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A bottom-up approach to conservation (The Hindu)

Mains Paper 3: Environment
Prelims level: Gadgil panel
Mains level: Highlights of the Gadgil panel’s suggestions

Context

• The repeat of landslides and consequent tragedies in Kerala this year too, after the rainfall, has caused much concern.
• The need for implementing the Gadgil panel’s suggestions is felt more important now than ever before.

What is the realisation with the recent floods?

• The 2018 floods and landslides in Kerala caused huge financial losses and manifold human tragedies.
• It was believed by many that the 2018 tragedy in Kerala marked a once-in-a-century calamity.
• The probability of two such back-to-back events was only 1 in 10,000. So, it was hoped that normalcy would return soon and people could return to business as usual.
• Hence, a repeat of intense floods, landslides, financial losses and manifold human tragedies in 2019 too was something people were unprepared for.
• The 2019 events have thus made people realise that it is unwise to continue business as usual.
• This has made them seriously consider the alternatives to deal with the calamities of nature.

What does the Gadgil panel report offer?

• One set of possibilities is provided by the recommendations of the Western Ghats Ecology Expert Panel (WGEEP) chaired by Madhav Gadgil.
• The policy prescriptions in the report were well within the framework of the constitutional mandates, and only suggested following the existing laws.
• This relates to environmental protection and devolution of powers, right down to the gram sabha and ward sabha level.
• In all, the WGEEP called for a model of conservation and development compatible with each other. The report sought a replacement of the prevailing ‘Develop Recklessly, Conserve Thoughtlessly’ pattern with one of ‘Develop Sustainably, Conserve Thoughtfully.’
• This fine-tuning of development practices to the local context would have required the full involvement of local communities.
• It would have therefore been inappropriate to depend exclusively on government agencies for deciding on and managing Ecologically Sensitive Zones (ESZs).

Recommendation on ESZs

• The WGEEP’s mandate asked the state to demarcate areas within the Western Ghats Region that need to be notified as ecologically sensitive.
• It was also asked to recommend for notification of such areas as ecologically sensitive zones under the Environment (Protection) Act, 1986.
• In line with the National Forest Policy, the panel decided to assign 60% of the total area of Western Ghats in Kerala as a zone of highest ecological sensitivity, ‘ESZ1’.
• These included the region housing wildlife sanctuaries and national parks.
• The panel proposed ‘elevation’ and ‘slope’ as two key indicators of sensitivity.
• In Kerala, rainfall increases rapidly with elevation, and high rainfall and steep slopes render localities vulnerable to landslides.
• Hence, areas prone to landslides would come under ESZ1.
• The extent and quality of natural vegetation was the third indicator for classifying an area as ESZ1.
• Landslides are under control in areas with intact natural vegetation because the roots bind the soil.
• Any disturbance to such vegetation would render any locality that has steep slopes and experiences high rainfall susceptible to landslides.
• Such disturbances may include , quarrying or mining, replacement of natural vegetation by new plantations, leveling of the land using heavy machinery, construction of houses and roads.
• Therefore, it was recommended that such activities be avoided in ESZ1 areas.

How successful is Kerala in devolution of powers?

• The Plachimada Panchayat of Kerala cancelled Coca-Cola company’s licence.
• This was because the company polluted and depleted groundwater reserves, drying up wells and adversely impacting agriculture and livelihoods.
• While doing so, the panchayat invoked its constitutional rights, arguing that it had the duty to protect the well-being of its citizens.
• It thus claimed that it had the right to cancel or refuse permission for anything that affected its citizens adversely.
• The company’s counterargument was that the panchayat was subordinate to the State government, which had granted it the licence.
• The Kerala High Court rejected this contention, affirming that grass-roots institutions have the authority to decide on the development course in their own locality.
• Furthermore, the Kerala legislature unanimously passed a law asking Coca-Cola to pay Plachimada Panchayat due compensation for losses inflicted on them.

What is the way forward?

• Democracy is not merely voting once in 5 years; it is the active involvement of citizens in governing the country at all levels, especially at the local level.
• The powers and responsibilities conferred under provisions such as the 73rd and 74th Constitutional Amendments, and the Biological Diversity Act, 2002 should be fully utilised.
• The ruling that local bodies have the authority to decide on the development course in their own localities be made operational across the country.
• Implementation of the Gadgil panel recommendations would have definitely helped manage better the heavy rainfall, and reduce the extent and intensity of landslides.
• It is only wise to apply the panel’s recommendations at least now.

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Earth’s burning lungs: On Amazon's rainforest fire (The Hindu)

Mains Paper 3: Environment
Prelims level: Forest fires
Mains level: Details about deforestations worldwide

Context

• The Amazon rainforest, the largest of its kind in the world, is ablaze, with over 9,500 distinct fires burning through its main basin since August 15.
• Overall, Brazil has seen more than 76,000 fires ravage the Amazon in 2019, of which around 10,000 have been started in the past few weeks, mainly by loggers and farmers seeking, as they do during the summer months, to clear vast tracts for agricultural or industrial use.
• However, this annual exercise of planned deforestation appears to have crossed a tipping point this year.

Key highlights about the deforestation

• There has been an increase of at least 80% in the number of recorded fires compared to the same period in 2018, according to Brazil’s National Institute for Space Research (INPE).
• This week, images of darkening skies above Sao Paulo, more than 2,700 km away from the fires, went viral.
• The number and intensity of the fires are closely linked to the rate of deforestation. Some reports estimate that in July 2019, the Amazon shrunk by 1,345 sq km, up 39% from the same month last year, and a historical record.
• The flames are not confined just to Brazil either. In neighbouring Bolivia, deadly blazes are devastating forests and farmlands, so much so, that its President, Evo Morales, has put his re-election campaign on hold over the weekend, and, unlike his Brazilian counterpart Jair Bolsonaro, was quick to welcome foreign aid to help fight the fires.

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G7 summit: Absence of consensus and statesmanship on critical issues (The Hindu)

Mains Paper 2: International Relations
Prelims level: G7 summit
Mains level: Highlights of the critical issues discussed there

Context

• Overt anxiety about a repeat of the last year’s fiasco in the ongoing Group of Seven summit at Biarritz, France, gave way to some quivering optimism with US President Donald Trump’s latest pivot on his shrill trade war with China.
• Three days after describing him as an “enemy”, the US President asserted that the Chinese Premier Xi Jinping is a “great leader” and that he hopes to “make a deal” towards ending a crisis that has plagued world financial markets and escalated global fears of recession.

G7 summit highlights

• The G7 has turned into a collection of bilateral talks mostly tailored to suit the US President’s priorities.
• Trump struck a deal with Japan to sell excess US corn as a result of the standoff between Washington and Beijing and refused to attend the session on climate, oceans and biodiversity where the other members agreed on a $20 million aid package to help Brazil and its neighbours fight the fires raging in the Amazon rain forest.
• Trump also refused to meet Iranian Foreign Minister Javad Zarif who arrived in Biarritz on Sunday reportedly as part of a French move to calm things down between the US and Iran.
• From the Indian perspective, a bilateral meeting between Prime Minister Narendra Modi and the US President would be beneficial only if it helps facilitate and expedite the trade talks between the two countries.
• President Trump’s insistence on mediating in Kashmir overshadowed the proceedings.
• The US President has twice offered his assistance on Kashmir.
• The PM seemed to have staved off these overtures by underlining that India and Pakistan can solve their issues bilaterally. What remains to be seen is whether the camaraderie displayed in Modi’s meeting with Trump would translate into the US desisting from its drive to prevent India, along with China, from availing Special and Differential Treatment (SandDT) in the WTO as developing countries.
• While some in the developing world may celebrate the diminished influence of a once mighty Western consensus.

Conclusion

• It would be dangerous if global affairs continue to be guided by the whims of a volatile leader, while Russia and China chart their individual course.
• The absence of statesmanship is being felt even more keenly amidst deepening trade and economic crisis, and stark manifestations of climate change and inequality.

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The Centre’s ‘stimulus’ addresses some pain points of industry, markets (The Hindu)

Mains Paper 3: Economy
Prelims level: NBFC crisis
Mains level: Challenges faced by foreign portfolio investor

Context

• Finally reacting to the ‘gloom-and-doom’ narrative around the economy, the Finance Minister announced a slew of steps to kickstart growth, and restore sentiments of the business community, in particular.
• On Friday, the Centre rolled back the additional surcharge on income tax for both foreign and domestic institutional investors announced in the July 5 Budget.
• But the damage has been done: the markets (Sensex and Nifty) are down 10 per cent from the highs of June, with small and mid-cap scrips diving much more.

Challenges faced by foreign portfolio investor

• Foreign portfolio investors have pulled out $3 billion since the Budget.
• The erosion of wealth, given the enhanced levels of retail participation in recent years through mutual funds, is likely to have dampened consumer sentiment.
• For businesses already grappling with an adverse export environment, a credit squeeze on account of the NBFC crisis, some inappropriate GST rates and an intrusive tax administration, the crash in the markets was particularly ill-timed.
• Meanwhile, the macro data are particularly unflattering: following a 6.8 per cent growth rate in 2018-19, Moody’s estimates India’s growth in 2019-20 at 6.2 per cent, while Nomura expects just 5.7 per cent growth in Q1.
• The Centre could not have overlooked this mess, showing up at the popular level in the form of high-profile job losses in the auto and FMCG sectors, for much longer.
• Hence, it has announced that public sector banks will get ₹70,000-crore capitalisation, with a promise to reduce the cost of credit for consumer goods and working capital.
• To ease the conduct of business, the Angel Tax provision for start-ups will be withdrawn and GST formalities simplified. CSR violations will not be treated as a criminal offence, though the obligation remains as a back door tax on corporate profits.

Steps taken by the Government

• The Centre seems intent on a course correction and this is to be welcomed.
• However, it remains to be seen whether this somewhat hectic infusion of funds into banks, and through them hopefully to some NBFCs and MSMEs, will necessarily lead to a pick-up in credit growth.
• Consumer spending needs to pick up for businesses to feel persuaded to borrow and invest and that cannot realistically be expected if jobs are lost more than they are generated.
• The Centre must create jobs and invest in high-multiplier sectors such as railways, besides social infrastructure. A more congenial business environment alone won’t do the trick.

Conclusion

• However, the Centre must demonstrate beyond the steps it has announced to set aside some 1,400 tax ‘offences’ and moving to faceless tax scrutiny that it has set aside its attitude of tax overreach.
• The tax administration has to be more transparent in its functioning. Promises of leniency are not enough.

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Channel churn: TRAI’s attempts to micromanage the broadcasting sector have backfired (The Hindu)

Mains Paper 3: Economy
Prelims level: TRAI
Mains level: Key regulations taken by TRAI

Context

• The Telecom Regulatory Authority of India’s attempts to fix tariffs for the broadcasting sector have disrupted the TV broadcasting sector, without benefiting all stakeholders.
• The idea of allowing consumers to pick the channels they want to watch on a la carte basis was aimed at ensuring transparency, but the manner in which it has been implemented has led to higher costs for many subscribers.
• Under the new framework that came into effect from April 1, distributors of television channels can charge a monthly rental amount of maximum ₹130 per month from a subscriber for 100 Standard Definition channels. In addition, viewers may subscribe to any other paid channel individually.

Key highlights about the viewing pattern in India

• According to the regulator, 80 per cent of subscribers, as per the viewing pattern given by BARC, either view or flip 40 or less number of channels.
• Therefore, the regulator argued, instead of paying for a bouquet of hundreds of unwanted channels, a consumer can carefully choose channels of her choice.
• This was supposed to put control back into the consumer’s hand, but in reality, it has become a nightmare for many consumers.
• The overall cost of accessing TV channels on a la carte basis have gone up by 25-50 per cent for viewers who opt for top 10-15 HD channels.
• Those who do not want to subscribe on a la carte basis can no longer subscribe to an annual plan with all channels included.
• Challenges related to revenue sharing between multiple system operators and local cable operators had also emerged.
• That TRAI has now undertaken a review of the entire framework within a few months of introducing it, is an acknowledgment that the tariff order was not working as intended.
• But TRAI’s latest attempt fails to address the core issue of enabling consumers to get access to TV content at affordable rates.

Way forward

• This is a flawed approach, because making one product more expensive does not make the other product cheaper.
• TRAI also wants to regulate the number of bouquets and the type of channels in the bouquet. This may face more operational and legal challenges during execution.
• The broadcasting sector is already plagued with litigations between the various players and it is the consumers who bear the brunt of such disputes.

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Currency capers: On falling rupee (The Hindu)

Mains Paper 3: Economy
Prelims level: 72 mark
Mains level: Measures taken to strengthen the rupee

Context

• The rupee is back in the news following a sharp depreciation in its value versus the dollar in the last one month after a prolonged period of relative stability.
• It has weakened by a little over 4% since mid-July and on Friday nudged the 72 mark to a dollar before retracing its steps.

Market trend

• The fall has to be seen in the context of the overall weakness in currencies of emerging markets and Asia in August.
• The Turkish lira, Brazilian real, South Africa’s rand, the Mexican peso have all uniformly lost value versus the dollar with the Argentine peso losing the most, but this has more to do with the Argentine economy’s woes.
• The trigger was China’s devaluation of the yuan to below the 7 per dollar level for the first time in more than a decade; the last time that the yuan was seen below the 7 per dollar mark was during the global financial crisis in 2008.
• The yuan’s devaluation is itself a part of the complex trade war that Beijing is now waging with the United States whose President has labelled China a currency manipulator.
• Emerging market currencies have also been depressed more since the bond yield curve inverted in the U.S. last week when yields on 10-year bonds fell below the two-year note signalling the market’s fear of a recession in the U.S. economy.
• While there’s no data to support such fears as of now, the trade spat with China seems to be giving the jitters to the market.

Influence on economy

• The fall in the rupee is, of course, influenced to some extent by the overall economic slowdown and the sell-out in the equity markets in the last couple of months leading to capital withdrawal by foreign portfolio investors.
• The capital outflow particularly has hit the currency’s valuation. But the fall is no cause for alarm as yet because there is stability on the external account with the current account deficit at a comfortable 0.7% in the quarter ended March 2019.
• Of course, export growth is depressed but the forex reserves are at historically high levels of $430 billion. In fact, the fall will make India’s exporters competitive.

Way forward

• Economists often complain that the rupee is over-valued in terms of the real effective exchange rate making exports uncompetitive.
• The Reserve Bank of India does not appear to have intervened in support of the rupee, signalling that it is not uncomfortable with the fall.
• The central bank can be relied upon to enter the market if things get too depressing for the currency.
• The Finance Minister’s announcements on Friday are sure to perk up the markets on Monday and the rupee may yet bounce back. But, eventually, in an environment where other major emerging market currencies are depreciating, the rupee cannot be an outlier.

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Privacy no longer supreme (The Hindu)

Mains Paper 2: Polity
Prelims level: Not much
Mains level: Right to Privacy

Context

• Two years ago, this month, a nine-judge bench of the Supreme Court unanimously held that Indians have a constitutionally protected fundamental right to privacy.
• It held that privacy is a natural right that inheres in all natural persons, and that the right may be restricted only by state action that passes each of the three tests:
• First, such state action must have a legislative mandate;
• Second, it must be pursuing a legitimate state purpose; and
• third, it must be proportionate i.e., such state action both in its nature and extent, must be necessary in a democratic society and the action ought to be the least intrusive of the available alternatives to accomplish the ends.

Prescribing a higher standard

• That judgment in Justice K.S. Puttaswamy (Retd) vs Union Of India fundamentally changed the way in which the government viewed its citizens’ privacy, both in practice and prescription.
• It undertook structural reforms and brought transparency and openness in the process of commissioning and executing its surveillance projects, and built a mechanism of judicial oversight over surveillance requests.
• It demonstrated great care and sensitivity in dealing with personal information of its citizens.
• It legislated a transformative, rights-oriented data protection law that held all powerful entities that deal with citizens’ personal data (data controllers), including the state, accountable.
• The data protection law embodied the principle that the state must be a model data controller and prescribed a higher standard of observance for the state.
• The law also recognised and proscribed the practice of making access to essential services contingent on the citizen parting with irrelevant personal information.
• This law established an effective privacy commission that is tasked with enforcing, protecting and fulfilling the fundamental right to privacy implemented through the specific rights under the legislation.
• The data protection law also revolutionised the technology sector landscape in the country, paving way for innovative privacy-aware and privacy-preserving technical solution providers to thrive and flourish, and establishing the country as a global leader in the space.
• This fairytale would have been the story of the last two years if the government had followed the script. But it did the exact opposite.
• The judgment in K.S. Puttaswamy effected little change in the government’s thinking or practice as it related to privacy and the personal data of its citizens.

National security as reason

• It continued to commission and execute mass surveillance programmes with little regard for necessity or proportionality, with justifications always voiced in terms of broad national security talking points.
• The Ministry of Home Affairs, in December last year, authorised 10 Central agencies to “intercept, monitor and decrypt any information generated, transmitted, received or stored in any computer in the country”.
• This notification is presently under challenge before the Supreme Court.
• In July last year, it became known that the Ministry of Information Broadcasting had floated a tender for ‘Social Media Monitoring Hub’, a technical solution to snoop on all social media communications, including e-mail.
• The government had to withdraw the project following the top court’s stinging rebuke.
• A request for proposal for a similar social media surveillance programme was floated in August last year by the Unique Identification Authority of India (UIDAI), which is presently under challenge before the Supreme Court.
• The Income-Tax department has its ‘Project Insight’ which also has similar mass surveillance ends. These are but a few examples.

Data use vs. privacy

• The government has shunned a rights-oriented approach in the collection, storage and processing of personal data and has stuck to its ‘public good’ and ‘data is the new oil’ discourse.
• In other words, personal data in the custody of the state is for the state to use, monetise and exploit in any manner it desires so long as it guards against security incidents such as breaches and unauthorised access i.e. unauthorised by the government.
• This convenient redux of the idea of privacy to mere information security appears to inform all its policies.
• This is evident from this year’s Economic Survey as it commends the government for having been able to sell and monetise the vehicle owners’ data in the Vahan database and exhorts it to replicate the success with other databases.
• The Justice Srikrishna committee which has published the draft Personal Data Protection Bill uses a similar language of ‘free and fair digital economy’, with the digital economy being the ends and the notion of privacy merely being a shaper of the means – not only misrepresenting the purpose of the bill, but also its history and the mischief that it intended to tackle.
• The committee made the choices it made despite being aware that the courts are likely to interpret every provision of the legislation purposively, taking note that the purpose is couched in terms of the economy as opposed to the bill having a singular focus on the fulfilment of the right to privacy.

Conclusion

• A rights-oriented data protection legislation which includes comprehensive surveillance reform prohibiting mass surveillance and institution of a judicial oversight mechanism for targeted surveillance and which recognizes.
• The principle that the state ought to be a model data controller as it deals with its citizens’ personal information; is still possible, one hopes.

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On the wrong side: On PCI backing Kashmir restrictions (The Hindu)

Mains Paper 2: Polity
Prelims level: PCI
Mains level: Various institutions and their mandate

Context

• The Press Council of India (PCI)’s support of government restrictions on communication last week was brazenly contrary to its mandate and purpose.
• It has sought to intervene in a petition by Kashmir Times executive editor Anuradha Bhasin, pending before the apex court, seeking an end to the restrictions on communication in Jammu and Kashmir that were imposed before the Government’s decision on August 5 to revoke the special constitutional status of the erstwhile State.

Constitutional provisions

• The petitioner has cited Articles 14 (equality before the law) and 19 (freedom of speech and expression) of the Constitution of India, and the PCI’s intervention, if any, should have been on the side of the petitioner.
• Instead, it has justified restrictions on communication “in the interest of the integrity and sovereignty of the nation”.
• The notion that an open society, and an independent media, is somehow a threat to the nation’s integrity and sovereignty is nothing less than a rationale for despotism.
• That it is coming from a statutory, quasi-judicial, autonomous body whose mandate it is to protect and reinforce a professional and objective media is shocking.

PCI explanations

• The PCI explains its raison d’tetre as “rooted in the concept that in a democratic society the press needs at once to be free and responsible”. Of course, freedom of expression like any other freedom is subject to reasonable restrictions.
• But the operative word is ‘reasonable’. “Where the norms are breached and the freedom is defiled by unprofessional conduct, a way must exist to check and control it. But, control by Government or official authorities may prove destructive of this freedom... Hence, the Press Council,” it says.

PCI stance

• The PCI’s stance in the instant case goes against the letter and spirit of this claim.
• Its track record may not have been stellar; nevertheless, its interventions occasionally held the mirror to deviant journalists and publications and, at the same time, sought to shield the profession and professionals from the highhandedness of the state and non-state actors.
• It supported the Punjab Press in its “efforts to inform the people truthfully and impartially” during the years of militancy in the early 1990s; around the same period, it pulled up several publications that showed communal bias in coverage of the Ayodhya agitation.
• In fact, the PCI considers “defaming a community a serious matter” and believes “ascribing to it a vile, anti-national activity is reprehensible and amounts to journalistic impropriety”.

Conclusion

• India is currently witnessing a disturbing debasement of standards in journalism, and the PCI’s legal and ethical obligation has never been so critical.
• Media is often called upon by the state to privilege a narrowly defined national interest over truthful reporting; professional media in a democracy must view truthful reporting in itself as in national interest.
• The PCI must play its mandated role and not kowtow to the government of the day.

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Explained: Why Amazon fires are worrying (Indian Express)

Mains Paper 3: Environment
Prelims level: Forest fires
Mains level: Concern for Amazon forest fires

Context

• Over the last several days, the Amazon rainforest has been burning at a rate that has alarmed environmentalists and governments worldwide.
• Mostly caused by farmers clearing land, the fires have thrown the spotlight on Brazil President’s policies and anti-environment stance.

Background

• The fires started in the Amazonian rainforests and have impacted populated areas in the north such as Rondônia, blocking sunlight and enveloping the region in smoke.
• The smoke has wafted thousands of miles to the Atlantic coast and São Paulo, according to the World Meteorological Organization (WMO).
• The forest fires in the region have doubled since 2013, and increased by 84% compared to the same period last year, according to Brazil’s National Institute for Space Research (INPE).
• This year alone there have been 72,843 fires and more than 9,500 of those have happened over the past few days.

How did the Amazon fires start?

• Brazil President Jair Bolsonaro’s anti-environment rhetoric has encouraged farmers, who in turn organised a fire day along BR-163, a highway that runs through the heart of the rainforest.
• A local newspaper there reported that the local farmers had set fire to the section of rainforest a few days ago to get the government’s attention.
• An INPE researcher told that this year, the region did not experience extreme dry weather.
• This point is significant because the dry season creates the favourable conditions for the use and spread of fire, but starting a fire is the work of humans, either deliberately or by accident.
• The Amazon fires are so large that they are visible from space. NASA released images showing the spread of fires and reported that its satellites had detected heightened fire activity in July and August.

Why the Amazon fires are a cause for concern?

• The Amazon rainforest is a repository of rich biodiversity and produces approximately 20% of oxygen in the Earth’s atmosphere.
• It is home to indigenous communities whose lives and homelands are under threat due to encroachment by the Brazil government, foreign corporations, local farmers, etc.
• In a 2017 study, the University of Leeds found that carbon intake by the Amazon basin matches the emissions released by nations in the basin.
• The burning of forests implies additional carbon emissions. Further deforestation could transform Amazon to a savanna, which would reverse the region’s ecology.
• A National Geographic report said the Amazon rainforest influences the water cycle not only on a regional scale, but also on a global scale.
• The report said the Amazon rainforest has the ability to produce at least half of the rain it receives. This cycle is a delicate balance.

What environmental protection do Brazil’s laws provide, and what has changed recently?

• In 1965 - Under Brazil’s Forest Code of 1965, farmers could purchase Amazon land but could farm only 20% of it.
• In 1988 - Following the collapse of the 1988 military dictatorship, a new constitution gave indigenous populations legal ownership of their land and the right to reject the development of their land.
• In 2012 - Forest Code was revised to reduce the area of deforested land required to be restored, and to reduce penalties for illegal deforesting.
• In 2018 - Brazil’s Supreme Court upheld these changes.
• In 2019 - Bolsonaro took office in January, promised during his election campaign that he would open up the Amazon region for business.
• Along with aggressive policies of promoting agribusiness, Bolsonaro has opposed protections for indigenous tribal land.
• Agribusiness products in 2016 represented 46% of Brazil’s exports.
• Conservationists believe that for Brazil’s government, short-term economic interests take precedence over environmental concerns.

How has the government reacted to the concerns over the fires?

• Bolsonaro has dismissed the INPE findings and said it was the time of the year when farmers burn the land for farming.
• In July, he fired INPE scientist Ricardo Galvao for publishing agency data that showed the accelerated rate of deforestation, calling the figures a lie and the images manipulated.
• Bolsonaro said that a report that does not match the truth can cause great damage to the image of Brazil. INPE has defended its data.

Way forward

• Germany and Norway have suspended funding for programmes that aim to stop deforestation in the Amazon.
• They also accused Brazil of doing little to protect the forests.
• Indigenous groups and environmental activists have led protests and criticised Bolsonaro for his comments and policies.

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Increasing investment to stimulate growth (The Hindu)

Mains Paper 3: Economy
Prelims level: Gross Fixed Capital Formation
Mains level: India’s present economic slowdown concerns

Context

• India’s current economic slowdown is due to a combination of two underlying trends.
• First, there is the short-run cyclical slowdown exhibited by a number of high-frequency indicators, reflecting a significant fall in demand, especially for sectors such as automobiles, consumer durables and housing.
• Second, there is the more serious long-term fall in investment and savings rates. Raising growth requires that attention be paid to both cyclical and structural dimensions of the problem.

Fixed capital formation

• When it comes to the Gross Fixed Capital Formation (GFCF) relative to GDP at current prices, a steady fall has been visible since 2011-12, when it was 34.3%. By 2017-18, it had fallen by 5.7% points, to a level of 28.6%.
• Assuming an Incremental Capital Output Ratio (ICOR) of 4, this meant a fall of nearly 1.4% points in the potential growth rate.
• The fall consisted of sectoral decreases in the household, private corporate and public sectors (as indicated in the table).
• It is noticeable that the fall in the household sector’s investment rate got arrested by 2015-16.
• However, by then, the rate had already fallen by 6.3% points. From 2016-17, the sector’s investment rate even showed some recovery.
• In contrast to the household sector rate, the private corporate sector investment rate did not show any fall up to 2015-16 when, at 11.9%, it was in fact higher than the corresponding rate for 2011-12 (11.2%). It fell in the subsequent years, but only by 0.7% points. This near-constancy runs counter to what industry leaders have been saying and what other data sources such as CMIE indicate, casting some doubts on the veracity of the figures.
• In the case of the public sector, the rate fell by 0.3% points between 2015-16 and 2017-18.
• Thus, the period from 2011-12 to 2017-18 can be seen as consisting of two parts: 2011-12 to 2015-16, when the household sector investment rate fell sharply; and 2015-16 to 2017-18 when the investment rates of the private corporate and public sectors fell marginally.

Fall in household savings rate

• The Gross Domestic Savings Rate also fell between 2011-12 and 2017-18 by 4.1% points, from 34.6% of GDP to 30.5%. However, this fall was entirely due to the household sector, with the private corporate and public sectors showing increases in their savings rates by margins of 2.2% points and 0.2% points, respectively.
• This differentiated sectoral pattern of investment and savings rates had significant implications for the financing of investment.
• Throughout the period from 2011-12, the savings rate of the private corporate sector increased, reducing its dependence on the surplus savings of the household sector. While the excess of private corporate sector’s investment over its own savings rate was 3.8% points of GDP in 2011-12, the gap fell to 0.5% points by 2017-18.
• At present, all the surplus savings of the household sector is available for the public sector.
• With private corporate sector’s investment demand being largely met by its own savings, public sector’s borrowing requirements can be fully financed using the surplus from the household sector, supplemented by net inflow of foreign capital without any fear of crowding out.

Requirement for critical policy challenges

• In 2018-19, the real GDP growth rate was 6.8%.
• A countercyclical policy should increase growth rate to its current potential of 7%-7.5% and then structural reforms should raise the potential growth itself to above 8.5% if India is to attain a size of $5 trillion by 2024-25.

More capital expenditure

• From the monetary side, reducing the repo rate by a cumulated margin of 110 basis points in 2019 has not as yet induced a noticeable growth response.
• Complementary fiscal stimulus, in the form of additional public sector investment, may prove to be more effective.
• However, given the fiscal deficit constraint, there is limited flexibility for increasing centre’s capital expenditure directly.
• In the 2019-20 budget, this is estimated to be 1.6% of GDP. There may be some expansion, if additional dividends from the Reserve Bank of India (RBI) flow to the government.
• Further, there may be some possible additional disinvestment. However, care should be taken to deploy all of these additional funds for capital expenditure.
• Normally, the prescription to meet slowing demand is to increase government expenditure.
• In the current situation, there can be an increase in government expenditure but it has to be directed towards an increase in investment expenditure.

Conclusion

• A similar effort may be made by State governments and non-government public sector enterprises to increase capital expenditures.
• All these measures may also crowd in private investment.
• Thus, this fiscal push, together with the already-initiated monetary stimulus, may help raise the growth rate.
• Another area that needs immediate attention is the financial system, which must be activated to lend more.

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Shallow draughts: On Trump’s Kashmir remarks (The Hindu)

Mains Paper 2: International Relation
Prelims level: Not much
Mains level: U.S.-Taliban peace process

Context

• Prime Minister Narendra Modi and U.S. President Donald Trump, expected on the sidelines of the G7 summit, many in South Block would have hoped that the U.S. President would not make any of his characteristically controversial statements.
• The two leaders have a full bilateral agenda to discuss, including defence and strategic cooperation, and will need to resolve outstanding trade issues, as well as deal with possible U.S. sanctions on India for an upcoming purchase of the Russian S-400 anti missile systems and the future of Iran sanctions for oil purchases.

U.S.-Taliban peace process

• India’s concerns over the U.S.-Taliban peace process will also be high on the agenda.
• However, Mr. Trump has made it clear, in at least three recent statements, that the situation in Jammu and Kashmir (J&K) and resultant tensions between India and Pakistan will claim much of the conversation.
• Mr. Trump has repeated, despite several rejections from India, that he would like to “mediate” between the two countries.
• He has also called the India-Pakistan conflict over Kashmir a ‘religious problem’.
• While Mr. Trump is free to make assertions, his views on the Kashmir dispute betray an ignorance of the nature of the conflict and the situation on the ground.

Historical consequences behind the partition

• Since 1947, the view on the Indian side has been that Partition was not on the basis of a religious divide, but an ideological one: the ‘idea of Pakistan’ vs. the ‘idea of India’. Pakistan was carved out of India because sections of Muslims believed that they could not live equitably with the majority Hindu community.
• India consisted of those who believed people of all religions could live together in a secular, pluralistic society; and it should be noted that more Muslims chose to live in India than in Pakistan.
• India’s claim over J&K, a State that included Hindus, Muslims and Buddhists, stemmed from this very premise.
• The government has repeatedly stressed that its decision on J&K was mandated by a desire to provide better governance and development for the people there.

Conclusion

• Mr. Trump’s assertion that the issue over Kashmir is a religious one unwittingly plays into the Pakistani narrative of a conflict that has defied such narrow definitions for more than 70 years. It is therefore necessary that the government firmly corrects Mr. Trump on the matter.
• While the government has decided wisely to ignore many of his quixotic comments, his assertion that Kashmir is essentially a communal problem is dangerous, and needs to be countered by New Delhi in the interest of bilateral relations, as well as the resolution of the problem itself.

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Sentiment booster: On govt response to slowdown (The Hindu)

Mains Paper 3: Economy
Prelims level: Economy slowdown
Mains level: Comprehensive package of measures for our economy against the slowdown

Context

• For an economy that is downbeat in growth and in sentiment, the comprehensive package of measures announced by Finance Minister Nirmala Sitharaman on Friday may just be the right boost.

About slowdown process

• They address growth slowdown concerns; free up funds for investment and spending by banks, housing finance companies and MSMEs; and importantly, undo some controversial proposals, in the budget and outside it, which were affecting sentiment in the markets and the corporate sector.
• These have all been done without any significant financial burden on the government.
• Some of the measures promote the ease of doing business and even the ease of living for ordinary citizens.
• The auto sector’s biggest demand that of reduction in GST rate may not have been conceded, but Ms. Sitharaman has given the sector enough to cheer about.
• The accelerated depreciation of 15% (in addition to the existing 15%) for all vehicles acquired till March 31, 2020 and the deferment of the proposed increase in registration fee for new vehicles to June 2020 are positive measures that will boost sentiment and, it is to be hoped, translate into demand.
• As the festive season sets in, banks will have more space to increase their lending consequent to the upfront funding of ₹70,000 crore (announced in the budget) that they will get from the government towards recapitalisation.

Push for repo rate linked loan products

• This, together with the strong push for repo rate linked loan products, is likely to benefit consumers borrowing to buy new homes, vehicles and durables.
• The roll-back of the capital gains tax imposed in the budget on foreign portfolio investors, the withdrawal of angel tax on start-ups and the promise that non-compliance with corporate social responsibility (CSR) norms will be decriminalised show a government that is willing to listen to feedback from the ground.
• Much of the mayhem in the markets could have been avoided though if only the Finance Minister had acted earlier on the negative feedback to the FPI tax proposal. Some of the smaller steps can go a long way.
• Expediting delayed payments by government departments and public sector units is alone expected to release a massive ₹60,000 crore into the economy.
• The assurance that all pending GST refunds to MSMEs will be paid within 30 days and going forward such refunds will be made within 60 days is a great relief for the sector.
• This will ease the cash flows of MSMEs who often work with stretched finances.

Conclusion

• The most significant takeaway though from Ms. Sitharaman’s announcements is the fact that the government is no longer scared of the suit-boot ki sarkar jibe. She declared upfront that the government respects “wealth creators” and the measures are aimed at helping them.
• Will these measures put GDP growth back on the rails?
• Will they restore the jobs lost in the last few months? The answers to these are in the hands of the wealth creators now.
• The government did what it could; it is now up to India Inc to take the ball and run.

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Contain the crisis (Indian Express)

Mains Paper 3: Economy
Prelims level: FRDI bill
Mains level: Challenges to the resolution/liquidation of financial firms

Context

• The liquidity and solvency issues plaguing the non-banking financial sector continue unabated. Earlier this week, Dewan Housing Finance Corporation Ltd (DHFL) defaulted on its repayment obligations to the tune of Rs 1,571 crore.
• NBFCs/HFCs continue to struggle to repay their loan obligations and raise low cost funds.
• As credit flow through this channel has slowed down, the ripple effects are being felt in the broader economy.

Background

• One way, perhaps, to have contained the crisis, and prevent it from spreading throughout the financial sector, engulfing mutual funds as well, would have been through quick and orderly resolution/liquidation of firms in trouble.
• But the resolution framework, as it exists, makes it difficult to close down financial firms such as banks and NBFCs.
• The Financial Resolution and Deposit Insurance (FRDI) bill had envisaged a framework for this.
• The bill, which was introduced by the NDA government in its first term, however, was withdrawn due to protests over some clauses. The current situation warrants a fresh look at the legislation.

Challenges to the resolution/liquidation of financial firms

• The resolution/liquidation of financial firms is a challenging process, as, unlike in the case of non-financial firms, there are depositors to deal with.
• The inter linkages between financial firms and the broader economy complicate matters. The FRDI bill had envisaged the creation of a resolution corporation, endowed with powers to monitor/assess the risk of financial firms, to enable speedy resolution of firms — either through a merger or by selling off or winding up or through other avenues.
• As the events of the past few months show, there is a need for regulators to step in quickly.
• Delays in recognition and failure to act in time lead to higher losses. A long drawn out insolvency process for financial firms, as in the case of IL&FS, can have far-reaching ramifications for the economy.
• In comparison, an early resolution can lessen the impact of firm failure on the economy, and lead to more efficient allocation of capital.

Conclusion

• The FRDI bill was withdrawn due to protests over the contentious “bail-in” clause and concerns about the extent of deposit insurance.
• But, as the complications in the ILandFS resolution process and the ongoing problems in the NBFC sector show, the government would do well to bring it back, albeit with modifications to address the issues that have been raised.

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Creating jobs through garment exports (The Hindu)

Mains Paper 2: Economy
Prelims level: Employment
Mains level: Boosting employment through garment exports

Context

• Rapid creation of productive and better paying jobs reduces poverty. It also mitigates inequality.
• One can actually have high GDP growth rates with modest employment generation.
• One can also have higher expenditure on anti-poverty and welfare measures, without having a major impact on jobs.

Job creation is the key goal

• Job creation should, therefore, be the key development goal. States, instead of signing MoUs for thousands of crores of investment, should be seeking job creation commitments in their Investment Summits.
• Seeing the economy through the prism of job creation would bring into focus labour intensive sectors and generate discussion around policy instruments which could be used to get these sectors to grow more rapidly.
• This would require fresh thinking beyond the traditional macroeconomic parameters such as inflation, the fiscal and current account deficits, and interest rates on the one hand, and, on the other, infrastructure development; power, highways, ports and airports.
• India fought hard in the WTO negotiations for the phasing out of the quota system which used to govern textile exports and where (presumably for geopolitical reasons) the Chinese had a quota which was many times that of India’s.
• It was felt that once quota restrictions ended, apparel exports from India would rise rapidly and catch up with Chinese exports.

Challenges for India

• After the quota regime ended in 2005, textile and garment exports from India did not rise more rapidly.
• China’s per capita income and wages are now about five times that of India’s. Yet its textile exports are over $270 billion whereas India’s are around $40 billion.
• India’s growth rates remain modest whereas Vietnam and Bangladesh have been having sustained export growth of over 20 per cent per annum.
• Fresh thinking on feasible measures to achieve a breakthrough is overdue.
• Garment exports, given India’s low wages, should be covering the whole range of products for the global market rather than being restricted primarily to cotton apparel as is the case now.
• Given the nature of the global supply chain of readymade garments with rapidly changing designs and fashions, hassle-free zero duty imports of synthetic fabrics specified by designers of global brands is an essential prerequisite for becoming part of global supply chains.
• This is not the case now.
• The mechanism of advance licensing on input-output norms for exports works for standard industrial products, but not for garments.
• One radical option would be to do away with the duty protection available to the domestic synthetic fibre and fabric industry.

What it needs to?

• However, a viable approach which does not hurt the upstream domestic industry would be a dispensation where garment exporters exporting more than ₹100 crore per annum are given the freedom to import fabrics duty free, maintain records of usage for exports and be subject to annual audit to ensure that there is no misuse.
• Bangladesh runs such a scheme. India could easily do so.
• This would enable garment exporters across the country to attempt diversification using imported fabric and accessories.

Textile SEZs

• A more ambitious approach would be for the government to develop large integrated textile and apparel Special Economic Zones, where there are no import duties, and invite investors from India as well as overseas to put up plants.
• There is one good precedent in the 1,000-acre Brandix textile SEZ, promoted by a Sri Lankan entrepreneur near Vijayawada.
• It has specialised in women’s underwear and is a major supplier to the global luxury brand Victoria Secret.
• They claim that 60 per cent of the bras sold by Victoria Secret in the US are made here.
• It has been growing and now employs over 18,000 women from nearby villages who come in chartered buses for two shifts in the day.
• The allotment of land at reasonable/nominal/subsidised rates for industrial parks for job creation has to be the guiding principle if labour intensive organised sector manufacturing jobs for global supply chains are to be created.
• Expensive land can undo the cost advantage of low wages.
• The SEZ regime could also be tweaked to treat sales to the domestic market on normal import duties as meeting the foreign exchange earning obligation of units in the SEZ.
• Some production for the growing Indian market would shift to the SEZ creating jobs for Indians.

Incubation centres

• Another bolder approach would be for the state to finance the creation of Incubation Centres of plug and play garment manufacturing units in Textile Parks.
• This would mean that work sheds with state-of-art stitching machines are provided at a token rent to a start-up, say, a fresh graduate from a fashion/ design institute with the agreement that as she succeeds, she would pay higher rents and even buy the garmenting unit paying the full cost.
• Those who fail, and some would fail, could leave and look for jobs without any liabilities. The cost of the failures could over time be borne by the successes so that the Incubation Centre could grow and nurture an increasing number of entrepreneurs.
• To have global scale, the Textile Parks need to be large. These may be promoted by the state directly, or, through innovative public-private partnerships.
• These could also break new ground by developing rental workers housing which has so far been missing in industrial area development.

Conclusion

• However, staff housing is intrinsic to the IT SEZ development. Decent housing at a reasonable distance from the work place makes a huge difference to worker productivity.
• These ideas are equally relevant for other labour intensive sectors ranging from toys to shipbuilding.
• The state needs to assume a larger responsibility than it has so far been prepared to do for India to begin creating manufacturing jobs for global supply chains on the scale needed.
• It also needs strategic thinking, patience and willingness to take risks.

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What’s behind slow-moving consumer goods (The Hindu)

Mains Paper 3: Economy
Prelims level: FMCG
Mains level: Slowdown in the FMCG companies

Context

• A lot has been written about why automobile sales in the Indian economy have been skidding lately.
• While it is easy to understand why consumers may hold back on big-ticket car or SUV purchases when faced with slowing credit or income.
• Studying long-term growth trends in listed FMCG companies and their investor interactions after the June-quarter results yields some insights.

It’s a slowdown, not recession

• The sales of the 30 listed FMCG companies, after expanding at 11-13 per cent between the June and December quarters of 2018, lost speed to a 9 per cent growth in the March quarter of 2019 and further to 7.3 per cent in the latest June quarter.
• Market researcher Nielsen has said that after growing at 12 per cent in the first half of 2019, India’s FMCG market growth will likely slow to about 8 per cent in the second half.
• FMCG firms often keep their sales growth ticking through price increases, so volume growth trends better represent consumer demand.
• On this score, sector bellwether Hindustan Unilever (HUL) has reported a 5 per cent volume growth in the June quarter of FY20, after managing 10 per cent growth in FY19.

So what has driven this boom-bust behaviour?

• After growing at the sedate single digits until FY16, volume growth for FMCG players received a body-blow from the note ban, reporting shrinking volumes in the September and December quarters of 2016.
• By the time they staged a tentative revival to 3-4 per cent by June 2017, the GST implementation kicked in.
• With the GST sharply lowering indirect taxes on many large FMCG categories amid a benign input environment, players were able to drum up demand through price cuts and promotions.
• As a result, growth accelerated and stayed at double digits between September 2017 and 2018.
• But with the high base effect kicking in and input prices turning volatile in 2019, the old normal of single-digit volume growth seems to be reasserting itself.

What are the trends to driving it?

• The rural market, accounting for about 40 per cent of FMCG sales, seems to be facing the brunt of the slowdown. Rural demand growth for FMCGs, which was racing ahead at 1.3-1.5 times urban growth in 2018, has since levelled off.
• This can probably be pinned on the drought-like situation across many States this past year on top of declining agricultural incomes. Northern and western markets for FMCGs have reported a sharper slowdown than the South or East.
• In highly penetrated categories such as soaps, laundry or toothpastes, mid- and low-priced brands appear to be hit by consumer downtrading on slowing income. But high-priced brands appear to be in good shape, thanks to the trend of affluent consumers ‘premiumising’.
• Products with a ‘natural’ tag, despite their higher price tags, have continued to be a hit with consumers. According to Dabur, oral care products with a natural tag managed to grow volumes at 18 per cent, against 5-6 per cent in garden-variety toothpastes.
• In categories such as biscuits, packaged foods and edible oils, nippy local players have posed a stiff price competition to listed players, wooing away value-conscious consumers. In India, phases of benign input prices for FMCGs have always given birth to new local brands playing the discount game.
• Nielsen noted that small regional manufacturers of FMCGs had managed a 28 per cent sales growth in the year to September 2018, while national players grew at 12 per cent.

Shifting towards urban markets

• In the urban markets, disruption in trade has also played a role in slowing sales for some players. The note ban prompted a distinct shift in urban shopping habits towards hypermarket and e-commerce stores, which now make up over 15 per cent of FMCG sales.
• The traditional wholesale channel has seen shrinkage with GST woes and the liquidity crunch.
• With modern trade and e-commerce sites seeing products fly more quickly off the shelves, some players have used targeted discounts and promotions to gain share in this space, while those sticking with traditional channels have lost.

Conclusion

• All this goes to show that FMCG players do not really have their backs to the wall.
• Should the slowdown worsen, they have leeway to stimulate demand by trimming ad-spends and taking selective price cuts.
• All this, however, must be separated from the stock price performance of FMCG players, which may still need to correct from over-optimistic valuations.

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New norms: On regulations for foreign investors (The Hindu)

Mains Paper 3: Economy
Prelims level: Not much
Mains level: Key implications from SEBI’s move on FPI

Context

• Foreign investors who have been fleeing the country since the Union budget presented early last month have something to cheer about finally.
• The Securities and Exchange Board of India (SEBI), based on the recommendations of the H.R. Khan committee, eased several regulatory restrictions that are likely to make life easier for foreign portfolio investors (FPIs).
• Among a slew of measures, the financial markets regulator has simplified the registration process for FPIs by doing away with the broad-based eligibility criteria, which required a minimum of at least 20 investors in a foreign fund, and certain documentary requirements.

Engage off market sale

• FPIs can now also engage in the off-market sale of their shares with fewer restrictions. Further, SEBI has allowed entities registered at an international financial services centre to be automatically classified as FPIs. This might help foreign investors bypass some of the restrictions.
• Mutual funds with offshore funds too can invest in India as FPIs to avail certain tax benefits now. Central banks that are not members of the Bank of International Settlements are also allowed to register as FPIs and invest in the country under the new norms.
• Smart cities, along with other urban development agencies, will now be allowed to issue municipal bonds to raise funds for development.
• These measures to cut red tape will help lower the regulatory burden on investors, globalise India’s financial markets, and aid the growth of the broader economy by increasing access to growth capital.

Key implications from SEBI’s move

• It is not immediately clear whether SEBI’s move was motivated by the recent flow of funds out of India’s capital markets.
• Capital in excess of ₹20,000 crore has left Indian shores in the last few weeks after Finance Minister Nirmala Sitharaman’s budget decision to increase taxes on FPIs.
• Policymakers were clearly under pressure to do something to allay the fears of foreign investors, so the timing of SEBI’s move is no surprise.
• But given the broader trend of capital flowing out of emerging markets across the world, it remains to be seen whether SEBI’s present move will yield immediate benefits. Even if it fails to do so, the move will still help Indian markets become more attractive to foreign investors in the long-run.

Conclusion

• While the steps taken by policymakers to make amends for their previous policy errors are obviously welcome, they should not deflect attention from the larger and persistent issue of overreach by the government against investors.
• In a world of globalised capital markets, where many nimble emerging markets compete to attract capital from the developed world, India cannot afford to be seen as flip-flopping on its commitments.

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Internal affairs: On Assam NRC (The Hindu)

Mains Paper 2: Polity
Prelims level: National Register of Citizens
Mains level: National Register of Citizens process

Context

• External Affairs Minister S. Jaishankar’s statement in Dhaka on Tuesday that the soon-to-be-published National Register of Citizens (NRC) in Assam is India’s internal matter lets Bangladesh off the hook as far as a possible return of those who don’t find their names in the NRC is concerned.
• The Supreme Court has repeatedly asked the Centre to ascertain from Bangladesh whether it would accept those persons, who might be declared foreigners, after the NRC exercise is completed in Assam.

Supreme Court

• The Supreme Court has had occasion to say that the Centre had not engaged Bangladesh in a substantive dialogue on the issue.
• By stating that the NRC is India’s internal matter, the External Affairs Minister has conceded to Bangladesh a point that Dhaka has repeatedly made that the 40 lakh-odd people who don’t figure in the draft NRC lists are not its citizens and it is not responsible for them.
• In fact, Bangladesh has never accepted that any of its citizens ever illegally entered Indian territory.
• Other than the cryptic remark about the NRC being an internal matter for India, newspaper quoted the Bangladeshi Foreign Minister A.K. Abdul Momen as saying that Mr. Jaishankar had conveyed to him not to worry about the NRC issue.
• Bangladesh could well be satisfied with New Delhi’s position on the NRC, but Indians are none the wiser about what the Centre plans to do with the lakhs of people Hindus and Muslims who are likely to find themselves missing from the Register when it is finally published on August 31.
• Other than this, there is no clarity on what the government plans to do with the lakhs of people likely to be rendered stateless after the NRC exercise is completed.
• Though these persons would have access to foreigners’ tribunals and the courts of the country, the Centre and the Supreme Court should have had a plan in place about how they will deal with the impending humanitarian crisis in Assam.

Conclusion

• Many of the affected are abjectly poor people, with little or no understanding of how the NRC process works, and entered this country in the hope of a better future for themselves and their children.
• It is the duty of the Government of India and the Supreme Court to ensure that these individuals are treated with dignity.
• The government would also do well to treat all communities who don’t figure in the NRC in a non-discriminatory manner.

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India’s engagements in the Indian Ocean (Mint)

Mains Paper 2: International Relations
Prelims level: Not much
Mains level: India’s foreign policy

Context

• India is setting a high tempo of naval operations in Asia. In recent weeks, a series of bilateral exercises with regional navies in the Indian Ocean have demonstrated the Indian Navy’s resolve to preserve operational leverage in India’s near seas.
• In April, in their biggest and most complex exercise, Indian and Australian warships held drills in the Bay of Bengal.
• This was followed by a much-publicised anti-submarine exercise with the U.S. Navy near Diego Garcia.
• Last week, the Indian Navy held a joint exercise ‘Varuna’ with the French Navy off the coast of Goa and Karwar.
• Even as two Indian warships participated in a ‘group sail’ with warships from Japan, the Philippines and the United States on return from a fleet review in Qingdao.

Challenges for India

• The trigger for India’s newfound zeal at sea is the rapid expansion of China’s naval footprint in the Indian Ocean. Beyond commercial investments in Pakistan and Sri Lanka, China has established a military outpost in Djibouti, a key link in Beijing’s Belt and Road Initiative (BRI).
• Reports suggest the People’s Liberation Army (PLA) is planning an expansion of its logistics base for non-peacekeeping missions, raising the possibility of an operational overlap with the Indian Navy’s areas of interest.
• As some see it, Djibouti portends a future where China would control key nodes skirting important shipping lanes in the Indian Ocean, allowing the PLA’s Navy (PLAN) to dominate the security dynamic.
• Meanwhile, South Asian navies have been making their presence felt in the seas of the subcontinent. In a quest for regional prominence, Sri Lanka has positioned itself as a facilitator of joint regional endeavours, expanding engagement with Pacific powers which includes the Royal Australian Navy and the U.S. Navy.
• With China’s assistance, Pakistan too is becoming an increasingly potent actor in the northern Indian Ocean, a key region of Indian interest.
• Beijing has also been instrumental in strengthening the navies of Bangladesh and Myanmar, both increasingly active participants in regional security initiatives.
• In these circumstances, India has had little option but to intensify its own naval engagements in South Asia.

Partnerships are key

• As the most capable regional maritime force, the Indian Navy has played a prominent role in the fight against non-traditional challenges in the Indian Ocean.
• While its contribution to the counter-piracy mission off the coast of Somalia, humanitarian assistance and disaster relief (including in cyclone-hit Mozambique) has been substantial, a paucity of assets and capacity has forced the Navy to seek partners willing to invest resources in joint security endeavours.
• Partnerships are vital to the Indian Navy’s other key undertaking: deterring Chinese undersea deployments in South Asia.
• For New Delhi, China’s expanding submarine forays in the Indian Ocean indicate Beijing’s strategic ambitions in India’s neighbourhood.
• Experts reckon PLAN has been studying the operating environment in the Indian Ocean in a larger endeavour to develop capabilities for sustained operations in the littorals.
• As a result, the Indian Navy’s recent bilateral exercises have focussed on under-sea surveillance and anti-submarine warfare.

The movement of China

• To be sure, sightings of Chinese submarine sightings have decreased, which has led some to conclude that Beijing is moving to scale down its maritime operations in the Indian Ocean.
• After a ‘reset’ of sorts in ties following the Wuhan summit last year, some observers believe India and China are on a collaborative path.
• New Delhi’s silence on China’s continuing aggression in the South China Sea, and Indian warships being sent for the Chinese fleet review in Qingdao (in April) do suggest a conciliatory stance.
• Yet, reduced visibility of Chinese submarines does not necessarily prove absence.
• The truth, as some point out, is that PLAN is on a quest to master undersea ‘quieting’ technologies and its new submarines are stealthier than ever.
• The reason they are not being frequently sighted is because Chinese submarines are quieter and craftier than earlier.
• China has been downplaying its strategic interests in South Asia.
• It is concerned that too much talk about its growing naval power could prove detrimental to the cause of promoting the BRI.
• Alarm at the recent BRI summit over Chinese ‘debt traps’ has led Beijing to revise some infrastructure projects. India’s refusal to participate in the BRI may have also prompted China to rethink its economic and military strategies in the Indian Ocean.

African focus

• Even so, Beijing hasn’t indicated any change of plan in West Asia and the east coast of Africa, where most of China’s energy and resource shipments originate.
• Chinese investments in port infrastructure in Kenya, Sudan, Tanzania and Mozambique have grown at a steady pace, even as PLAN has sought to expand its presence in the western Indian Ocean.
• In response, India has moved to deepen its own regional engagement, seeking naval logistical access to French bases in Reunion and Djibouti, where the second phase of ‘Varuna’ will be held later this month.
• Yet, India’s Indian Ocean focus makes for an essentially defensive posture.
• Improvements in bilateral and trilateral naval engagements, it hasn’t succeeded in leveraging partnerships for strategic gains.
• With India’s political leadership reluctant to militarise the Quadrilateral grouping or to expand naval operations in the Western Pacific, the power-equation with China remains skewed in favour of the latter.

Conclusion

• For all its rhetoric surrounding the ‘free and open Indo-Pacific’, New Delhi is yet to take a stand on a ‘rules-based order’ in littoral-Asia.
• A wariness for sustained operations in China’s Pacific backyard has rendered the Indian Navy’s regional strategy a mere ‘risk management’ tactic, with limited approach to shape events in littoral-Asia.

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Privacy rights, wrongs (Indian Express)

Mains Paper 2: Polity
Prelims level: Security - Privacy - Technology debate; Aadhaar issue
Mains level: Historical underpinnings, evolution, features, amendments, significant provisions and basic structure

Context

• Supreme Court has agreed to hear together multiple public interest litigations pending in Madras, Bombay and Madhya Pradesh high courts, calling for the linking of Aadhaar with social media accounts.

Why it is needed?

• Death threats, criminal intimidation, smearing and stalking are commonplace in social media.
• The mills of rumor and fake news have the capacity to spark violence and conflict.

Key challenges to the linkage

• It could have international implications and inspire litigation in other nations.
• Privacy is at stake. Supreme Court clarified it and defined it as a “guaranteed fundamental right” in 2017. That SC judgment was hailed by Electronic Frontier Foundation, the pioneering digital civil liberties group.
• The right to privacy is fundamental and cannot be reduced under normal circumstances.
• The data security of Aadhaar remains doubtful and it is not mandatory even for banking purposes.

Privacy and security concerns

• The balance between the imperatives of privacy and security should be maintained.
• Right to life is absolute until a death sentence is pronounced, and the right to liberty can be conditional only in a state of unrest or emergency.
• The question of striking a balance with an absolute right cannot arise under normal circumstances.

Way Forward

• Phone numbers associated with social media accounts can identify owners with complete accuracy since sim cards are issued against identity documents.
• The technical solution to the problem – AI can identify dubious content by textual analysis and flag it as spam or malware. Twitter proactively swept away Chinese accounts spreading disinformation about the Hong Kong protests.
• The Supreme Court should mandate a technical solution because it cannot encroach upon the very value that is upheld and protected.

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State-breaking is not nation making (The Hindu)

Mains Paper 2: Polity
Prelims level:
Mains level: Re-organisations of Indian states

Context

• In India most linguistic and ethnic groups aspire for a State of their own.
• Militants have taken up arms against the government and against other groups to achieve this particular objective.
• The abrogation of Article 370 guaranteed by the Constitution, and the downgrading of the State of Jammu and Kashmir, are being hailed and celebrated.
• It is surprising that the Telangana Government which secured its State through popular mobilisation, voted for a Bill that dismembered Jammu and Kashmir.

Issue of co-existence

• This lesson was hammered into political consciousness by events that followed the collapse of the Berlin Wall in 1989.
• Countries melted away and a number of new States emerged out of the debris of old ones often through processes of civil war, ethnic cleansing and genocide.
• As the world saw a rush of State-breaking and State-making, a new lease of life was infused into dormant separatist movements.
• The spate of ethnic cleansing and genocide has prompted scholars to raise the question: how can we ensure that people who speak different languages, worship different gods, and follow different belief systems coexist in a plural society?

Kernel of identity

• On balance, scholars agreed that federalism is the best answer to the question of co-existence. Federalism has since long been offered as an antidote to the centralisation of power, which results in a democratic deficit in large and multicultural societies.
• Decentralisation and regional autonomy ensure responsive governance, fiscal prudence and efficiency as well as popular participation.
• But in the 1990s, scholars realised that individuals do not only seek economic benefits.
• Individuals need to have an identity; they need community whether that of language, or religion, or memory, or shared traditions.

Regional autonomy

• The homogenising impulse of the nation state generates resistance. These are political wars; they cannot be resolved by military means.
• The only way to stem, to ward off disorder and the innumerable tragedies mayhem spawns is to strengthen federalism.
• A decentralised political system enables participation. It also protects minority identities. This was the precise logic that governed the linguistic reorganisation of States in India in the 1950s.
• This was the precise logic that gave to Jammu and Kashmir, along with other constituent States of the Indian federal system, regional autonomy.

Conclusion

• Mature democracies do not steamroller diversity or oppress minorities.
• They understand that diverse cultures expand and enrich our grasp of the complexities, and the dilemmas of the human condition.
• A monochromatic society is, by definition, soulless and bare. Stripped of the excitement of learning new languages, acquaintance with new values, familiarity with new cuisines, literature, music, art, sculpture, and ways of conceiving the world, life becomes dull. Life in a plural society promises adventure.

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