflict manufacturing competitiveness.

India must join regional trade partnership, hook into global value chains, address issues afflicting competitiveness. Critically comment.

The larger picture about inclusive programming

• The Ministry of Information and Broadcasting (MIB) recently mandated captioning for TV programming in order to make it accessible to the Deaf or Hard of Hearing population.
• The decision comes nearly four decades after the United States first implemented captioning for the same purpose.
• India’s phase-wise implementation plan requires all 800 plus channels to start this on at least one programme a week, beginning August 15, 2019, Independence Day. By 2020, 10% of all programming must have captions.
• The figure is to grow by 10% every year, covering up to 50% of all programming by 2025.

The wellspring

• The policy impetus for this decision is rooted in the Rights of Persons with Disabilities Act, 2016 which made “sub-titles” on TV a right.
• The major challenge for the Ministry now is to ensure compliance by all channels, state and private, as set in the time table.
• Captioning on TV for the aurally-challenged is not new.
• Many countries have followed the U.S.’s lead. Still, India’s foray into TV captioning is significant for two reasons.
• It is one of the first major countries in the Global South to embrace captioning for media access, Brazil being the other one.
• But India is the first country where the importance of captioning, or Same Language Subtitling (SLS) has been established for mass reading literacy.

Key goals

• At a time when countries are searching for scalable and evidence-based solutions to achieve their Sustainable Development Goals (SDGs), SLS in India, if implemented as mandated, is poised to make a massive contribution to SDG-4 on quality education; this is because quality education, foundationally, depends on good reading skills.
• India has a billion TV viewers. The average Indian watches TV for 3 hours and 46 minutes every day, according to the latest FICCI–EY Media & Entertainment report (2019). Film (24%) and general entertainment (53%) are the dominant genres. All of this content is now required to have SLS, in all languages.
• Scientific evidence suggests that SLS on TV would serve three goals: daily and automatic reading literacy practice for one billion viewers, including 500 million weak-readers who would benefit the most.
• Indian language improvement for one billion viewers, and, finally, media access for 65 million aurally challenged people.

Key highlights

• In India have been implementing SLS for film and general entertainment content for over a decade.
• A fascinating study that compared ‘dubbing’ with ‘subtitling’ countries of English content on TV found that the population in the latter group has better English language proficiency.
• English channels in India added SLS on their own to help the Indian ear grasp unfamiliar English accents, causing a rise in viewership.
• Importantly, the English SLS experience establishes that it is not difficult for the entertainment industry to implement SLS system-wide, if it so desires.
• Studies in India are at the global forefront of advancing SLS for reading literacy, having proven in several TV pilots.
• SLS causes automatic and inescapable reading engagement even among very weak readers who can barely decode a few letters.
• The regular exposure to SLS leads to measurable reading skill improvement, and improved reading skills result in much higher rates of newspaper and other forms of reading.
• With frequent exposure to SLS over three to five years on content that people watch in any case, most weak readers can become functional and even good readers.

Institutionalise SLS

• The cost of SLS is negligible for new content when incorporated in the production process itself.
• To institutionalise SLS on TV, broadcast policy could, therefore, simply mandate it for all new content produced and telecast after a set date.
• The Annual Status of Education Reports (ASER) have found that, nationally, half the rural children in standard 5 cannot read standard 2-level text. Despite all the system-level inputs on quality education, this outcome measure has stubbornly resisted any noteworthy improvement.
• If India is to achieve its commitment to SDG 4 on quality education, we need solutions, backed by evidence, and the collective power of the government, civil society, academia and the industry to implement them.

Other platforms

• The Ministry of Information and Broadcasting has taken the most important step toward mainstreaming TV captioning.
• Now, together with the Ministry of Electronics and Information Technology, policy needs to mandate SLS on all digital Over-The-Top (OTT) platforms.
• Although translation subtitling is commonplace on OTT platforms and they offer SLS in English, none of them has SLS in the Indian languages, such as Hindi subtitles for Hindi content and so on.
• This is simply because policy does not yet require SLS on OTT.

Conclusion

• Civil society has shown how SLS can be implemented cost-effectively.
• Academia has provided strong evidence that SLS works remarkably well to achieve the multiple goals of media access, reading literacy and language learning.
• The entertainment industry must play its part by turning on SLS for audio-visual content in all Indian languages. SLS is a right. Let us do the right thing.

India is in a unique position to scale up ‘same language subtitling’, improving both media access and reading literacy. Comment.

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Factoring in safety: on stronger worker safety law

• India’s record in promoting occupational and industrial safety remains weak even with years of robust economic growth. Making work environments safer is a low priority, although the productivity benefits of such investments have always been clear.
• The consequences are frequently seen in the form of a large number of fatalities and injuries, but in a market that has a steady supply of labour, policymakers tend to ignore the wider impact of such losses.
• It will be no surprise, therefore, if the deaths of four people, including a senior officer, in a fire at the Oil and Natural Gas Corporation gas facility in Navi Mumbai, or the tragedy that killed nearly two dozen people at a firecracker factory in Batala, Punjab are quickly forgotten.
• Such incidents make it imperative that the Central government abandon its reductionist approach to the challenge, and engage in serious reform.

The progressive moves

• The Occupational Safety, Health and Working Conditions Code, 2019, introduced in the Lok Sabha in July to combine 13 existing laws relating to mines, factories, dock workers, building and construction, transport workers, inter-State migrant labour and so on, pays little attention to the sector-specific requirements of workers.
• One of its major shortcomings is that formation of safety committees and appointment of safety officers, the latter in the case of establishments with 500 workers, is left to the discretion of State governments. Evidently, the narrow stipulation on safety officers confines it to a small fraction of industries.
• On the other hand, the Factories Act currently mandates appointment of a bipartite committee in units that employ hazardous processes or substances, with exemptions being the exception. This provision clearly requires retention in the new Code.

International Labour Organization

• A safe work environment is a basic right, and India’s recent decades of high growth should have ushered in a framework of guarantees.
• Unfortunately, successive governments have not felt it necessary to ratify many fundamental conventions of the International Labour Organization (ILO) covering organised and unorganised sector workers’ safety, including the Occupational Safety and Health Convention, 1981.
• Those ILO instruments cover several areas of activity that the NDA government’s occupational safety Code now seeks to amalgamate, but without the systemic reform that is necessary to empower workers.

Conclusion

• It is essential, therefore, that the new Code go back to the drawing board for careful scrutiny by experienced parliamentarians, aided by fresh inputs from employees, employers and experts.
• Industries that use hazardous processes and chemicals deserve particular attention, and the Code must have clear definitions, specifying limits of exposure for workers.
• Compromising on safety can lead to extreme consequences that go beyond factories, and leave something that is etched in the nation’s memory as in the case of the Bhopal gas disaster.

Major industrial accidents point to the need for a stronger worker safety law. Comment.

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For sustaining the sugar sector, the Centre should push ethanol production

• In order to help sugar mills deal with the 145 lakh tonnes of sugar inventory 95 lakh tonnes more than the normal requirement of 50 lakh tonnes the Centre has announced export subsidies as well as compensation for the carrying cost of sugar mills.
• The move is aimed at placating the sugar cooperative sector in Maharashtra which will go to polls soon.

There is a real issue of excess

• This is despite the fact that the cane crop for the 2019-20 season is expected to be 47 lakh tonnes less than last year’s production of 329 lakh tonnes.
• With domestic consumption estimated at 260 lakh tonnes, the surplus is here to stay, threatening to depress prices.
• In order to hold up cane prices and clear farmers’ dues, buffer stocks have become an inexorable necessity.
• Meanwhile, a global glut in sugar makes it difficult to export viably. Hence, the Centre has, in the time-honoured tradition of placating this politically powerful sugar sector, resorted to a short-term fix.
• There can be no getting away from increases in the support price, or ‘fair and remunerative price’.

Too high FRP

• Despite various efforts to reform the sector, the sugar mills are able to extract concessions from the State on some pretext or the other typically, it is of the FRP being too high for them to meet their costs and pay farmers.
• Cane arrears are now close to ₹16,000 crore, principally due to farmers in Uttar Pradesh. But in Maharashtra, where the arrears are far lower, there’s a larger social cost of keeping the cooperative sector going it intensifies the impact of drought, particularly in arid regions such as Marathwada.
• There is certainly a case for this region moving away from growing cane.
• This calls for a well-thought-out plan, given the number of sugarcane farmers and industry workers involved.
• For Maharashtra as a whole, sugarcane is a source of livelihood to 2.5 crore people in rural regions.
• About 1.6 lakh workers are directly employed by the industry, while eight lakh workers are engaged in harvesting and transport operations every year.
• One option, as has been promoted by the Centre, is to actively encourage the conversion of cane to ethanol by offering a high price for the latter.
• At present, ethanol is prepared from C-grade molasses, whereas efforts should be made to prepare the same from sugarcane juice and B-grade molasses as well.
• This will take care of excess stocks, with positive balance of payments effects. Subsidies for sugar should be directed towards building ethanol capacities.

Conclusion

• However, sugar cooperatives are often run on less than commercial lines.
• Researchers have established how cooperatives are often milked to fund election campaigns of cooperative chiefs.
• The system needs a clean-up.

This will take care of excess stocks, with positive balance of payments effects. Comment.

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Is there much to gain from bank mergers?

• A recent McKinsey report sees banks in Asia Pacific ‘grappling with thinning margins, declining asset quality, and rising capital costs’.
• Pre-tax profits that grew 12 per cent a year during 2010-14, slipped to 3 per cent in 2014-18, four percentage points lower than the global average.
• Returns on equity are sliding whereas operational costs are rising. Search for scale once again returned to centre-stage to seize ‘benefits in distribution, productivity, and capabilities’.
• To that extent the intent to merge is consistent with current concerns and in the context of Indian banking, which is grappling with a huge wave of worries.
• The government might have done its own math for the merger, but from the point of a heavily banked intermediated country, with a credit-to-GDP ratio of 75 per cent, that still gives industry a lot of space for growth.

A few issues arise:

• The scope for organic growth, as most of the merged banks had performed well in the past and still hold potential to rebound;
• The procedure of picking targets in accordance with the severity of problems; and the opportunity costs of foreign investments.
• If the merger is a market-driven process, some of these factors could have been discounted.
• But since it is one from a mandate, uncertainties arise about efficacy of this exercise falling short of expectations in the long run.

The motives for bank mergers fall into four major groups:

• The cost benefits (economies of scale, efficiency, cost of funding, risk diversification);
• The revenue benefits (economies and scope for large deals);
• The economic conditions (up and downswings in business cycles); and
• Other motives (valuation, managerial benefits, pre-empting possible takeovers, etc).

Metrics for mergers

• Add to these the need to speed up growth, which is the biggest concern now for India. Bank mergers are a common fare.
• More than 700 banks were merged in Asia, Latin America and Eastern Europe in 1997-99, following the Asian financial crisis, and an equal number after the global financial crisis.
• Then there is the issue of the metrics chosen for the merger. If it is about bad debts, then Gross NPAs for the system as a whole fell from an average 43 per cent in 2013 to 24.1 per cent in 2018 with similar decline seen in nationalised banks (42 to 24 per cent) and in private banks (26 to 18 per cent) that reveals the issue is more systemic in nature than ownership specific.
• About choice of targets, Andhra and Corporation reduced NPAs by ₹9,972 crore in FY18 on a combined NPA portfolio of ₹34,714 crore, whereas Union Bank with whom these two were merged could reduce ₹3,476 crore on a total bad loan portfolio of ₹33,712 crore.
• The merged banks had Basel III capital ratios of 9-11 per cent that does not cause an immediate threat. Vijaya Bank’s Basel III CRAR of about 14 per cent is higher than that of many other banks with no record of loss since 2005, yet became a target of merger.
• Whereas Indian Bank, considered a basket case a decade back, has become suitable enough to absorb another PSB. The metrics for merger should have gone beyond mere size.

Losses made by various banks

• The losses of Dena and Vijaya at ₹3,721 crore during 2016-18 were less than those of Bank of Baroda at ₹7,828 crore; that of OBC and United, at ₹8,701 crore, lesser than the ₹16,256 crore of PNB; and Syndicate’s, at ₹4,683 crore, lesser than Canara’s ₹7,034 crore.
• Andhra and Corporation are an exception with losses of ₹7,971 crore, higher than Union’s ₹5,247 cr. But that’s not such a big difference. In contrast, UCO with combined losses of ₹9,086 crore, IOB with ₹12,614 crore and Bank of Maharashtra with ₹2,517 crore during 2016-18 are still awaiting action, raising speculation on their being left out.
• About 85 per cent of new recapitalisation is given to four banks that will absorb six banks, leaving questions about its efficacy.

There is opportunity cost too

• Foreign investment in nationalised banks averages a mere 4.8 per cent, compared with 43 per cent in new private banks and 27 per cent in old private banks.
• If the idea behind consolidation is to attract foreign investment, that seems misconceived. There will no longer be a number of banks for investors to choose from.
• Banks like Vijaya, Syndicate, Corporation and Andhra are located in regions that are witnessing rising income levels and an expanding middle class amidst booming technology and modern manufacturing, which could surely have helped them recover their prowess with a little more focus and thrust.

Conclusion

• India thinks 12 PSBs is enough along with 20-odd private banks and 35 foreign banks that have little share in business.
• China has 136 in the World’s Top 1000 and if that is not comparable, then a small economy like the Philippines has 45 big universal banks, 54 mid-sized thrift banks and hundreds of rural banks, with Moody’s rating them as stable in the medium term.

The metrics of bad debts and profit, most of the mergers weren’t required. In this context how many banks does a big and growing economy needs?

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A wider deficit is unavoidable to strengthen demand (Mint)

• The dominant consensus on the slowdown in India is that we have a demand problem. Lack of aggregate demand is a phrase that goes back to John Maynard Keynes.
• He is a ghost who reappears from time to time, however much one tries to bury him. Regardless of whether you are a Keynes devotee or not, his logic is irresistible, both to the policymaker and the common man, or woman.
• If there is insufficient demand on account of inadequate consumption, investment or exports, it ought to be offset by the government stepping in.
• That is to say a fiscal push is inevitable.
• Only once the government creates demand for goods and services through extra deficit-spending will new jobs and incomes be generated, which in turn will create fresh demand for goods and services, setting off a virtuous cycle until the economy can run on its own steam without fiscal steroids.

Deficit-spending

• The idea of deficit-spending divides economists into anti-deficit fundamentalists and “deficits do not matter" shoulder-shruggers who tend to support any amount of fiscal profligacy.
• Most well-meaning, classically-trained economists fall in the former camp, and they see opposing deficits as a noble duty because nobody else champions the moral cause of austerity or balanced budgets.
• The libertarians among them oppose deficits also because they don’t trust the government. Conventional theory says that uncontrolled deficit-spending will lead to high debt and interest rates, inflation and ultimately a crisis that will call for debt repudiation.
• That will lead to a loss of investor confidence and growth.
• This is the doomsday scenario. But India’s experience of the past three decades has been that despite a relatively high deficit, its economy has grown at a fast pace without runaway inflation, let alone debt repudiation.
  For a developing country, deficit-spending makes sense
• This is because the growth benefits of that spending accrue over multiple generations, so that today’s benefits are paid by taxes on tomorrow’s unborn citizens. This is sensible both from efficiency and fairness points of view.
• If a bridge or airport is financed through a deficit today, it is a public good that will last for more than 50 years and whose benefits will be enjoyed by multiple generations. So long as the country’s demography is such that more beneficiaries are expected to be born than there are today, the per capita burden of today’s deficit-spending will be lower tomorrow.
• India currently enjoys such a demographic profile. Of course, there is such a thing as sustainable debt. Whether it is 100% or 200% of gross domestic product (GDP), one cannot say.
• The Fiscal Responsibility and Budget Management expert committee has recommended that central debt be capped at 40% of GDP.

Country with highest debt-to-GDP ratio

• Japan has the world’s highest debt-to-GDP ratio, at close to 350%. But its debt is still AAA-rated and nobody has said it is unsustainable, even though its demography is unfavourable because its population is shrinking.
• The per capita burden of servicing that debt will keep rising for future Japanese generations. One big point in their favour is that most of the debt is held internally. It is like the left pocket owing money to the right.
• Another favourable point is its near-zero interest rate on sovereign debt. It is as if servicing the debt is almost without cost.
• In the US, which runs the highest deficit in the world (close to $1 trillion), the big point is that all its debt is in a currency that it can print. So it can earn unlimited seigniorage, inflate and thus erode the real value of its debt.
• Moreover, the world seems to have an insatiable hunger for US sovereign bonds, so financing the debt seems like a cakewalk.
• Indeed, long-term yields on US bonds is very low, which has led to an inverted yield curve.

Macroeconomic situation in India

• India’s macroeconomic situation warrants a significant fiscal push. China just announced a $125 billion spending plan, which is five times the cash surplus transferred by the Reserve Bank of India to the Centre.
• It is experiencing the adverse effects of a trade war with the US, as well as a slowing domestic economy. But the size of its fiscal injection shows what it takes to make an impact. Of course, the quality and destination of the fiscal spending greatly matter.
• Development of infrastructure, both hard and soft, should be a top priority. But let us not forget that old Keynesian idea of the efficacy of even filling ditches.
• The National Rural Employment Guarantee Scheme can serve the dual purpose of creating rural jobs and village assets.
• The scheme accounts for less than 2% of all person-days annually, but sets a wage floor and raises rural earnings overall. It is particularly relevant and imperative in light of India’s rural distress.

Conclusion

• While we loosen our fiscal purse strings, we should not lose focus on the revival of export growth, manufacturing, skill-building and agricultural reforms.
• The extra fiscal bill can be partly funded by the ambitious sale of government stakes in public sector entities. But running a bigger deficit in these times is a must.
• Thankfully, India is enjoying a demographic dividend that gives it greater leeway for deficit-financing.

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