Biodiversity Act: A jungle of confusion (The Hindu)

Mains Paper 3: Environment
Prelims level: Biodiversity Act
Mains level: Highlights of the Biodiversity Act guidelines

Context

• The Biological Diversity Act (2002). Seventeen years of implementation have provided the country with enough experience on how to implement the Act, as well as how not to interpret certain provisions.

Highlights of the Act

• One key component of the Act is to devise ways and means to seek benefits from the commercial utilisation of biological resources and the associated traditional knowledge pertaining to the use of such resources.
• Guidelines for such access and benefit sharing (ABS) were issued in 2014.
• However, the interpretation of these Guidelines during implementation has been severely problematic.
• This has resulted in a large number of litigations before the courts, including the National Green Tribunal.
• In the absence of any case law and experience in interpreting the provisions of the Act and its Rules (issued in 2004) along with the Guidelines, the courts in India are also finding it difficult to deal with litigations, resulting in a state of confusion and concern among those wishing to commercially utilise the resources and secure economic benefits.

Notable issues

• While there is general agreement amongst a majority of the businesses to share the benefits from the profits they make using the country’s biological resources and the associated traditional knowledge.
• It is the coercive attitude of the implementing agencies and a lack of clear interpretation of the provisions of the Act and its Rules that have created problems and cases of non-compliance.
• Realising these issues, the Ministry of Environment, Forests and Climate Change issued a revised set of Guidelines on ABS recently.
• Detailed analyses of the revised Guidelines clearly point towards a scope for more confusion and possibilities for legal challenges while implementing the provisions.

Key concerns the revised Guidelines need to address:

• The usage of the terms ‘guidelines’ as well as ‘regulations’ in the title provides a confusing mandate, given that this document falls in the category of a legal instrument and needs to be strong.
• Calling the points guidelines instead of regulations reduces its potential.
• Though the guidelines speak about benefit sharing, they focus only on ‘securing benefits’ and are completely silent on ‘sharing’.
• This can be legally challenged, since there has been no proof available in the history of the implementation of this Act discussing whether the benefits accrued have ever been shared with the benefit-claimers, which include local communities.

Calculating percentage

• That benefit sharing has to be negotiated between parties, especially the benefit claimants and resource-users, is clearly ignored throughout the revised Guidelines.
• The pre-determination of the percentages of profits to be shared also goes against the very spirit of the Act and the Nagoya Protocol.
• In addition, there is no rationale provided to how the percentage of the annual ex-gross factory sale to be allocated for benefit sharing has been reached.
• These percentages were prevalent since the 2014 Guidelines as well, but there is no data available on any case where they were allotted to applicants.
• Confusing provisions on gross factory sale and gross factory price also compounds the problem.

State Biodiversity Boards (SBBs) have powers to levy ABS

• Some SBBs have used such powers to negotiate benefits. The revised Guidelines clearly note that it is the National Biodiversity Authority (NBA) that has the power to determine benefits. This will pose a legal challenge, given the decentralised power-play envisaged in the Act and the Rules.
• In addition, unless the amendments are brought about in the Act itself regarding the powers of the SBB, it will give way to purposive interpretation of the provisions by the judiciary.
• The role of the Biodiversity Management Committees (BMCs) has also been completely ignored throughout the Guidelines.
• The Guidelines prescribe an upfront payment for bioresources having high conservation/economic value by a successful bidder, purchaser or user as decided by the NBA or SBB, without the BMCs being a part of the  determination. This is in direct contradiction to the Act and is legally not maintainable.
• The revised Guidelines also provide the option of giving a 25 per cent discount on the benefit sharing amount due to an applicant who has submitted a proof of payment of the levy fee to the BMCs in accordance with the Act.
• This means any individual accessing the resource for commercial purposes should provide a levy fee for the BMC as well as agree to a percentage benefit with the NBA.
• This is a way of charging double for the same action, and can be challenged in the court of law.

Exempted activities

• One of the most significant revisions brought about is on the exemptions provided to traders of bioresources, small-scale industries with low turnover and start-ups from paying any kind of benefits. From a legal perspective, the Act itself makes no distinction between the different types of commercial entities and mere guidelines cannot make this differentiation.
• The revised Guidelines further seek to clarify the activities which are exempted from the application of the ABS provisions.
• However, before doing this, it is important that there is a clear-cut definition of what entails commercial utilisation and who the benefit claimants are. This has not been done so far.
• There are some additional provisions of significance within the revised guidelines as well.
• For instance, a period of 45 days has been accorded to the NBA to provide approval of research for emergency purposes, but such a limit does not make any sense in the case of an emergency.

Way forward

• While it is clear that the Act, its associated Rules and the ABS Guidelines hold great potential for the country’s economic growth through sustainable commercialisation of bioresources and associated knowledge.
• The same cannot be realised unless there is all-round clarity on the provisions so as to avoid legal challenges in the future.
• The revised Guidelines seem to add to continuing confusion.
• It is important now that lawmakers and experts recognise this impasse and strive for better application of mind when it comes to implementing the Act in its truest spirit.

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Discount addiction detox (live mint)

Mains Paper 4: Ethics
Prelims level: Not much
Mains level: Emotional intelligence and consumer behavior

Context

• Wiping out market-creation losses typically involves reducing customer subsidies bit by bit and getting service partners to taken on some or all of the burden
• If you’re looking to order food home or book a table at a restaurant, you may soon find that your favourite eat-out place is missing from the app you swipe open on your phone.

Effects of discount addiction detox

• According to a news report, about 300 restaurant brands in Gurgaon are delisting themselves from aggregators and table-reservation services such as Zomato and EazyDiner, over deep discounting.
• They’ve cited adverse revenue implications as the main reason, and have come together to detox consumers from their discount addiction.
• And this is not just about Gurgaon; Eateries in Delhi, Pune, Mumbai, Kolkata and Bengaluru are likely follow suit.

Key implications of this business strategy

• The business strategy of many online services is to first offer price cuts to lure people, and then gradually raise prices to turn profitable once they have a large customer base habituated to the convenience on offer.
• The assumption is that large sums of money ploughed in to gain a bit of the world’s most prized real estate place for an app on your mobile phone can be more than made back at some point in the future.
• The success of this strategy, however, depends on whether online businesses and their partners can endure the expenses along the way.

Conclusion

• Every such user-subsidising business must face a moment of reckoning, for sure, and answer tough questions on its so-called “path to profit".
• Wiping out market-creation losses typically involves reducing customer subsidies bit by bit and getting service partners to taken on some or all of the burden. It’s not easy.
• In the food-ordering business, some restaurants have turned restive, arguing that they would be better off on their own. How food apps respond would be interesting.

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Over to the teacher (Indian Express)

Mains Paper 2: National
Prelims level: ASER surveys
Mains level: Steps towards education quality improvement

Context

• The quality of education in India has been a persistent concern.

Key highlights about the data

• ASER report has been that a large number of children in the country cannot read fluently or do basic arithmetic even after attending secondary school.
• Other studies have raised questions about teaching methods in Indian schools.

Case study: Odish

• Odisha government tried to address this problem by doubling the teaching time of three subjects — English, Mathematics, and Science — in all government schools in the state.
• These subjects get 90 minutes of teaching time every day while other subjects will continue to get 45 minutes.

Key benefits

• The ASER surveys have shown that a large percentage of children in the country’s primary schools are first-generation learners.
• School environment and the role of the teacher is crucial in providing support to children from non-literate homes and communities.
• If pedagogy is aimed at completing the syllabus, there is scarcely any scope for addressing the needs of students who are falling behind.
• This shortcoming can be overcome if students spend more time with English, Mathematics and Science teachers and get time to clear their fundamentals.

What are the major problems

• For a child, acquiring foundational skills in a language that is not her mother tongue is a complex matter.
• Doubling the teaching time could tax the attention span of students, and may end up doing more harm than good.
• Science and Mathematics education has been dogged by rote learning.

Way ahead

• Teachers could utilize the extra teaching time to stimulate students to discover the laws of nature and Mathematics.
• Teachers will have to be provided the autonomy to venture beyond bookish explanations.

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Appointment of chief of defence staff will fill a void in India’s defence system (Indian Express)

Mains Paper 3: Defense and Security
Prelims level: CDS, VCDS
Mains level: Requirement of appointing CDS

Context

• One of the most significant announcements made by Prime Minister Narendra Modi on Independence Day is the creation of a Chief of Defence Staff (CDS) to ensure better coordination between the three services.

Background

• This has been a long pending demand of the defence forces and was recommended by both the Kargil Review Committee led by K Subrahmanyam in 1999, as well as the Committee of Experts set up by Ministry of

Defence under the chairmanship of General D B Shekatkar.

• After the recommendations of the Kargil Review Committee which had recommended a CDS as well as a Vice Chief of Defence Staff (VCDS), a group of ministers headed by the then Deputy Prime Minister L K Advani examined it and recommended CDS with a tri-service joint planning staff.
• Although, the exact terms of responsibility and assignment of the CDS have not been made public, in all probability it would be a four-star military officer, who would act as the single point adviser to the government on military matters.
• The CDS would also coordinate amongst the three services and bridge the differences.

Unity of command needed

• Modern military battles cannot be fought by each service fighting independently.
• The present Indian Armed Forces are colonial constructs and were configured primarily to serve the interest of their colonial masters during the great wars.
• The restructuring of armed forces, therefore, has been a crying need as future wars are going to be short intense affairs where all organs of the state are likely to be employed simultaneously.
• Such a scenario would require unity of command, which is feasible only when the country has a unified command structure led by the CDS.
• However, political insecurities and bureaucratic stranglehold over the Ministry of Defence have prevented this important void from being filled.

Structural formation of CDS and VCDS

• Accordingly, the Headquarters Integrated Defence Staff (HQIDS) was created in October 2001. But, bureaucrats succeeded in stalling the appointment of the CDS by creating the perception that it would be far easier for a CDS to stage a coup.
• Consequently, an anomalous situation was created wherein an organisation was created, which has been functioning without a head for the past 18 years.
• The VCDS was reconfigured as Chief of Integrated Defence Staff to the Chairman Chiefs of Staff Committee (CISC).
• The absence of the CDS has limited the ability of CISC to mediate between the three services.
• More significantly, being lower in rank, he was never accepted as the sole adviser to the government in a rigidly hierarchical organisation like the military.
• Consequently, HQIDS was mostly duplicating the jobs being undertaken by service headquarters, rather than performing the tasks the office was meant for.

How its became more effective?

• The appointment of the CDS will make the armed forces more effective.
• However, the mere creation of the office is not enough. This will need to be augmented by restructuring of the Ministry of Defence (MoD) and creating integrated theatre commands.
• The CDS has to be a cerebral warrior with good understanding of the global security environment and functioning of the three services.
• It should not be a rotational appointment; the government must select one after interviewing top officials of the three services.

Way forward

• To begin with, all defence land and capital budget must be put under the CDS and appointments in inter-service organisations must be made essential for further promotions.
• For the CDS to be effective, he must have direct access to the defence minister and through him to the prime minister.
• After the reorganisation of MoD and establishment of theatre commands, they should directly be responsible to the defence minister through the CDS for all combat operations.
• Each service chief should only be responsible for equipping, organising and training of the forces.
• The creation of the CDS will need to be followed up with further reforms to reconfigure the armed forces to meet India’s aspirations to be a global power.

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Trade rhetoric: On U.S.’s WTO pullout threat (The Hindu)

Mains Paper 2: International Relations
Prelims level: World Trade Organization
Mains level: On U.S.’s WTO pullout threat

Context

• U.S. President Donald Trump opened up another front in the ongoing global trade war on Wednesday by ramping up rhetoric against the World Trade Organization (WTO).
• He even threatened to pull the U.S. out of the multilateral trade organisation if it fails to treat the U.S. fairly and blamed it for allowing too many countries to claim the status of a “developing country”.

Background

• In a memo to the U.S. Trade Representative last month, Mr. Trump pointed out that nearly two-thirds of the 164 WTO members classified themselves as developing countries, and raised the issue of even many rich economies claiming to be “growing” rather than “grown” economies.
• This time around, in Pennsylvania, the President targeted India and China in particular for “taking advantage” of the U.S. by classifying themselves as “developing countries” at the WTO.

Status of a developing country by WTO

• The status of a developing country allows countries to seek partial exemptions from the WTO’s rules for free and fair trade between countries.
• The status, for instance, allows countries like China and India, with their special tag, to impose higher tariffs on imports from other countries and also offer more subsidies to local producers in order to protect their domestic interests.
• Developed countries find this to be unfair on their producers who are put at a relative disadvantage, but countries like China have argued that their developing country status is justified given their low per capita income.

Criticism

• Mr. Trump’s recent attacks on the WTO would be welcome if they were truly about creating a global trading arena with lower tariffs and fewer barriers to trade.
• The “developing country” status, which offers substantial benefits to countries that want to protect their domestic interests and which most countries are more than happy to make use of, has indeed skewed global trade over the years in favour of certain countries.
• But he may be raking up the issue not to further the cause of global free trade, but simply as a convenient pretext to justify further trade barriers against China and other countries.
• By pointing fingers at other countries that follow protectionist policies, Mr. Trump will find it justified to impose retaliatory tariffs against them.

Conclusion

• This will help him bolster his “America First” approach and allow him to successfully hold on to his support base in America’s manufacturing belt that has been affected by foreign competition.
• Even if countries like China and India offer to lower their tariffs, Mr. Trump would not take them up on their offer.
• That is because it would require reciprocation in the way of lowering U.S. tariffs, which would work against the interests of local American producers.

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When AP put the cart before the horse (The Hindu)

Mains Paper 3: Economy
Prelims level: Article 19
Mains level: Job localization law

Context

• Raises concern the latest and the most serious being the law passed by the Andhra Pradesh government to reserve 75 per cent of jobs in an enterprise to locals.
• The trigger for this politically rewarding but otherwise a debilitating move is an economy which is witnessing a ‘job-less’ growth, coupled with an agricultural sector that is in deep distress.
• The sight of people from other States ‘taking away’ their jobs has caused heartburns among a section of the society that has felt left out.

Little benefit

• The Andhra Pradesh Employment of Local Candidates in the Industries/Factories Act 2019 insists that every enterprise, new and existing, should reserve 75 per cent of jobs for locals. Existing industries have three years to comply with the law.
• If the businesses do not find qualified people for employment, they should train them in that time. For that purpose, the State will set up skill-development centres.
• Those not complying have been warned of penal action.

Why the law is bad?

• It is unconstitutional. Article 19 of the Indian Constitution guarantees free movement. An Indian can work and live in any part of the country.
• It also ignores a Supreme Court order which caps reservation to a maximum of 50 per cent. That apart, the policy is not borne out by facts.
• The census data on migration paints a different picture. While the stock of inter-State migration between 2001 and 2011 has risen from 41 million to 54 million, as a share of the total population, it has remained at 4 per cent.
• In fact, in majority of India’s districts, inter-State workers account for less than 1 per cent of urban workers.
• Most migration, the data suggests, happens within a State. Thus, this law serves little purpose.

Skilling workforce

• To passing a law that mandates employment of locals for all industries will be counter-productive.
• Lack of qualified people appears to be the only answer.
• To compete in a highly competitive market such as India, you need to produce a world-class product and that cannot be done without quality workforce.
• It is quite understandable that the newly carved out State of AP will take some time to build the necessary infrastructure, skill its manpower and build the supply chain that a highly industrialised environment demands.
• But in the absence of these, such protectionist policies will only leave it industrially backward, as investors would prefer to invest elsewhere in the country.
• Its leadership position at the top of the ‘Ease of Doing Business’ ranking in the country is already at stake.

Investments at stak

• Policymakers in AP are forgetting that there is intense competition among the States in India to attract investment.
• Every State is offering incentives these days and what is tipping the scale is quality of manpower.
• AP’s policymakers have a shining example in their own State – Sri City.
• This industrial township, spread over 100 square kilometres, has investments from over 180 companies from across 27 countries.
• The brands here include the likes of Cadbury, Pepsi, Isuzu, Alstom and Kelloggs.
• The question they should ask themselves is that would these investments have come if the township was not located just 55 kilometres off Chennai, with a bulk of the employees travelling from the city to work there.
• At a time when the world is moving towards Industry 4.0, where technology plays a critical role, skilled manpower happens to be the key differentiator.
• Such retrograde policies will only leave the State industrially backward and widen the inequality when it comes to economic development.

Conclusion

• A better approach for the AP government would be to identify focus sectors (based on the State’s inherent strengths) for investment, unveil attractive sector-specific policies with incentives that will be too good for investors to ignore and initiate a large-scale skilling programme in consultation with the industry to skill the workers for employment in these sectors.
• Only such progressive measures will ensure that investors will flock the State, employ the locals and catalyse its rapid economic development.
• As things stand now, none of these are likely to happen.

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GIFT finance city at an inflection point (The Hindu)

Mains Paper 3: Economy
Prelims level: Gujarat International Finance TecCity
Mains level: Introducing Gujarat International Finance TecCity in Indian economy

Context

• Towards the end of 2018, when the results of the Lok Sabha elections were still in the realms of speculation.
• A financial market intermediary let it slip inadvertently that he was surreptitiously planning to move the infrastructure installed in Gujarat’s GIFT (Gujarat International Finance TecCity) to Mumbai.

Background

• The GIFT, one of Prime Minister Modi’s pet projects, rolled out in 2015, would have had no future if the election results had been adverse for the ruling NDA.
• Most financial market intermediaries who are already well ensconced in Mumbai, the financial capital of India, are not too happy about being asked to shift to an IFSC in Gujarat.
• They would have been happier if the IFSC was set up in their backyard, in the Bandra Kurla complex.
• But now that the NDA is in its second term, it has made the GIFT IFSC one of its key focus areas.
• A number of key regulatory changes have been pushed through since May to enable greater participation on these exchanges.
• Two major changes, in particular, are likely to be a game-changer for the Indian IFSC, and could set it well on its way to sustainable growth.

The NSE-SGX connect

• One of the primary objectives behind setting up the GIFT IFSC was to bring offshore trades based on Indian stocks and currencies to trading platforms in the Indian IFSC.
• The Centre has been especially worried about migration of volumes in Nifty futures to the Singapore Stock Exchange (SGX); they currently account for 30-40 per cent of the daily turnover in Nifty futures.
• Indian bourses had upped the ante last year, deciding to stop providing data feed to the SGX for enabling the trading of the SGX Nifty and other India-based stock derivatives.
• The SGX had retaliated by constructing an index mimicking the Nifty 50, and had threatened to continue trading these new products.
• With the entire issue going in to arbitration, both parties seem to have come to a decision that ultimately favours the GIFT IFSC greatly.
• They plan to shift the entire trading in Nifty 50 futures as well as other India-specific derivatives to the GIFT IFSC through a jointly promoted platform, the NSE IFSC-SGX Connect.
• While the implementation could take another 18 months, this is likely to give a large fillip to the traded volume on the GIFT IFSC exchanges.
• Daily traded volume of SGX Nifty futures are currently around $4-5 billion while the daily turnover of exchanges on the GIFT is currently $1.8 billion.
• It is likely that the large pool of liquidity in the NSE-SGX Connect could make some FPIs registered with SEBI for trading in domestic exchanges begin trading on the IFSC too.

Trading in rupee derivatives

• Another major development that can help the GIFT IFSC is the recommendation of the RBI Task Force on Offshore Rupee Markets.
• This committee looked in to the manner in which rupee trades overseas are beginning to bloat to significant levels, almost matching the level of transaction in the inter-bank OTC market.
• This migration of volumes to Non Deliverable Forwards (NDF) markets overseas not only results in significant loss to the revenue, it also leads to higher possibility of distortions in rupee value due to speculative forces.
• The task force has recommended that non-deliverable rupee derivatives (with settlement in foreign currency) may be allowed on the GIFT IFSC.
• It is proposed that exchange-traded currency derivatives involving the rupee may be introduced initially and non-deliverable OTC currency derivatives involving the rupee may be allowed subsequently.
• The committee is also allowing positions without underlying exposure $100 million in OTC as well as the exchange-traded currency derivative market.

Relocation not easy

• It is clear that the red carpet for FPIs is almost ready. Company Law exemptions were provided in January 2017 and the International Dispute Resolution Mechanism through the Singapore International Arbitration Centre was set up at the GIFT in August 2017.
• A slew of tax incentives are available for units operating in the IFSC.
• Exchange-traded transactions on the GIFT City do not attract securities transaction tax or commodity transaction tax.
• Capital gains made on transaction executed on GIFT exchanges are not taxed, making the GIFT City comparable to other offshore financial centres.
• Services offered in this zone do not face an additional levy of the Goods and Services Tax and the Minimum Alternate Tax of 9 per cent is levied on book profits.
• The Government of Gujarat has further exempted stamp duty on entities having a registered office in the GIFT for capital market activities. Companies and mutual funds operating in the IFSC have also been exempted from dividend distribution tax from current and accumulated incomes.
• The Budget 2019 allowed profit-linked deductions of 100 per cent of net income for any 10 consecutive years out of 15, beginning with the year in which the necessary permission was obtained, for companies registered in the GIFT City.

Conclusion

• There are also few more regulatory hitches that can be sorted out. Individuals still cannot open a bank account in the GIFT City. While a via media has been found recently, it will be good to ease this rule.
• Rules governing eligible foreign investors also need more clarity.
• Allowing listing of stocks, bonds and depository receipts on GIFT Exchanges can enable domestic retail investors to also route the funds under the Liberalised Remittance Scheme to GIFT exchanges.

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How does negative rate policy work? (Indian Express)

Mains Paper 3: Economy
Prelims level: Negative rate policy
Mains level: Significance of the Negative rate policy

Context

• Negative rate policy is becoming a more attractive option for some countries’ central banks.
• This policy would counter unwelcome rises in the currencies of these countries.

Why have some central banks adopted negative rates?

• To battle the global financial crisis triggered by the collapse of Lehman Brothers in 2008, many central banks cut interest rates near zero.
• A decade later, interest rates remain low in most countries due to subdued economic growth.
• With little room to cut rates further, some central banks have resorted to unconventional policy measures, including a negative rate policy.
• The euro area, Switzerland, Denmark, Sweden and Japan have allowed rates to fall slightly below zero.

How does it work?

• Under a negative rate policy, financial institutions are required to pay interest for parking excess reserves with the central bank.
• That way, central banks penalise financial institutions for holding on to cash in hope of prompting them to boost lending.
• The European Central Bank (ECB) introduced negative rates in June 2014, lowering its deposit rate to -0.1% to stimulate the economy.
• Given rising economic risks, markets expect the ECB to cut the deposit rate, now at -0.4%, in September.
• The Bank of Japan (BOJ) adopted negative rates in January 2016, mostly to fend off an unwelcome yen spike from hurting an export-reliant economy.
• It charges 0.1% interest on a portion of excess reserves financial institutions park with the BOJ.

What are the pros, cons?

• Aside from lowering borrowing costs, negative rates weaken a country’s currency rate by making it a less attractive investment than that of other currencies.
• A weaker currency gives a country’s export a competitive advantage and boosts inflation by pushing up import costs.
• But negative rates put downward pressure on the entire yield curve and narrow the margin financial institutions earn from lending.
• If prolonged ultra-low rates hurt the financial institutions’ health too much, they could hold off on lending and damage the economy.
• There are also limits to how deep central banks can push rates into negative territory – depositors can avoid being charged negative rates on their bank deposits by choosing to hold physical cash instead.

What are central banks doing to mitigate the side-effects?

• The BOJ adopts a tiered system under which it charges 0.1% interest only to a small portion of excess reserves financial institutions deposit with the central bank.
• It applies a zero or +0.1% interest rate to the rest of the reserves.
• The ECB is expected to take “mitigating measures”, such as a partial exemption from the charge in the form of tiered deposits rates, if it were to deepen negative rates from the current -0.4%.

Conclusion

• But designing such a scheme won’t be easy in a bloc where cash is distributed unevenly among countries.
• It could even backfire by pushing rates up in certain countries, rather than down.

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Unethical actions: On Sikkim MLAs defection (The Hindu)

Mains Paper 2: Polity
Prelims level: Sikkim Assembly
Mains level: Anti defection law crisis in Sikkim

Context

• The switching of sides by 10 MLAs from the Sikkim Democratic Front (SDF) to the Bharatiya Janata Party in Sikkim on Tuesday and later two others from the SDF to the ruling Sikkim Krantikari Morcha (SKM) brings a sense of deja vu.

Background

• The en masse shifts are reminiscent of what happened in Arunachal Pradesh in 2016, when rebel Congress MLAs joined the People’s Party of Arunachal in order to get over the legal hurdles to defection.
• These actions have reduced the SDF, which ruled the State for 25 years with Pawan Kumar Chamling as the Chief Minister with the longest tenure in India, to just one MLA Mr. Chamling himself.
• Such a shift might well have helped the former SDF legislators stay clear of the anti-defection law, which stipulates that a breakaway group must constitute at least two-thirds of the legislative party’s strength and that it must merge with another party.
• As the elections to the Sikkim legislative Assembly were held barely three months ago and the BJP had come a cropper without winning a single seat and just 1.6% of the overall vote.
• The BJP has shown no qualms as seen elsewhere in Karnataka, Arunachal Pradesh among others about poaching legislators instead of winning over support organically through a democratic mandate.

Facing anti-defection law

• The Sikkim defections have added yet another chapter to the hollowing out of the anti-defection law.
• The SDF, which finished with 15 seats (two since vacated), was a National Democratic Alliance member, but has now been replaced by the 18-member SKM in the BJP-led North East Democratic Alliance.
• The SKM might have secured a clearer majority with the defection of two SDF MLAs to its fold, but a cloud of uncertainty hangs over its party leader and Chief Minister P.S. Golay alias Prem Singh Tamang.
• Mr. Golay was convicted in 2016 in a case of corruption and had served a sentence in prison for a year till August 2018. The People’s Representation Act, 1951, mandates that a person convicted under the Prevention of Corruption Act cannot contest an election for six years after release.

Way forward

• The fact that he is serving as the Chief Minister (he did not contest the Assembly polls) despite the conviction goes directly against a Supreme Court order in a similar case dealing with the eligibility of former Tamil Nadu Chief Minister Jayalalithaa in 2001.
• The court had then said that the “appointment of a person to the office of Chief Minister who is not qualified to hold it should be struck down at the earliest”.
• In line with the drastic change in the party composition in the Assembly due to the defections, the continuance of Mr. Golay as chief minister makes a mockery of democratic and legal principles. Something is rotten in the State of Sikkim.

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Symptom as cause: On automobile industry woes (The Hindu)

Mains Paper 3: Economy
Prelims level: Automobile industry
Mains level: Declining sales in Automobile industry

Context

• India’s automobile industry is experiencing a snowballing crisis of demand that shows no signs of abating, leave alone reversing.
• Domestic sales across all vehicle categories slid 19% year-on-year in July, as passenger vehicle despatches plunged 31% to register the segment’s steepest fall in almost 19 years.
• And with the wheels having come off both two-wheeler deliveries and commercial vehicle shipments, with the former contracting 17% and the latter slumping 26%, the picture is one of widespread gloom.

Economic impact

• The straightforward interpretation of the data is that demand has dried up in all corners and among all key consumer segments — urban, semi-urban and rural and personal and institutional.
• Nine straight months of contraction in passenger vehicle sales has also begun extracting a toll in terms of showroom closures and lay-offs at dealerships, component suppliers and vehicle makers themselves.
• While the Federation of Automobile Dealers Associations recently warned of more jobs being at risk, on top of about two lakh positions that have already been shed, the Society of Indian Automobile Manufacturers admitted that the industry had laid off at least about 15,000 contract workers in the last three months.
• That the broader economy is experiencing a serious slowdown has been evident for some time now and the latest data from the auto sector only bears testament to it.
• And as the RBI acknowledged last week “private consumption, the mainstay of aggregate demand” remains sluggish.

Non availability of credit

• While some of the factors currently bedevilling demand in the auto sector are well established the liquidity crunch in the NBFC industry and the resultant tightening of credit availability to finance vehicle purchases.
• An increase in up front insurance costs and the 28% GST charged on cars, motorcycles and scooters the fact that manufacturers overestimated demand when setting up capacity, especially of fossil-fuel powered vehicles, has largely been overlooked.
• In 2012, the company decided to invest ₹1,700 crore in a new diesel engine plant in Gurugram, capacity that it now needs to repurpose or idle.
• Simultaneously, the ride-share industry has mushroomed in recent years, especially in urban areas where choked roads and lack of parking space have incentivised rapid adoption of app-based commuting. The outlook too, especially for the near term, looks far from hopeful.

Conclusion

• The RBI’s July round of its Consumer Confidence Survey, which reflected a decline in consumer confidence in July, shows 63.8% of respondents expect discretionary spending will stay the same or shrink one year ahead.
• In June 2018, the comparable reading was 37.3%.
• The onus now lies on the government to urgently formulate policy interventions to address this sectoral crisis or risk wider contagion.

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Face the deluge (Indian Express)

Mains Paper 1: Geography
Prelims level: Floods
Mains level: Various geographical phenomena and its changes in nature

Context

• Nearly 500 people have reportedly lost their lives in Kerala, Karnataka, Maharashtra, Gujarat, Assam and Bihar.
• In Kerala, which experienced its worst deluge in a century last year, more than 80 people have lost their lives in five days since August 8.
• In neighbouring Karnataka, the toll stands at 48. Northern Karnataka, which was facing drought like conditions in May, is now under water.
• According to Chief Minister BS Yediyurappa, the state is witnessing its worst floods in 45 years.
• In Maharashtra, more than 40 people have lost their lives in Sangli and Kolhapur districts, while the Marathwada and Vidharbha regions are reeling under a drought.

Changes the nature of monsoon

• The floods this year have drawn attention to the changing dynamics of the southwest monsoon.
• According to India Meteorological Department (IMD) data, the state recorded a more than 25 per cent deficit in rainfall between June 1 and August 7.
• But Kerala has nearly made up the deficit in the past five days. Palakkad district has received 80 per cent excess rainfall after August 8, Wayanad and Thrissur have also experienced sharp departures from normal rainfall, with an excess of nearly 40 per cent.
• Similarly, on August 8, Karnataka received nearly five times the rainfall the state receives in a day.
• Kodagu, the state’s worst flood-hit district, received 460 per cent above normal rainfall between August 5 and 11.
• In fact, monsoon rains in the past five years have followed a pattern: A few days of intense rainfall sandwiched between dry spells.

Focus on the preparedness attempt

• The focus this year, as in the past, has been on providing relief to the flood-affected. But questions must also be asked about the ways states prepare for, and deal with, floods.
• The vagaries of weather, for example, demand cooperation between states that share a river basin.
• This year, Maharashtra and Karnataka bickered over opening the gates of the Almatti dam on the river Krishna.
• By the time the two states agreed over the amount of water to be discharged from the dam’s reservoirs, the damage was already done.
• The floods also drive home the urgency of focusing on nature’s mechanisms of resilience against extreme weather events.

Conclusion

• Policymakers and planners have shown little inclination to place wetlands, natural sponges that soak up the rainwaters, at the centre of flood control projects.
• Flood governance in the country has placed inordinate emphasis on embankments.
• But the floods in Bihar and Assam showed for the umpteenth time that these structures are no security against swollen rivers.
• Of course, what is true for the Western Ghats states may not hold for Assam and Bihar.
• But the message from the floods this year is clear: There is a need to revisit the understanding of the monsoon and find ways to deal with its fury.

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New era of pervasive agricultural subsidies? (The Hindu)

Mains Paper 3: Economy
Prelims level: Agricultural subsidies
Mains level: Pervasive agricultural subsidies and its impact on economy

Context

• Managing India’s groundwater has become a big challenge for policymakers.
• Over the years, the challenge has become very complex, with political economy taking dominance over hard science.

Background

• Since groundwater overdraft is also linked to subsidised power supply to agriculture, researchers had explored how the mode of electricity pricing supplied to agriculture could be changed to control groundwater abstraction and to achieve the goals of efficiency, equity and sustainability.
• The most frequently suggested instrument for controlling groundwater draft was the metering and pro-rata pricing of electricity.
• In India, there is a large body of research which raises scepticism about the viability of metering irrigation pumpsets, claiming that it is political suicide for any government to even think about installing meters in farmers’ field, and that whenever it did do so, it led to fall of the government.
• However, there was no reality check on this claim.
• A study by the World Bank in 2001 in Punjab and Haryana showed that farmers are willing to pay for electricity if quality power supply is assured.
• More curiously, even after the government in West Bengal successfully introduced pro-rata pricing of electricity in the agriculture sector in 2006, this false narrative continues.

Electricity pricing conundrum

• The idea was to make sure that farmers get free power, but the power utility reduces its subsidy burden gradually by incentivising the farmers to use less electricity, thereby saving both groundwater and electricity.
• It involves metering of agricultural power connections, but no metered tariff.
• This model, adapted by the power utility of Punjab, involves offering cash incentives to well-irrigating farmers who use less than a designated quota of electricity each season.
• The individual’s quota is decided on the basis of the connected load and the season.
• For one HP of connected load, a farmer is entitled to 200 units a month during the kharif season and 50 units per month during the winter.
• The farmer gets a cash incentive of ₹4 for every unit of electricity saved.
• This pilot project implemented in 135 farms across Punjab, has shown reduced electricity consumption by around 60 per cent of the farmers, while nearly a third of the farmers had increased electricity consumption even after accepting the scheme.
• The claim is that the farmer had ‘saved’ electricity and the corresponding groundwater equivalent.
• To know the validity of this claim, we should know the rationale behind fixing the quota based on the connected load.

Chosen capacity

• In a given year, season and locality, the power demand will be a function of the cropped area and cropping pattern.
• Many resource-rich farmers have chosen over-sized pumps.
• In such cases, their energy quota will be much higher than what is required to irrigate the plot even at the current excessive levels of dosage.
• The reason for maintaining the high-level of irrigation dosage could be that it can be rewarding from an economic perspective as it might result in yield improvement, whose value is more than the economic incentive they get by saving water.
• Hence, these resource-rich farmers will be able to keep their power consumption much below the allocation or ‘quota’ while continuing with inefficient irrigation, and yet be able to claim the cash incentive; whereas a resource-poor farmer, who has a low-capacity pump might end up using the full quota of energy or even more.
• Ideally, the ‘energy quota’ for deciding on the incentive should have been fixed on the basis of the actual land holding cultivated by the farmer during a particular season which determines the water and energy requirements for irrigation.
• The point is that the current subsidy structure may not create any special incentive to save either electricity or groundwater in Punjab.

Will this help conserve groundwater in Punjab?

• It is quite well-known that the irrigated paddy fields as well as rainfall contribute to the recharging of shallow groundwater during the monsoon season in alluvial Punjab.
• Therefore, groundwater storage change is the net effect of the gross draft and the ‘total recharge’, the latter being the sum of rainfall infiltration and irrigation return flows.
• The gross abstraction equals the water consumed by crop added with the soil moisture depletion after crop harvest, soil moisture storage and the deep percolation or irrigation return flows.
• Therefore, reducing the gross draft might only result in a reduction of return flows and change in moisture storage, so long as the farmers don’t choose a crop or variety with lower evapo-transpirative requirement, which is unlikely as it might lead to yield reduction.

Wasteful attempt

• But the people who designed the project seem to be completely unaware of this.
• Only a fraction of the total water applied (around 1,200 mm) to the field for kharif paddy actually gets consumed by the crop.
• Since the evapo-transpirative demand for kharif paddy in Punjab is around 450-480 mm, the rest of the water is available as return flows to groundwater.
• Hence, even if the farmers reduce the amount of water applied to irrigated paddy fields to reduce electricity consumption, there won’t be any groundwater saving.
• One wonders how on earth the farmers are offered a heavy cash incentive of ₹4 for saving a unit of electricity, while the actual cost of supplying it (₹5.12/unit) is only a little more than that.
• Instead of offering cash incentive for the fictitious power saving, the agency should start working on establishing (volumetric) water use rights amongst the groundwater users, fix equivalent energy quota, and then start monitoring groundwater and electricity use.

Conclusion

• No doubt, these are extremely difficult measures and would require great degree of coordination among various departments water resources, electricity and agriculture.
• But once they are initiated, there won’t be any need for promoting efficient irrigation technologies and water-efficient crops.
• Farmers will take up these measures on their own, without any subsidy support.

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Deliberate, don’t disrupt: On Budget session (The Hindu)

Mains Paper 2: Polity
Prelims level: Budget Session
Mains level: Utilization of a meaningful budget session

Context

• One of the most unedifying sights in public life is lawmakers taking to organised disruption of legislative business.
• In Parliament in the past decade as political parties and legislators demonstratively advertised their points of view without recourse to debate.
• A number of crucial bills have taken an inordinate time to be enacted due to disruption, while others were not enacted despite a broad consensus such as the Women’s Reservation Bill due to the behaviour of a few naysayers.

Incorporate model code of conduct

• Many sessions of Parliament in the recent past saw little business being done due to repeated disruption.
• In this context, Vice President Venkaiah Naidu’s exhortation to political parties to incorporate a model code of conduct for their legislators in State Assemblies and in Parliament is welcome.
• He suggested that the code should include stipulations on members not entering the well of the House, and desisting from sloganeering and unruly acts.
• If indeed parties adopt a code, it will go a long way in making parliamentary work meaningful.
• Otherwise, the general public will lose interest in the procedural aspects of parliamentary democracy and limit their participation to just voting in the elections.

Questions to a meaningful debate

• The current Budget session sailed through with minimal disruption.
• Yet the high productivity during the session came without sufficient deliberation over crucial bills, several of which were rushed through without vetting by parliamentary standing and select committees.
• These committees have in the past been useful in expanding discussion over laws with civil society and experts from various streams of the larger society.
• They have also facilitated an enhanced cross-party coordination over issues.
• By not sending a single Bill among the 28 that were introduced and passed to a standing or select committee for scrutiny, the current session accentuated the trend that has minimised the importance of such committees over the last few years.
• Unlike the 15th Lok Sabha (2009-2014), when 71% of the bills were referred to such committees, in the 16th Lok Sabha, they constituted only a fourth of the overall number of bills.

Conclusion

• Time spent on debates in the current session in both the Lok Sabha and Rajya Sabha was barely a third of the overall business.
• This does not augur well for lawmaking.
• As Mr. Naidu has also pointed out correctly, deliberation is an important component of parliamentary democracy apart from legislation and accountability of lawmakers.
• All three aspects must cohere for a thoroughgoing procedural democracy.

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Writing out a clean Bill on health (The Hindu)

Mains Paper 2: Health
Prelims level: NMC Bill
Mains level: Proposal of the NMC bill

Context

• There have been expressions of concern in various fora over a few clauses of the National Medical Commission (NMC) Bill, now enacted. Even medical professionals have protested.
• According to media reports, there are five primary concerns.
• These pertain to the National Eligibility-cum-Entrance Test (NEET)/National Exit Test, empowering of community health providers for limited practice, regulating fees for only 50% seats in private colleges, reducing the number of elected representatives in the Commission, and the overriding powers of the Centre.

On examinations

Focus on the examinations

• For the past few years, a separate NEET is being conducted for undergraduate and postgraduate courses.
• In addition there are different examinations for institutes such as the All India Institute of Medical Sciences and the Jawaharlal Institute of Postgraduate Medical Education and Research.
• This Act consolidates multiple exams at the undergraduate level with a single NEET and in turn avoids multiple counselling processes.
• NEXT will act as the final year MBBS examination across India, an entrance test to the postgraduate level, and as a licentiate exam before doctors can practise.
• It aims to reduce disparities in the skill sets of doctors graduating from different institutions.
• It would also be a single licentiate exam for graduates across the world. Thus, the government has in effect implemented a ‘One-Nation-One-Exam’ in medical education.

Limited license to practice for community health

• The concerns have been expressed over the limited licence to practise for community health providers.
• We have to appreciate that even with about 70% of India’s population residing in the rural areas, the present ratio of doctors in urban and rural areas is 3.8:1; 27,000 doctors serve about 650,000 villages of the country.
• A recent study by the World Health Organisation shows that nearly 80% of allopathic doctors in the rural areas are without a medical qualification.
• The NMC Act attempts to address this gap by effectively utilising modern medicine professionals, other than doctors in enabling primary and preventive health care. Evidence from China, Thailand and the United Kingdom shows such integration results in better health outcomes.

Fee structure

• It is an open secret today that private medical colleges are capitation fee-driven, resort to a discretionary management quota and often have charges of corruption levelled against them.
• The Indian Medical Council Act, 1956 has no provision for fee regulation.
• Until now, ‘not-for-profit’ organisations were permitted to set up medical colleges, a process involving enormous investments and a negotiation of cumbersome procedures.
• The NMC Act removes the discretionary quota by using a transparent fee structure.
• It empowers the NMC to frame guidelines for determination of not only fees but all other charges in 50% of seats in private colleges to support poor and meritorious students.

Representation in the NMC

• The current electoral process of appointing regulators is inherently saddled with compromises and attracts professionals who may not be best suited for the task at hand.
• Indeed, there is ample evidence that the process has failed to bring the best in the field in regulatory roles.
• The process is based on what is now widely regarded as a flawed principle whereby the regulated elect the regulators.
• The Act, therefore, provides for a transparent search and selection process with an eclectic mix of elected and nominated representatives, both in the search committee and the commission itself.
• The government has further addressed the concern of preponderance of selected members in the commission by adding members from State medical councils and universities.

In a nutshell

• While some sections of people have sought to create a negative perception about select clauses of the Act, they have not highlighted other features.
• The Act establishes the Diplomate of National Board’s equivalence to NMC-recognised degrees — a long-pending demand. It also promotes medical pluralism.
• Then, there is a paradigm shift in the regulatory philosophy from an input-based, entry barrier for education providers without corresponding benefits, to its becoming outcome-focused.
• Both the number of doctors and their skill sets are expected to improve.
• Autonomy to boards and segregation of their functions will avoid a conflict of interest and reduce rent-seeking opportunities.
• And ‘quacks’ are liable to face imprisonment or be fined or both.
• The Act ends inspector raj.
• The efforts of successive governments have now culminated with the NMC Act replacing the IMC Act.
• There is no denying that medical education needs continuous reforms in order to usher in improvements in health care.
• There cannot be just one solution. The NMC Act is a serious attempt to meet the primary need of more medical professionals in the country; it is a beginning.

Conclusion

• We need to view the issue of overriding powers of the Centre in the context that the Medical Council of India, even if directed by the government on critical matters, may not always pay heed. In public emergencies, citizens expect the government to address issues.
• In the current set-up, it may not be possible all the time.
• Also, the government should be able to give directions so that NMC regulations align with its policy.
• The use of such authority would follow the principle of natural justice: the NMC’s opinion would be sought before giving directions.

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Sanguine amidst slowdown (The Hindu)

Mains Paper 3: Economy
Prelims level: CMIE
Mains level: Economic slowdown and its impact

Context

• Any major country in the world would give an arm and a leg for a growth rate of 6% per annum. But, in India, we lament such an achievement as a ‘slowdown’.
• Today we perceive any growth below 7% to be unsatisfactory. And not so long ago, we perceived any growth rate below 8% to be less than satisfactory.

What has changed now?

• It is not as if our per-capita income levels have suddenly shot up to a point where a lower growth rate can be considered satisfying. We are still a lower-middle income country.What has really changed is our perception of what a satisfactory growth rate will be.
• Such perceptions do matter as they reflect the mood of the times that influences economic decisions. For instance, usually, growth in discretionary spending is a function of growth in income.
• But, if income expectations change, then the relationship between income and discretionary spending could also change.
• Similarly, aspirations and social norms impact decisions.
• If the mood turns sombre, if aspirations are diluted and if social norms turn less upbeat, economic decisions would be less enthusiastic even if income growth remains unchanged.

Seeking consumers’ opinion

• According to George Katona, who pioneered work on consumer sentiments at the University of Michigan, discretionary spending depends on the ability and willingness of a consumer to spend.
• While ability is reflected in the consumers’ income and assets, willingness to spend is reflected in the consumers’ perception of future prospects.

How have Indians perceived their future in the recent past?

The Reserve Bank of India (RBI) has been conducting a Consumer Confidence Survey since 2010 and the Centre For Monitoring Indian Economy (CMIE) has been conducting a Consumer Sentiments Survey as a part of its Consumer Pyramids Household Survey (CPHS) since January 2016.

Expectations of income increase

• According to the RBI survey, around the end of 2017, 46.5% of households expected their incomes to increase and 12.7% expected a decline.
• On a net basis, 34% expected an increase. By end-2018, the net figure had gone up to 57.3%, signifying a major improvement in income expectations during 2018.
• The CMIE’s CPHS shows a similar rising trend but at a different level.
• The net proportion of households that expected an increase in income increased from less than 5% in February 2018 to 23% in May 2019.
• The RBI’s survey shows that the decline began in the first quarter of 2019 while the CPHS shows it began in the second quarter.
• Interestingly, both showed pessimism on jobs during 2018. The consistent contradiction in both surveys is noteworthy.
• Households did not see an increase in jobs in 2018 but they did expect incomes to improve. This means hopes were high even in the face of job losses.
• The RBI survey quantifies this eloquently. While 9.5% households, on a net basis, believed that employment conditions had worsened in 2018, 28.5% households believed employment conditions would improve in a year.
• Their faith in the future remained intact even in the face of adverse outcomes compared to expectations.
• In December 2017, 9.4% of the households believed employment levels were worse (on a net basis) than a year ago but simultaneously, 33.6% believed they would improve in a year.
• A year later, in December 2018, 8.7% still believed the employment levels were worse than a year ago. Yet, a larger proportion — 37.6% believed these would improve in a year.
• Optimism continued to prevail even in the latest July 2019 RBI survey, where 13% of households believed that employment conditions had worsened over a year but 31% of them believed that these would improve in a year.
• As of July 2019, on a net basis, only 3% of the households believed their incomes were higher compared to a year ago but 48.5% believed these would be better a year later.

Divergent findings on spending

• The RBI survey is prescient in anticipating a slowdown in the automobile sector.
• It shows that while households are optimistic on jobs and income in spite of current adverse conditions, they are not similarly gung ho about spending on non-essentials.
• In mid-2018, on a net basis, 53% of the households expected to spend more on non-essentials a year ahead. By July 2019, this proportion fell to 15%.
• The CMIE’s CPHS asks a related but somewhat different question, on whether households considered current conditions to be a good time to buy household durables.
• It shows that till July 2018, respondents who believed that it was a good time to buy consumer durables roughly equalled those who believed it wasn’t. Both numbers were at about 22.6%.
• By March 2019, the proportion of pessimists declined to 17% and that of optimists increased to 30%.
• The CMIE survey shows an improvement in the mood to spend on discretionary goods.
• This reflects the fact that sales of domestic appliances began a recovery in the June 2018 quarter and grew at double-digit rates during the December 2018, March 2019 and June 2019 quarters.

Conclusion

• There isn’t any widespread consumer goods slowdown. The slowdown is prominent in the automobile sector but not in other industries.
• The RBI survey reflects the former and the CMIE survey reflects the latter.
• It may be worth noting here that the RBI survey is based on a survey from 5,451 respondents from 13 towns while the CMIE’s CPHS is based on over 40,000 respondents from over 300 towns and nearly 3,000 villages.
• Different parts of the Indian economy are moving in divergent directions but, Indian households maintain hope in a future that will bring in more jobs and more income.

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Land digitization in Karnataka (Indian Express)

Mains Paper 3: Economy
Prelims level : Digital land ownership
Mains level : Farm loan waviers system and process in Karnataka

Context

•  The Karnataka government has released nearly Rs 8,357 crore as waiver amount to 20.40 lakh farmers against overdue crop loans of up to Rs 2 lakh till December 31, 2017.
•  It expects to complete this scheme, covering some 41 lakh farmers, by the end of this fiscal.
•  Karnataka is one of the few states with fully digitised records of land ownership, rights, tenancy and crop information.

Background

•  Most states undertaking loan waivers have done so based on the lists given by banks.
•  In many cases, the same farmer would have taken loans from multiple banks, thereby benefitting from waivers against all these accounts, even if the outstanding dues added up to beyond the announced limit.
•  In Karnataka, however, the state government could match the data from banks with the land survey, Aadhaar and ration card numbers.
•  It led to savings in double payments to around 5 lakh farmers and the waiver was limited to Rs 2 lakh per family against all their crop loan accounts.

Digital land ownership

•  The Karnataka scheme reveals the promise held out by direct benefit transfers (DBT) — how they can be made in a practically foolproof manner to every farmer based on their Aadhaar-seeded bank accounts as well as digitised land ownership details.
•  The next logical step should be to eliminate all farm subsidies and convert these into targeted DBTs or income support programmes.
•  Ramesh Chand, Member of the NITI Aayog, has favoured such a transition that is justifiable from both an efficiency and equity standpoint.
•  The Centre could take the lead here. Currently, its annual subsidy on food, fertiliser, crop loans and insurance premium, without accounting for rollovers and late payments, is over Rs 2,91,000 crore.
•  In addition, state governments dole out subsidies through free/cheap farm power and water that would total another Rs 1,50,000 crore or so.

Conclusion

•  Implementation of loan waiver in state points to possibility and promise of direct benefit transfer in helping farmers.
•  The Union Budget can make a beginning by announcing a three-year phase-out plan for all fertiliser subsidies and capping yearly foodgrain procurement for the PDS to 50 million tonnes.
•  The savings can be used to provide a flat Rs 5,000 per hectare to all farmers.
•  A single DBT scheme, with income support under PM-Kisan, will serve India’s farmers better than iniquitous and market-distorting subsidies.

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IT dynamics revolution (The Hindu)

Mains Paper 2: International Relations
Prelims level : H-1B
Mains level : Indian Diaspora

Context

•  The sharp rise in wage costs for Indian IT companies due to an increase in overseas hiring, augurs well for the sector which has been trying to find a way around tightening H-1B visa rules.
•  Though the rise in staff costs may look to be a cause of concern in the short term, it could be a blessing in disguise in the long run.
•  Staff costs for large Indian IT services companies have gone up by 15-20 per cent in FY 19 as they hired engineers in countries wherever their clients are located.
•  This is being done, especially in the US where tougher immigration laws and tightening visa rules have become a predictable feature of Donald Trump’s Presidency.

Background

•  Over the last four years, there have been several tweaking of H-1B visa rules making it harder for Indian techies to land their dream job.
•  This emanates from a belief held by the Trump administration that companies are bringing in cheap labour to replace American workers through the H-1B route.
•  The US issued 10 per cent fewer H-1B visas between October 2017 and September 2018.
•  To fill the gap, IT companies have started hiring locally.

Cost effectiveness in India

•  Competition from global IT giants such as Accenture, and a workforce dominated by legacy engineers trained in old technology platforms is holding back Indian IT services firms from making big inroads into winning new-age technology projects.
•  In the traditional IT services space, India’s cost competitiveness, which is approximately 3-4 times cheaper than the US, had been the mainstay in the global sourcing market.
•  For far too long, some IT services companies have relied on shipping low-cost skilled labour to countries such as the US to drive higher margins.

New visa rule effect

•  Tougher visa rules are forcing many large Indian IT services firms to change their business model and ramp up onshore hiring.
•  To cope up with related higher costs, the IT companies are now beginning to move up the value chain in search of higher margins.
•  The earlier business model had led to a situation where Indian IT firms had become the global experts in executing low-value projects.
•  Now they are switching over to new transformational platforms like robotics, artificial intelligence and automation.
•  Indian engineers are also gaining from this shift as companies are investing in reskilling existing workforce to match the requirements of the new technology platforms, helping them to find more meaningful projects in Mumbai instead of implementing an enterprise resource planning software for a client in Chicago.

Way forward

•  Transformational business is seeing double digit percentage revenue growth.
•  This switch is great news for the Indian IT industry.
•  Globally, these new technologies are enabling tectonic shifts in systems and processes that require very different capabilities compared to implementing an enterprise resource planning software.
•  Hiring locally also makes the Indian IT companies more nimble in responding to these opportunities.
•  IT services companies should force a faster transformation in their delivery models to compensate for the increasing wage costs.

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Lessons from Bhutan (The Hindu)

Mains Paper 2: Health and Education
Prelims level : PISA assessment
Mains level : Adopting education policy like Bhutan and its aftermath effect

Context

•  Bhutan’s teachers, doctors and other medical staff will earn more than civil servants of corresponding grades, if a policy recently announced by the country’s government is implemented.
•  The new salary scales will benefit about 13,000 teachers and doctors.
•  This is a novel move. No other country has accorded teachers and doctors such pride of place in its government service, both in terms of remuneration and symbolism.

Inspired or fanciful?

•  The policy’s tonal reference is to be found in Bhutan’s 12th Five Year Plan (2018-23), published by its Gross National Happiness Commission, the country’s highest policy-making body.
•  The commission’s strategy to achieve desired national outcomes through education opens with the notation, “making teaching a profession of choice”.
•  The proposal then is evidently at the core of a larger governmental strategy to achieve the country’s human developmental objectives.
•  The decision also comes in the wake of high levels of teacher attrition, especially the best.
•  The government has formulated the policy as a styptic to stop the serious haemorrhage.

PISA assessment

•  The Organisation for Economic Co-operation and Development’s Programme for International Student Assessment (PISA) is a worldwide study that measures and compares student ability in reading, mathematics,
• science and global competence, with financial literacy an option.
•  Accordingly, it ranks educational systems of countries. An independent study led by the economist, Peter Dolton, has demonstrated a distinct correlation between student outcomes in a country, as measured by PISA scores, and the status that its teachers enjoy.
•  The initiative’s latest report, Global Teacher Status Index 2018, based on its own surveys across 35 countries, goes on to make a strong case for high wages to improve teacher status.
•  Policies act as levers that governments use to achieve desired results in focus areas.
•  The results of Bhutan’s policy, if implemented, will take a few years to emerge for critical evaluation. It is, however, based on credible research.

The fiscal implications

•  Bhutan already spends about 7.5% of its GDP on education.
•  The fiscal implications of the new salary structure are unclear now. Generally, teachers constitute a considerable portion of government employees.
•  Therefore, governments looking to emulate Bhutan’s lead will inevitably be asked questions about the financial viability of such a momentous administrative decision.
•  The Minister concerned in Tamil Nadu, on educational indices, turned down demands of striking teachers for better pension explaining that wages, pensions, administrative costs and interest repayments already amounted to 71% of the State’s expenditure.

Can India afford a similar policy?

•  India currently spends about 3% of its GDP on education, accounting for about 10% of the Centre’s and States’ budgetary expenses.
•  Salaries constitute a large portion of this expenditure.
•  The NITI Aayog in its report last year recommended that India raise this to 6% of GDP by 2022. Paying teachers (and doctors) significantly higher salaries may seem like a tall order, but the Central and State governments could consider rationalising both teacher recruitment and allocation of funds to existing programmes.
•  Some programmes may have outlived their purpose, while others could be pared down or better directed. In fact, improving accountability in the system could free up huge savings.
•  A World Bank study found that teacher absenteeism in India was nearly 24%, which costs the country about $1.5 billion annually.
•  Absenteeism could be the result of many factors, including teachers taking up a second job or farming to boost incomes, providing parental or nursing care in the absence of support systems, or lacking motivation.
•  The incentive of an enviable income which is girded with unsparing accountability could mitigate many ills that plague the system, free fiscal space and help meet important national developmental objectives.

Education system in Delhi

•  Piloting a policy of such consequence may also be easier in a smaller State, say Delhi.
•  Education is a key focus area for the Delhi government; the State invests 26% of its annual budget in the sector (much more than the national average).
•  The administration has also worked on improving teacher motivation as a strategy for better educational outcomes. The base has been set.
•  The political leadership in the State, which is unafraid of the bold and big in the social sector, could build on this.
•  Moreover, since the State is highly urban and well-connected, it would be easier to enforce accountability measures, which must underpin so heavy an expenditure.

Way forward

•  Ultimately, no investment that enables an educated, healthy, responsible and happy community can be deemed too high by any society
•  The short-term GDP-minded would do well to consider these words in OECD’s ‘Education at a Glance 2018’ report: The quality of education can be a strong predictor of a country’s economic prosperity.
•  Shortfalls in academic achievement are extremely costly, as governments must then find ways to compensate for them, and ensure the social and economic welfare of all.
•  Governments intent on improving the quality of education they offer must step out of incrementalism in policy-making.
•  Improving teacher status by offering top notch salaries to attract the best to the profession could be that revolutionary policy-step forward, which Bhutan has shown a willingness to take.

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Self-care medical interventions (The Hindu)

Mains Paper 2: Health
Prelims level : Self-care medical interventions
Mains level : Measures needed to improve Self-care medical system

Context

•  Self-care, which mostly happens outside the formal health system, is nothing new.
•  What has changed is the deluge of new diagnostics, devices and drugs that are transforming the way common people access care, when and where they need them.
•  With the ability to prevent disease, maintain health and cope with illness and disability with or without reliance on health-care workers, self-care interventions are gaining more importance.

Healthcare problems in India

•  Millions of people, including in India, face the twin problems of acute shortage of healthcare workers and lack of access to essential health services.
•  According to the World Health Organization, which has released self-help guidelines for sexual and reproductive health, over 400 million across the world already lack access to essential health services and there will be a shortage of about 13 million health-care workers by 2035.

About Self-help system

•  Self-help would mean different things for people living in very diverse conditions.
•  While it would mean convenience, privacy and ease for people belonging to the upper strata who have easy access to healthcare facilities anytime, for those living in conditions of vulnerability and lack access to health care, self-help becomes the primary, timely and reliable form of care.
•  The WHO recognises self-care interventions as a means to expand access to health services. Soon, the WHO would expand the guidelines to include other self-care interventions, including for prevention and treatment of non-communicable diseases.

Measures needed to improve healthcare

•  India has some distance to go before making self-care interventions for sexual and reproductive health freely available to women.
•  Home-based pregnancy testing is the most commonly used self-help diagnostics in this area in India. Interventions include self-managed abortions using approved drugs morning-after pills taken soon after unprotected sex, and mifepristone and misoprostol taken a few weeks into pregnancy that can be had without the supervision of a healthcare provider.
•  While the morning-after pills are available over the counter, mifepristone and misoprostol are scheduled drugs and need a prescription from a medical practitioner, thus defeating the very purpose of the drugs.
•  The next commonly consumed drug to prevent illness and disease is the pre-exposure prophylaxis (PrEP) for HIV prevention. India is yet to come up with guidelines for PrEP use and include it in the national HIV prevention programme.

Conclusion

•  Despite the WHO approving the HIV self-test to improve access to HIV diagnosis in 2016, the Pune-based National AIDS Research Institute is still in the process of validating it for HIV screening.
•  One of the reasons why people shy away from getting tested for HIV is stigma and discrimination.
•  The home-based testing provides privacy. India has in principle agreed that rapid HIV testing helps to get more people diagnosed and opt for treatment, reducing transmission rates.

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Nagaland NRC (The Hindu)

Mains Paper 2: Polity
Prelims level : Nagaland NRC
Mains level : Citizenship status across Nagaland

Context

•  Nagaland is following on the footsteps of its western neighbour, Assam, in the task of setting up a Register of Indigenous Inhabitants of Nagaland (RIIN).
•  Nagaland claims to have watched the process unfold in Assam, followed it closely, and it will now complete the task of identifying and registering indigenous inhabitants in less than five months, by December 10, 2019.

Lesson from Assam

•  This is more or less the kind of time-line that was followed by Assam, which is yet to publish its final NRC a year after the process began. In two months from July 10, Nagaland hopes to have a list of indigenous inhabitants, after which it will be published and time given till October 10 to file claims and objections, before finalisation.
•  It sounds simple, and Nagaland is considerably less populated than Assam.
•  But the Assam experience shows that in the complex demographies of the Northeastern States, it may not turn out that way.
•  As many as 40 lakh people were left out of the NRC listing in Assam, which seemed aimed to filter out ‘illegal immigrants’. Indeed, in Nagaland, various local attempts have been made to determine non-locals, non tribals and non-Nagas, and identify what some people refer to as the ‘Illegal Bangladeshi Immigrant’.
•  Two years ago, a town not farther than 15 km from Dimapur, the largest city and the commercial capital of the State, passed a resolution to place curbs on IBIs and devised ways to prevent them from integrating, living or trading in the town.
•  When such is the situation on the ground, in an already volatile region where the Armed Forces (Special Powers) Act is routinely extended, it is best that Nagaland proceeds with caution in this enterprise.
•  The RIIN should not ultimately become a vehicle to make outsiders of insiders.

Suggested measures

•  The Assam experiment has no clear end-point. Bangladesh has repeatedly suggested that the process going on in Assam is “an internal matter” of India, implying that there is no deportation possibility here.
•  Other than deepening the existing fault-lines in its own State and rendering the situation even more volatile, it is unclear what the Nagaland government hopes to achieve through the exercise. What happens to the people who are in the end found to be on the wrong side of the Nagland list?
•  The right to appeal and a humane hearing should be in-built in this exercise.

Conclusion

•  The NRC experiment in Assam witnessed extremely divisive political posturing.
•  Other Northeastern states are sure to be watching with keen interest what is unfolding in Assam and Nagaland. Emotive political issues cannot be allowed to drive the compiling of a registry of citizens.

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