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Power play (Indian Express)

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

Context

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

Background

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

Implications from this move

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

Conclusion

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

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Paving a green path (Indian Express)

Mains Paper 3: Environment
Prelims level : IPCC report
Mains level : IPCC report highlights

Context

• On the margins of the UN General Assembly in September, the UN Secretary General has convened a summit to discuss plans to address climate change.
• The summit will take place exactly a year before the implementation of the Paris Agreement begins.
• The UN Secretary General is concerned that the collective climate ambition is low and is keen to launch new initiatives to close the gap between the Nationally Determined Contributions (NDCs) made under the Paris Pact and the goal of climate stabilisation.

Rise of 1.5 degree Celsius

• The recent IPCC report which called for limiting the global warming to 1.5 degree Celsius has added momentum to the push.
• For this goal, the world will need to move towards zero carbon emission around 2050.
• But such a world is contingent on heavy electrification of energy, industry and transport systems in the medium term and market adoption of low or near zero carbon technologies in the longer term.

Industry track

• Nine tracks of discussion are planned at the summit, with the hope of nudging countries to move to an aggressive path of decarbonisation.
• One of them, the “industry track,” focussing on industrial decarbonisation, is led by India and Sweden.
• One has to see if the leaders of this track will handle it with finesse or put industry under pressure.

Challenge of industrial decarbonisation

• The challenge of industrial decarbonisation looks daunting at first glance. However, India’s experience in this respect is telling.
• As per government data, India may be on track to achieve its NDC target of emissions intensity well ahead of time.
• The period between 2005 to 2014, for which emissions data is available, has seen consistently higher economic growth (around 6-7 per cent) than the rate of growth in emissions (around 3.8 per cent).
• Falling energy costs of renewables have made it possible for incomes and jobs to be protected while lowering the emissions.

Harder-to-abate sectors

• However, over a third of the emissions is generated by the harder-to-abate sectors which will witness high growth rate in the next decade, leading to three to four times increase in energy demand.

High emission intensity

• While the energy intensity of these sectors may fall because of improved energy efficiency, their emissions intensity may remain high.
• The fall in India’s emissions intensity of GDP may not be sustainable unless attempts are initiated now to address the carbon intensity of these sectors in the long term.

Difficult to replace

• The trouble is that for heavy industries such as iron and steel, cement, aluminum, plastics, and long distance transport, which depend on fossil fuels, technologies to replace such fuels are either not ready for commercial-scale application or simply not available.
• Typically, industry is hesitant to adopt better but costly technology because of concerns about market share.
• A common aspirational goal has to be established on a scientific basis to enable industry to make investment decisions on a level-playing field. In the process, cost of newer technologies may also come down over the medium term.

Way forward

• One can think of the summit helping to build three levels of coalitions in a push for such transformation.
• First, a voluntary coalition of industries having the desire to accelerate to low or zero carbon technologies could be formed. These coalitions could adopt sector-wide goals by 2023 based on the best-available technology using life-cycle methods.
• The second coalition could consist of countries interested in promoting decreased carbon intensity through specific schemes.
• A coalition of industries and countries could also be formed to push for international agreements aimed at promoting technology solutions in harder-to-abate sectors through working groups and partnerships.

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Running dry (Indian Express)

Mains Paper 3: Environment
Prelims level : Jal Shakti ministry
Mains level : Environmental impact assessment

Context

• After a dry spell of almost 200 days, Chennai received monsoon showers last week. But this has not mitigated the water crisis in Tamil Nadu’s capital.

Background

• Clashes over water have been reported from different parts of the city and firms in Chennai’s Information Technology Park have asked employees to either work from home or bring their own water.
• The state government and the city’s municipality have blamed the crisis on the deficient Northeast Monsoon in October-November last year.
• They are not completely wrong.
• However, the fact also is that in the past five years, Chennai’s water supply has consistently fallen short of the city’s requirement.
• The Chennai Metropolitan Water Supply and Sewerage Board has been able to supply only 830 million litres a day (mld) as against the demand of about 1,200 mld. This year, the agency’s water supply dipped to 550 mld.

Key highlights about the climate region in Chennai

• Chennai is a rain-shadow city.
• It gets more than 80 per cent of its water from the Northeast Monsoon.
• In the past, this water was stored in ponds, canals and lakes which would minimise the run-off — that a coastal city is susceptible to — and recharge groundwater.
• Besides, according to a study by researchers at the geology department of Chennai’s Anna University, the city had more than 60 large water bodies at the turn of the 20th century.
• Three major waterways — the Buckingham canal and the rivers, Adyar and Cooum — crisscrossed Chennai.
• But Tamil Nadu’s capital today has only 28 water bodies, large or small, notes the Anna University study.
• The Pallikaranai marshland which used to sprawl over more than 6,000 hectares has shrunk to about 650 hectares.
• A growing body of literature has shown that urban planners gave short shrift to the imperatives of Chennai’s hydrology to meet the city’s infrastructural demands.
• A parliamentary panel that enquired into the causes of the Chennai floods in 2015, for example, reported that that real estate business had “usurped” the city’s water bodies.
• Today, Chennai gets its water from four reservoirs, which have gone dry after the retreating monsoon failed last year. Chennai’s desalination plants can barely supply a fifth of the city’s water requirements.

Conclusion

• Chennai is amongst the 21 Indian cities which the Niti Aayog fears will run out of groundwater by 2020.
• The city’s water crisis bares a critical challenge for the new Jal Shakti ministry.
• It has to play a leading role in resolving the tension in India’s current urban planning paradigm between the developmental needs of people and water security imperatives.
• The new ministry should start by coordinating with local authorities in Chennai to rejuvenate the city’s aquifers.

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How the agrarian crisis can be eased(The Hindu)

Mains Paper 3: Economy
Prelims level : Agrarian crisis
Mains level : Ways to resolve agrarian crisis

Context

• The current agrarian crisis in India is a product of two factors: failure to recognise when the Green Revolution started giving diminishing returns and taking steps to come up with alternatives; and the economic impact of subsidies.
• The current crisis can be summed up as diminishing soil fertility, sinking water table, increasing costs (all effects of the Green Revolution) and poor returns to farmers, periodic unaffordable spikes in key commodities, and periodic excess production which are dumped on the roads ruining several farmers and a huge burden on the government.

Reasons behind the policy failures

• The policy failures have arisen due to not recognising the nature of demand and supply curves for agricultural commodities.
• The demand is highly inelastic in a market which consumes 100 kg tomato if one supplies 125 kg, the prices collapse, since not much demand is there for the excess.
• Contrarily, when only 75 kg is supplied, the prices skyrocket since everyone wants to garner their daily supplies.
• The graph plots the demand and supply of a typical agri crop.
• The cost build-up of various suppliers is arranged from lowest to highest and its ridge on top becomes the supply curve.
• In agriculture, the demand curve is steep and supply curve is relatively flat. Where this is the case the market price is closer to the supply curve.
• This leaves a huge consumer surplus (excess of what the people are willing to pay and what they actually end up paying) and thin profits.

Flatness of supply curve

• The real problem is the supply curve’s flatness.
• This is largely the result of the government’s ill-advised subsidy policy which makes no discrimination whatsoever on the various input subsidies to agriculture.
• When everything from electricity, water, seeds, fertiliser, interest, are given free or subsidised without any limits of landholding or size, it leads to similar cost structures for most suppliers and hence the supply curve becomes flat (as shown in ‘Before’ segment in graph).
• Even if all mandies are handed over to the farmers, with such a curve, their profitability is unlikely to improve much.

What needs to be done?

• The solution should revolve around exploiting the inelasticity of demand.
• The sure-fire solution is to make the supply curve more elastic and harvest a huge ‘consumer surplus’.
• This can be achieved by rationalising subsidies.
• This can be done by restricting subsidies to only those holding 2-3 acres or to the first 2-3 acres only for even for larger farmers.
• With precise targeting through DBT (Direct Benefit Transfer), it is possible in the current scenario. Or it can be graded like 100 per cent of current levels for 2-3 acres, 50 per cent for 4-8 acres and nil thereafter, like in the graph.
• This will increase the cost for larger farmers (all units with ‘L’ label on X-axis) and induce a steepness (as shown in the ‘After’ situation in the graph).
• The prices as is seen in the graph will rise ( from ₹69 to ₹84).
• This shifts a portion of consumer surplus to producer profits. This will mostly benefit the small and marginal farmers.
• This transfer is perhaps much needed. We cannot have a society where 55-60 per cent of people get a share of 15 per cent of GDP.
• The quantities bought and sold will fall. But given the inelasticity of demand, it will be relatively much less.
• The larger units which lose a part of their subsidies will become uncompetitive in their traditional crops.
• They will diversify into other commercial crops or crops for which there are no subsidies now so that they won’t suffer in relative terms versus subsidy-supported small farmer.
• This is an important necessity. Our foodgrains production is in surplus and for increasing its income, diversification is a pre-requisite.
• This will also partially address the rural income inequality problems.

Governments finances

• The government will save a lot by curbing subsidies going to larger farmers.
• It can reduce the crops procured under MSP since the market prices would have substantially moved to enhance their incomes.
• This would have come from consumers who were willing to pay, hence maybe without much pain (other than a one-time price adjustment as inflation).
• The government may have to spend a part of its savings on covering some poorer marginal sections (who are net buyers of food) through higher PDS subsidies.
• A portion of PDS procurement can be reserved for organic farming by larger farmers. With the promising growth for organic products the world over, it could give an early-mover advantage.

Conclusion

• The government need not do this rationalisation for all products. It can start with those where there are surplus buffer stocks.
• If prices of those products move up, consumers will diversify their consumption basket to other products and their prices of un-subsidised products will also start moving up.
• Larger farmers would gravitate towards such products.

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Right to a minimally decent life (The Hindu)

Mains Paper 2: Social Justice
Prelims level : Fundamental rights
Mains level : Defining basic rights

Context

• The horrific tragedy in Muzaffarpur, Bihar, where the systemic failure of health care has killed over a hundred children.

New ways to defining rights

• The constitutional principle of a basic structure, it is time to articulate an equally robust doctrine of basic rights.
• These basic rights must be viewed primarily as positive, rights not against interference from the state (negative rights) but to the provision of something by it.
• Just as individuals are punished for legal violations, the government of the day must also be punished for the violation of these basic rights.
• This punishment need not await the next round of elections but must be meted out immediately, by the law itself.

Define basic rights

• Basic rights flow from basic needs such as physical security or subsistence. their non-fulfilment can cause great harm, even kill.
• The failure to get an antibiotic if you have a bacterial infection can hurt you very badly. Needs depend on the way human bodies are constituted. They are a solid necessity; one cannot get on without them.
• Nor can they be fulfilled by substitutes.
• For us, nothing can take the place of water, food and air.

Impact of lacking basic needs

• People suffer if basic needs are met inadequately or with delay. They are then denied a minimally decent life.
• When basic needs are not fully met, we feel vulnerable and helpless. We grieve, cry for help, seek assistance. We complain and demand elementary justice from our community, especially from the state.
• Elementary justice requires that before anything else, the state does everything at its disposal to satisfy all basic needs of its citizens, particularly of those who cannot fend for themselves. We feel aggrieved when the state abdicates this responsibility.

Security and subsistence

What does the language of rights add to the idea of basic needs?

• A right is something that is owed to us; it is not a favour. So, rights help the recognition of anything that satisfies basic needs as an entitlement.
• Basic rights are claims on the state to provide us with goods and services that satisfy our basic needs.
• When something is identified as a basic right, it puts the state under a duty to enable its exercise. The state becomes its guarantor.

Maintaining minimum economic security and subsistence

• The right to minimum economic security and subsistence that includes clean air, uncontaminated water, nutritious food, clothing and shelter.
• By showing the devastation caused by its absence, the Muzaffarpur tragedy amply proves that the right to primary health care is also an integral part of the right to subsistence.
• It is common knowledge that malnourishment lowers resistance to disease. A similar link exists between disease, unemployment and poverty.
• Credible threats to these rights can be reduced by the government by establishing institutions and practices that assist the vulnerable; for example, by setting up hospitals with adequate number of doctors, nurses, beds, medical equipment, intensive care units, essential drugs and emergency treatments.
• For this, proper budgetary allocation is required that depends in turn on getting one’s political priority and commitment right.
• When a government fails to provide primary health care to those who can’t afford it, it violates their basic rights.

Vulnerability, accountability

• To these two basic rights, I add a third the right to free public expression of helplessness and frustration, if deprived of other basic rights.
• The scope of freedom of expression is large and I don’t think all of it can be deemed basic. But the relevant part of it is.
• The right to make one’s vulnerability public, be informed about the acts of commission and omission of the government regarding anything that adversely affects the satisfaction of basic needs, to critically examine them and to hold state officials publicly accountable is a basic right on a par with right to physical security and subsistence and inseparably linked to them.
• It follows that governments must make arrangements for people to demand that their basic rights be satisfied, to complain when these demands are not met, to report lapses and omissions on the part of governments, point fingers at apathetic government officials, criticise the government for its failures and to do so without fear.

Conclusion

• These basic rights can be summed up in a single phrase, the right to a minimally decent life.
• A society may soar, strive for great collective achievement.
• There are no limits to the longing for a better life. But the point of having a threshold of minimal decency is that our life must not fall below a certain level of existence.
• Anything short of a minimally decent life is simply not acceptable.
• They routinely abdicate responsibility for the suffering they directly or indirectly cause.
• This is why we must ask why governments are not immediately and severely penalised when they undermine the exercise of these basic rights.

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Software robots and importance of risk management (Live Mint)

Mains Paper 3 : Science and Technology
Prelims level : Not Much
Mains level : Robotic Process Automation

Context

• Robotic process automation, or RPA, has emerged as a potent productivity-enhancement innovation that is being embraced globally by virtually all industry sectors.
• This is hardly surprising since a software robot (also known as a bot) can work around the clock at a fraction of an employee’s cost.

Is RPA delivering to its promise of having digital labour seamlessly replace humans?

• The evidence is mixed. Many companies are experiencing significant productivity gains, but research suggests that 30-50% of RPA projects fail, unleashing risks.
• A telecom company had deployed bots for managing its complaints process. Coding errors led to many grievances being diverted to an incorrect queue, resulting in a backlog of complaints.
• A global conglomerate deployed bots in its finance and accounts function to automate the accruals process.
• Its auditors, however, noticed that the accruals had been materially under-reported for a quarter. Unfortunately, incorrect rule-set definitions in the bots had led to the problem.
• Information security is also at risk: There have been reports of malicious employees launching cyberattacks on bots to access sensitive company data.
• While critics blame the underlying technology, this is seldom the case.
• Usually, the root cause lies in the inattention to risk and internal control considerations in the bot-development life cycle and the re-designed, bot-enabled processes.

Five simple design principles

• First, the less risky processes should be prioritized for automation. Sensitive processes, such as those related to finance and compliance should come later. An additional layer of monitoring controls should be considered for all mission-critical processes.
• Second, RPA practitioners should adopt a “what-cannot-go-wrong?" mindset. For instance, if bots are posting transactions to an enterprise’s core technology platform, users and administrators with access to these bots should not have the ability to execute conflicting transactions, such as placing an order and approving the payment.
• Third, bots need to undergo robust risk-based functional testing. This, however, is sometimes not adhered to during the software development life cycle. An investment bank discovered that a bot emailing end-of-day trade confirmations to customers was “dangling" because fields that were supposed to contain email addresses were empty.
• Fourth, watertight processes around bot security are critical. Similar to humans, bots too have user-names and passwords. Ensuring that these are encrypted and accessed by employees according to their assigned privileges is key to preventing unauthorized access and potential misuse, including fraud.
• Finally, implementing robust change-control processes is critical. RPA teams need to be made aware of changes to system interfaces so they can make timely updates.

Way forward

• As companies expand automation efforts, risk management functions need to step up and serve as critical lines of defence in the governance of these programs.
• Risk managers can identify pitfalls related to automating specific processes, pressure-test redesigned processes before they go live, and implement early warning systems that can predict, and ultimately, prevent bot failures.
• Leading risk functions, for instance, are deploying “supervisory bots" that monitor critical tasks performed by other bots and proactively raise alarm bells if they suspect performance issues.

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Time to overhaul the financial system (The Hindu)

Mains Paper 3 : Economy
Prelims level : PSBs
Mains level : Reviving PSBs

Context

• Finance is fundamental to the fabric of the domestic economy and its businesses, though for much of the time in India it has been swaying to the global trends.If it’s the socialism and the overreach of the state in 1970s, that dominated for nearly two decades thereafter, when reforms were introduced in the 1990s.
• It was a major turn towards Washington Consensus of free markets that became a pivot.
• A comprehensive and consistent policy that was primarily meeting the needs of India, in accordance with its basic structure, conditions, constraints and requirement, was however best found only in parts and patches.

Background

• Indian finance transitioned from excessive state ownership and control with a plain vanilla system (version 1.0) to the state taking a step back to allow more of private and foreign participation (version 2.0) that also spawned multi-asset classes and alternative markets.
• While issues in allocative efficiency and financial repression were the worries in version 1.0, the next one has brought its fair share of disconnects.
• It’s not just the surge of bank NPAs (non-performing assets) that is scandalous. Between 2007 and 2018, considered as peak for finance, domestic credit/GDP ratio barely moved from 61 per cent to 72 per cent, bank capital ratios remained below the global benchmarks, and deposits and credit grew at an average annual rate of 14 per cent each, not exhilarating enough for a vast economy like India.
• Governance issues found in some top banks dented the image further.

Imperfections prevailed on the market side

• The benchmark stock index doubled with not much change in the market capitalisation.
• Notional value traded in equity derivatives grew to an unusual high of $32 trillion in 2018 with just one product where punters take positions in Nifty Fifty Index Options accounting for 85 per cent, against $1 trillion in the cash market. Only half of the listed stocks come up for trading.
• Raising new capital, which is the main domain of stock markets, too remained subdued. During 2006-16, India could manage to raise $46 billion against China’s $570 billion and a start-up market like Vietnam’s $26 billion.
• India’s SME capital markets reported a mere $1.6 billion market cap in 2018, far lower than the new kid on the block Hanoi’s $38 billion.
• Value traded, at $351 million, looks far too less against the $7 billion traded in Malaysia and $1 trillion in Korea.
• Growing delinquency of the NBFCs, corporate distress pushing mutual funds to delay redemption of fixed maturity plans, shortcomings in ratings quality, impending corporate stress from external debt becoming due for repayment are further threats looming large.

A well-crafted plan needed

• All of these make it imperative for India to overhaul its financial system.
• A well-crafted plan with a long-term perspective and mechanism for effective monitoring and evaluation are vital.
• Measures like privatisation of public sector banks at best could be a minor relief rather than a lasting solution.
• A few developments that India needs to track and absorb in its internal dynamics while planning for the future could include: rising inequalities in income and earnings globally; rise of global value chains and the prospects for surge in corporate economic power, declining productivity and stagnation in labour wages; rising indebtedness at the corporate and individual levels; decelerating trends in global economic growth, competing for a dominant share in the shift of global economic power; emergence of newer endeavours of economic cooperation (such as Belt and Road Initiative); restrictions in labour mobility; and growing tensions and disputes in world trade.
• Apart from political determination and foresightedness, a comprehensive and an efficient financial system could come handy in addressing the challenges that emerge from time to time.
• Within finance, faster pace of developments in fintech and the newer range of technologies need to be managed better to balance the priorities of the geographic divide.

Changes in the ecosystem of the economy

• In addition, there could be dramatic changes in the ecosystem of the economy, the way businesses are conducted, the jobs that they create and the way they are performed along with changing lifestyles of the people in all of which finance will have an important bearing.
• Perhaps it’s time to do some sketches on the drawing board.
• To begin with, revive PSBs and make the group into a distinct national brand of banking that stands for efficient and transparent banking as also that shows care and concern towards the society at large.
• It’s not such a daunting task as not very long ago PSBs were major suppliers of money as also hubs for talent and skills for numerous emerging markets, leave alone the strong counter-cyclical role in providing credit during episodes of slowdown.
• A complete relook at its structure, management and engagement is what could revive PSBs and make its presence meaningful.

Continuous evaluation

• Equally pertinent is to bring back development banking.
• Much of China’s development process has largely been driven by institutions like China Development Bank, whereas India’s two development banks which converted to commercial banks in the euphoria of universal banking are surviving under different stages of stress.
• A strong code of customer protection is another imperative. Mis-selling, hidden charges, not enough passing of interest rate reductions, etc., are rampant in India.
• Even an advanced market like the US recently brought a new “Regulation Best Interest’ to further safeguard the interests of investors in securities.
• China has a list of services for which banks are explicitly not allowed to levy charges.

Conclusion

• Finance needs a continuous evaluation of its institutions, instruments and processes.
• Course corrections and distortions could be aptly and adequately addressed by an independent commission through periodic studies.
• India should seriously think of setting an efficient institutional mechanism that does continuous review and assessments.
• While serving the internal purposes, evolving a productive state craft would be relevant for Indian finance to effectively engage with the outside world too.

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Reimagining the NITI Aayog (The Hindu)

Mains Paper 2 : Governance
Prelims level : Niti Aayog
Mains level : Various governmental institutions and their functions

Context

• India’s Constitution-makers thought of India as a union of States with a centripetal bias, done, advisedly, to preserve the unity and integrity of a newly fledged nation.
• Since then, the Indian economy, polity, demography and society have undergone many changes. The new aspirational India is now firmly on a growth turnpike.
• It is in this context that we revisit India’s fiscal federalism and propose redesigning it around its four pillars.

Vertical and horizontal imbalances

• A vertical imbalance arises because the tax systems are designed in a manner that yields much greater tax revenues to the Central government when compared to the State or provincial governments; the Constitution mandates relatively greater responsibilities to the State governments.
• For example, in India, post the advent of Goods and Services Tax (GST), the share of States in the public expenditure is 60% while it is 40% for the Centre to perform their constitutionally mandated duties.
• The horizontal imbalances arise because of differing levels of attainment by the States due to differential growth rates and their developmental status in terms of the state of social or infrastructure capital.
• Traditionally, Finance Commissions have dealt with these imbalances in a stellar manner, and they should continue to be the first pillar of the new fiscal federal structure of India.

Understanding the imbalance

• However, in India, the phenomenon of horizontal imbalance needs to be understood in a more nuanced fashion. It involves two types of imbalances.
• Type I is to do with the adequate provision of basic public goods and services, while the second, Type II, is due to growth accelerating infrastructure or the transformational capital deficits.
• The latter are known to be historically conditioned or path dependent.
• Removing these two imbalances clearly comprises two distinct policy goals and calls for following the Tinbergen assignment principle, which are two different policy instruments.
• It is here that we believe that NITI Aayog 2.0 must create a niche, assume the role of another policy instrument and become the second pillar of the new fiscal federal structure.

Introduced Gadgil-Mukherjee formula

• In the past, the Planning Commission used to give grants to the States as conditional transfers using the Gadgil-Mukherjee formula.
• Now with the Planning Commission disbanded, there is a vacuum especially as the NITI Aayog is primarily a think tank with no resources to dispense, which renders it toothless to undertake a “transformational” intervention.
• On the other hand, it is too much to expect the Union Finance Commission to do the dual job. In other words, there is an urgent need for an optimal arrangement.
• It is best that the Union Finance Commission be confined to focussing on the removal of the horizontal imbalance across States of the Type I: i.e. the basic public goods imbalance.
• We need another institution to tackle the horizontal imbalance of the Type II; for this the NITI Aayog is the most appropriate institution.
• It can be argued that the Finance Ministry is the other alternative to deliver the goods in this regard but it is ill-suited to do this;
• Its primary duty is to concern itself with the country’s macro-economic stability and the proper functioning of the financial system rather than be an instrument of growth at the sub-national level.

Strategies taken towards maintenance the task of cooperative federalism

• NITI Aayog 2.0 should receive significant resources (say 1% to 2% of the GDP) to promote accelerated growth in States that are lagging, and overcome their historically conditioned infrastructure deficit, thus reducing the developmental imbalance.
• The NITI Aayog should be engaged with the allocation of “transformational” capital in a formulaic manner, complete with incentive-compatible conditionalities.
• The variables or parameters used in this formulaic transfer will be very different from those traditionally used by the Finance Commission.
• NITI Aayog 2.0 should also be mandated to create an independent evaluation office which will monitor and evaluate the efficacy of the utilisation of such grants.
• In doing so, it should not commit the mistake of micro-management or conflicts with line departments.
• It must be also accorded a place at the high table of decision-making as it will need to objectively buy-in the cooperation of the richer States as their resources are transferred to the poorer ones.

Ushering in decentralisation

• This is crucial because intra-State regional imbalances are likely to be of even greater import than inter-State ones. Decentralisation, in letter and spirit, has to be the third pillar of the new fiscal federal architecture.
• De jure and de facto seriousness has to be accorded to the 73rd and 74th constitutional amendments. For this, the missing local public finance must be birthed.
• One of the ways for this is through the creation of an urban local body/panchayati raj institutions consolidated fund.
• This would mean that Articles 266/268/243H/243X of our Constitution will need to be amended to ensure that relevant monies directly flow into this consolidated fund of the third tier.
• Through such constitutional amendments, the Centre and States should contribute an equal proportion of their Central GST (CGST) and State GST (SGST) collections and send the money to the consolidated fund of the third tier.
• For instance, one-sixth sharing of the CGST and SGST with the third tier can generate more than 1% of the GDP every year for the financing of public goods by urban-level bodies.
• Such an arrangement will be the third pillar of fiscal federalism.
• Further, the State Finance Commissions should be accorded the same status as the Finance Commission and the 3Fs of democratic decentralisation (funds, functions and functionaries) vigorously implemented.
• This will strengthen and deepen our foundational democratic framework.

Fine-tuning the GST

• The fourth pillar and in a sense what is central and binding is the “flawless” or model GST.
• It is to the credit of our democratic maturity that the GST Bill was passed unanimously by Parliament; but in its present form, it is far from flawless. It needs further simplification and extended coverage.
• We need to quickly achieve the goal of a single rate GST with suitable surcharges on “sin goods,” zero rating of exports and reforming the Integrated Goods and Services Tax (IGST) and the e-way bill.
• The GST Council should adopt transparency in its working, and create its own secretariat with independent experts also as its staff.
• This will enable it to undertake further reforms in an informed and transparent manner.

Conclusion

• Thus, India will be able to truly actualise the “grand bargain” and see the GST as enduring glue holding the four pillars together by creating the new fiscal federal architecture and strengthening India’s unique cooperative federalism.

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A dialogue of civilisations (The Hindu)

Mains Paper 2 : International
Prelims level : Not much
Mains level : Uprising of a new Cold War

Context

• Is the 21st century going to be marked by a fruitful conversation among civilisations or marred by a frightening conflict of civilisations?
• This is one of the most vigorously debated questions in our times.
• In the closing decade of the last century, Samuel Huntington, a noted American political scientist, put forward the thesis of ‘The Clash of Civilisations’.
• He claimed that the future trend of world politics would be defined by the conflict between Western and non-Western civilisations. His belief: the West’s superior civilisation would triumph in this clash.
• Many in America and Europe lapped up his thesis, since it had appeared soon after the end of the Cold War, which saw the disintegration of the Soviet Union and the emergence of the U.S. as the sole superpower.
• Since then, numerous public figures around the world have countered Huntington’s theory. Notable among them was Mohammad Khatami, Iran’s President from 1997 to 2005.
• To its abiding credit, the United Nations endorsed his counter-concept and proclaimed 2001 as the “UN Year of Dialogue among Civilisations”.

A new Cold War?

• The U.S. has become a diminished power in the past three decades. Nevertheless, it appears that Huntington’s argument still has backers in the Donald Trump administration.
• One of its high-ranking officials has sought to paint the current U.S.-China trade war on the canvas of a ‘clash of civilisations’.
• Speaking at the 19th Congress of the Chinese Communist Party in October 2017, he highlighted the relevance of this debate to the newest, and one of the most pressing, problems facing the entire planetary population: climate change.
• He said the world needs to make a transition from “industrial civilisation” to “ecological civilisation”, and learn to create “harmony between man and nature”, a noble teaching embedded in all the world’s civilisations, cultures and religions.

Dialogue of civilisations

• Over 2,000 participants representing the 48 Asian countries, and also many distinguished personalities from other continents, attended the event.
• In his keynote, Mr. Xi stressed the importance of Asia, a continental “cradle of civilisations” that “covers a third of the earth’s land mass and has two-thirds of the world’s population”.
• Explaining the purpose of the conference, he said, “The world today is moving toward greater multipolarity, economic globalisation and cultural diversity, and is becoming increasingly information-oriented. All this points to promising prospects for the future.
• Meanwhile, instability and uncertainties are mounting and the global challenges faced by humanity are becoming ever more daunting, calling for joint responses from countries around the world.”
• His prescription: “to meet our common challenges and create a better future for all, we look to culture and civilisation to play their role, which is as important as the role played by economy, science and technology.”

Conclusion

• History is witness to how civilisations decline and die when they become exclusivist.

• We need to stay open and inclusive and draw on each other’s strengths.

• All living organisms in the human body must renew themselves through metabolism; otherwise, life would come to an end. The same is true for civilisations.

• Long-term self-isolation will cause a civilisation to decline, while exchanges and mutual learning will sustain its development.”

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Dangerous moves (The Hindu)

Mains Paper 2: International
Prelims level : US-Iran tussle
Mains level : Rising US-Iran tensions could have disruptive consequences for India

Context

• US President Donald Trump’s stepped back from the brink of a shooting war with Iran when he said with his usual bluster that weapons were “cocked and loaded” to fire against Iran.
• The world can only breathe a sigh of relief Trump refused to proceed with a military strike despite being reportedly egged on by hard-line advisors like National Security Advisor John Bolton and Secretary of State Mike Pompeo to attack in retaliation for Iran’s US drone downing.
• Such an action would have had potentially devastating consequences for a region already wracked by wars and rivalries that have reached a new intensity in recent years. It would also have plunged the global economy into turmoil almost instantly.

Decision taken by Trump

• Trump, following his familiar bad cop, good cop, routine now is extending an olive branch to Iran, saying on the weekend, “Let’s make Iran great again” and offering to “start all over” with nuclear negotiations.
• He’s even thanked Tehran for not downing a US military plane with dozens of personnel aboard.
• Trump’s sworn to bring US troops home from conflicts in Afghanistan and Iraq, and is apparently uneasy about opening a new theatre of conflict and the prospect of retaliation against US targets across the troubled region.
• Still, while Trump’s retreated from an imminent confrontation with Iran, the risk of conflict is still very much alive.
• Iran, enraged by US sanctions that have tightened the noose around its economy and which Trump’s shown no sign of lifting, has hinted that it could easily launch missile attacks on oil tankers in the Straits of Hormuz through which almost a fifth of the world’s oil supplies flow.
• The Iranian armed forces are said to have built up a formidable arsenal of missiles that could be used to attack shipping from long distances.

Discovering oil reserves

• The US, which has discovered its own fresh oil reserves, doesn’t depend on Middle East oil. Even so, oil prices could turn skittish and yet again rock India’s economy.
• Fears of a skirmish have triggered chaos in the aviation sector, with flights from India to the US and Europe avoiding Iranian space.
• A US war with Iran could put India in a delicate position.
• Already, there’s deep uncertainty around the future of Chabahar port being developed with the Iranians that would give India a new route into Afghanistan and Central Asia.
• The Middle East’s been in disarray almost continuously since the first shots were fired in the 1980 Iran-Iraq war.

Conclusion

• At the heart of the region’s troubles is the intense rivalry between the Saudis and the Iranians.
• In the middle are the Israelis who’ve sided with the Saudis.
• The Iranians have warned its stock of uranium is about to exceed limits set by the 2015 nuclear deal.
• If the Iranians develop their own nuclear weapons, the Saudis would do their best to follow suit.
• This means there’s no room for any complacency about the region, despite easing of the immediate Iran crisis.

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A crisis that is slowly turning catastrophic (Live Mint)

Mains Paper 2 : Governance
Prelims level : Not much
Mains level : Niti Aayog report on groundwater extraction

Context

• India faces a water crisis acute enough to cause popular unrest as it slowly assumes calamitous proportions. Addressing it will require efforts in almost every sphere of life
• A 2018 NITI Aayog report puts the scale of the crisis in perspective: India has only 4% of the planet’s fresh-water for 16% of its population.
• This sets the country up for exploitation by water-tanker operators who profit by digging borewells, often illegally and under political patronage, to sell water at scandalous prices to the needy.
• The phenomenon is so rampant that the pace of groundwater extraction invariably outstrips the rate of aqueous recharge.
• If the rains play truant, the depletion of reservoirs accelerates.

Highlighting the NITI Aayog report

• According to the NITI Aayog report, India is the world’s biggest groundwater extractor.
• As things stand, it forecasts that 21 cities, including Delhi, Bengaluru, Chennai and Hyderabad, will run out of groundwater by 2020; also, 40% of our citizens will have no access to drinking water by 2030.
• As many as 600 million people are already estimated to face “high-to-extreme" water stress every year.
• This crisis had been in the making for decades, with ecologists who warned of development myopia brushed aside in favour of concrete signs of economic success.
• All manner of structures have encroached upon lakes and rivers with impunity, while industrial waste and sewage inflows render various water bodies toxic.
• The problem is compounded by the large-scale adoption of thermocol and plastic plates and glasses even in the countryside, the stuff of non-biodegradable waste that ends up killing rural pools of water that have traditionally served entire villages.
• Groundwater levels, meanwhile, have fallen calamitously.
• In the farm sector, blame has long been assigned to the practice of flood irrigation and switchovers to water-soaking crops such as sugarcane and rice, but water theft by tanker gangs does much of the harm.
• Given how dear this vital fluid is becoming to the masses, the Narendra Modi government’s aim of assuring every citizen piped water by 2024 is indeed laudable.

Conclusion

• However, far more challenges need to be overcome than can be listed here.
• Agriculture would need to conserve water through drip irrigation and other methods.
• Groundwater replenishment will have to be done in mission mode. Rainwater harvesting must turn voluminous.
• For now, perhaps tanker gangs could be put out of business by state water supplies.

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Flip flops in EV policy (Indian Express)

Mains Paper 2 : Polity
Prelims level : FAME II
Mains level : Steps towards adopting EV policy

Context

• A preliminary proposal by the government to phase out fossil-fuel-based three-wheelers by 2023 and two-wheelers (up to 150 cc) by 2025 has set the cat among the pigeons.
• It was so far believed that India will have a 100 per cent electric vehicle (EV) fleet in public transport by 2030, and will aim for 40 per cent electrification in personal transport by then.
• This was laid out by the NITI Aayog in May 2017, by this government in its earlier term. The idea now is to advance the timeline by five to seven years for bikes and three-wheelers.

Mass adoption of EVs

• It can be argued that mass adoption of EVs can’t happen overnight and to reach the desired EV mix by 2030, one has to begin somewhere.
• But there are compelling reasons to believe that the government would have done better to advance the deadline for public transport vehicles such as buses, three-wheelers and taxis.
• These vehicles account for over a third of diesel consumption by the transport sector (trucks, accounting for 40 per cent, are out of the EV regime).
• If one takes into account the fact that monthly diesel consumption, at over seven million tonnes, is more than thrice that of petrol, the case for beginning with public transport to shift to EVs becomes stronger.
• Creating the infrastructure and technology might be also be easier to begin with.

About FAME II Scheme

• The ₹10,000 crore FAME II incentive scheme for EVs, which is operational for three years from April 1, 2019, in fact favours public transport by setting aside more than half its funds for e-buses and e-three-wheelers, including e-rickshaws.
• To this extent, moving the deadline for three-wheelers may still be acceptable. The accelerated deadline is for bikes with engine capacity of up to 150cc.
• Bikes in this category are predominantly used by the middle class, a price-sensitive market.
• And this move is being contemplated at a time when the adoption of BS VI technology and higher insurance premiums for two-wheelers are pushing up costs.
• The revised schedule cuts short the time for use of BS VI technology to just 3-5 years for both two- and three-wheelers after companies complete the massive investments needed for the BS VI switchover.
• Whether the supply chain or the charging infrastructure to support mass adoption of any class of EVs will be fully up and running by 2023-2025 is a moot point.

Way forward

• However, there is the question of optics. The number of two-wheelers sold annually is in the region of 21 million, against 3.3 million in the case of cars.
• In smaller cities, two-wheelers are everywhere; they account for 60 per cent of petrol use. Starting with them will send out the message that air quality in cities is a serious matter.
• However, the production of electricity too should be from clean sources for net emissions to come down.

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E-mobility: Catalyse, do not mandate (The Hindu)

Mains Paper 3: Economy
Prelims level : E-mobility
Mains level : Introducing electrification in Automobile sector

Context

• The government managed to bring about this rare feat when reports emerged that the Ministry of Road Transport and Highways was coming out with a draft notification stipulating sale of only electric three-wheelers in the country after April 1, 2023.
• For two-wheelers (below 150 cc) the D-Day was reportedly April 2025.
• This information stunned the industry.

Introducing SIAM

• The Society of Indian Automobile Manufacturers (SIAM), the apex body representing the auto sector in the country, reacted immediately asking the government to temper its electric vehicle (EV) ambition by adopting a practical approach that will not needlessly disrupt the industry.
• The government backed down quickly, rather uncharacteristically, calling for consultations with the industry.
• It is an exercise it should have done in the first place before drafting the guidelines.
• While the government’s intention to push e-mobility is welcome, the manner in which it is attempting to realise this dream is flawed.
• Trying to force the pace by mandating a date is not the right approach and could prove counter-productive.
• The industrialists are not way off the mark when they claim that the sector is not ready for this change.

Supply chain is a bigger concern.

• Despite reports suggesting that 4-5 million electric two-wheelers and three-wheelers will be sold in India by 2025, the industry has not made any significant investment as it is unable to perceive the demand on the ground.
• Electric two-wheelers sold in the country are still a negligible fraction of the overall sales.
• Some players have launched products by retro-fitting their existing models rather than designing them afresh. This has led to poor customer experience and slower adoption.
• The most critical part in an electric two-wheeler is the battery and much of it is imported today. That cannot be the case at high volumes.
• Today, as many as 21 million two-wheelers are sold in India and of that those less than 150 cc are 17 million.
• Then there is the larger issue of access to lithium, a rare earth mineral, that is critical for battery manufacturing. India does not have this mineral. China has in abundance.

Charging infrastructure

• Also, EVs are connected vehicles and have a lot more electronics in them.
• They are need to run the battery system, manage the charger, control the motor and operate the dashboard.
• Facilities to build these in large numbers need to come up. Then, of course, comes the charging infrastructure itself which is practically non-existent.
• India’s auto component eco-system, though vibrant, is heavily focussed on the internal combustion (IC) engine.
• As much as 60 per cent of the $55 billion sector deals with IC power-train parts. It need time to make the transition.
• Forcing the pace will adversely affect the sector which employs three million people.
• The better approach for the government would be to catalyse the demand. As we have seen in other sectors, once demand manifests all parts of the puzzle will automatically fall into place be it supply chain, technology, manufacturing capacity or the charging infrastructure.

Introducing FAME policy

• The government has already taken the first step with its FAME (Faster Adoption and Manufacture of (Hybrid) and Electric Vehicles) policy.
• Its second iteration, FAME-2, has been welcomed by all the stakeholders. It needs to give time for the policy to work.
• If the government is is really keen on speeding up the process, it should make the policy a lot more attractive by deepening (increase the outlay multiple times from the present ₹10,000 crore) and broadening it (with greater emphasis on hybrid technology).

Positive factors

• The policy of catalysing demand, rather than mandating a time line, should work as electric two-wheelers are becoming increasingly attractive for multiple reasons.
• To start with, their costs are coming down thanks to falling battery prices.
• In 2013 a kilo watt hour lithium battery cost as much as $1,000 but today it is just $160. Electric two-wheelers are now available at the ₹1 lakh range.
• Range anxiety is not a major issue for two-wheelers as studies have revealed that the average distance travelled in India is just about 20 kilometres. Electric two-wheelers offer a comfortably higher range in a single charge.
• Also, rising awareness among Indian about the need for clean air should drive demand.
• EVs also have the potential to turn the automotive industry on its head. They are throwing up new business models.
• As the new lot of electric two-wheelers are connected vehicles, it is now possible to offer them on lease instead of out right sale.
• As data keeps flowing, the vehicle can be tracked continuously. This reduces the risk premium and makes leasing attractive (a leased electric two-wheeler will cost less than a petrol vehicle).

Conclusion

• They are also threatening the present revenue streams. Service costs are very low in EVs as they need no periodic oil change, filter or carburettor cleaning.
• This will severely impact the present model where the dealers are dependent on service revenues.
• Manufacturers too need to tap newer options like revenue from charging stations (they need to put them up first, something existing players are not comfortable with) or look at ways to monetise data that the vehicles will generate.
• While the existing two-wheeler majors would hate to admit, it is their lack of readiness in dealing with this fundamental transformation that prompted them to react so strongly.

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Protectors of real news (The Hindu)

Mains Paper 2 : Polity
Prelims level : Citizenship
Mains level : Citizenship types

Context

• Citizenship today is divided into four categories, four styles of role-playing and involvement. The first two are more advertised and discussed in sociological detail.
• These are the voter and the consumer.
• They combine different times and involve different dramas. The other two are the fan and the reader.
• The cinematic fan has found his place in the south; and the fan club, in fact, is the only real cadre in politics today.
• The fan’s commitment to his iconic star goes beyond the dramas and demands of ideology.
• The reader, however, is portrayed as a more laidback, reflective character. He is loyal, but openly critical, and sustains a running commentary on the newspaper he reads. For him, the newspaper commands a certain loyalty, a certain ritual where, for many, the newspaper and morning coffee go together, articulating the pleasures and demands of citizenship.

An informal trustee

• The role of the reader deserves to be analysed in greater detail. His invisibility hides the fact that he is an informal trustee of a newspaper, tuned to its nuances and style.
• He sustains his favourite columns and greets them with a kind of enthusiasm which is moving.
• One faces the paradox that while a particular news might be ephemeral, the newspaper is a commons of memory, and the reader a trustee of news and its integrity.
• News, in that sense, is a public landscape maintained by the reader. He is its symbolic guardian.
• Memory is crucial and critical in a newspaper, and some columns sustain it brilliantly.
• There is no policing here just a celebration of a way of life, an appeal to its norms.

A reflective space

• One realises with a sense of dread that TV as a medium belongs to the lynch mob, the patriotic goon squad. It is no longer a public space except as a symbolic longing.
• Print, at least the communities around newspapers, has acquired a more reflective style. It demands immediacy, but the urgency is not instantaneous.
• It has space for memory, judgment and morality. We must think of ways to deepen this precious space, where responsibility combines with rationality.
• Given the disorders of development which every newspaper reports, one suggestion is that a newspaper, through its readers, become a trustee responsible for the fate of at least one craft, one language, one species such that readership becomes both life-giving and life-affirming.
• It must be emphasised that such a concern is not organisational, but stems from a community’s sense of its own membership.

Conclusion

• The tragedy is that while there is a frenzied preoccupation with digital media, print as readership is ignored.
• Yet print as news is critical, crucial in India.
• Print can help remake democracy, and the reader as citizen reinvent what news can mean today.

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What yoga can teach us (The Hindu)

Mains Paper 2 : Health
Prelims level : International Yoga Day
Mains level : Health and wellness through Yoga

Context

• The evolution of yoga can present us with an alternative world view for transforming human society.
• It is heartening to note that yoga has been widely accepted across the world today.
• The Polish government celebrates International Yoga Day.
• In Aligarh Muslim University here, special endeavours are being taken to make this event successful.

History of Yoga

• The word yoga was first mentioned in the Rigveda, but its philosophy, science and grammar were first provided by Patanjali in his magnum opus, Patanjali Yoga Sutra.
• Yoga was taken to the West by Indian gurus.
• They started centres where people practised yoga and realised its benefits.
• However, the popularity of yoga also created a massive business of approximately $40 billion.
• This is set to grow with the rising popularity of yoga.

All is one

• Yoga is something beyond physical health and material wealth.
• The human persona is not only a body; it is also a mind, an intellect, and a soul.
• Yoga attempts to harmonise all of them. In the process, one attains a healthy body, a sharp intellect, and a focused mind capable of realising the unity between ‘I’, generally defined as personal consciousness, and ‘I’, the universal or cosmic consciousness.

Objectives

• Its ultimate goal is to experience the unity of individual and universal consciousness.
• Yoga teaches us to recognise the fundamental unity between human beings and humankind, humans and the environment, and ultimately recognise a total interconnectedness of everything.
• The essence of this realisation is to experience that all is one.
• There is no ‘us’ and ‘they’ everything is us. This is an integral or holistic approach.
• There is today a new vision of reality emerging from new physics.
• As we know, old physics was mechanistic; we had then the great figure of Isaac Newton.
• Corresponding to that mechanistic philosophy, but in a larger mould, we had a dualistic philosophy that divided the world into two components.
• The world of matter and the world of mind.
• The great figure of this philosophy was Descartes. But a hundred years ago, a brilliant Indian physicist, Jagadish Chandra Bose, demonstrated to the scientific world that there was no fundamental division between plants, animals and human beings.

A new way of thought

• Globalisation based on the mechanistic world view also attempts to integrate nations through the concept of the world as one market.
• The recent experience of attempts to integrate the economies and technologies of nations instead of creating any global consciousness leading to oneness has turned out to be divisive, exclusivist, fragmentary and has not helped in resolving any of the conflicts.
• The market forces, instead of harmonising conflicts, have further deepened the fault lines.
• This has resulted in a world that is out of balance.
• Restoration of the balance in this planet is a big challenge.
• Enlightened global minds need to think about an alternative paradigm.
• This indicates that some meaningful thinking has set in.
• It can be argued that if international negotiations could be held on the basis of holistic tenets, along with a calm mind, perhaps the UN would be able to use its time for good purposes.
• If such and other practices of holistic behaviour are pursued, possibly a new culture of conducting world affairs and international relations might evolve in the future.

Conclusion

• There is increasing awareness that the present imbalance is the outcome of the inability of existing socio-economic institutions and political structures to deal with the current impasse, which is derived from the inadequacy of concepts and values of an outdated model of the universe and the belief that all problems can be solved by technology.
• Perhaps there is a need for a new paradigm.
• Enlightened global minds should seriously ponder on such a probability.
• Apart from emphasising the normal benefits of yoga, International Yoga Day should be utilised to think about how a peaceful transition can be achieved for peace, harmony and happiness.

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Simultaneous polls are needed to address distortions in the electoral system (Indian Express)

Mains Paper 2 : Polity
Prelims level : One Nation One Election
Mains level : Election reforms

Context

• The renewed pitch for “One Nation One Election” if understood in terms of process improvement, or reforms, makes eminent sense.

What are the distortions that have crept in due to the year-round election cycle?

• The Rajya Sabha has simply stopped reflecting the current will of the people.
• No, this is not an argument to assert that Rajya Sabha should reflect the reality of the Lok Sabha mandate.
• But is it anybody’s case that the Rajya Sabha members should not reflect the current will of their respective state’s mandate?
• The assembly elections two years either side of Parliamentary elections, in states ruled by a different party than that at the Centre, have led to an almost continuous confrontationist attitude, severely compromising federal cooperation and governance delivery.
• Although governments are nominally elected for five years, the frequent imposition of the Model Code suspends decision making and implementation every few months.
• This has squeezed out space for ideas that may be vital but have no immediate electoral salience.
• The competitive nature of electoral democracy inevitably means choosing to make the easiest promise. Routed in the general elections and fearing similar result six months later, who would want to invest time in arduous efforts to effect real, long-term changes?
• The ubiquitous nature of social media has meant that almost everybody is now not just an informed political animal but a participating political animal. Once you have taken a position on a political issue, then the very nature of the beast will compel you to keep on participating with your political lens.

Conclusion

• There have been various models proposed for implementing the idea of simultaneous elections.
• They will surely be debated and a plausible method to reconcile the practicalities be evolved. It took us about a decade to agree to GST.
• It was a one-time adjustment at the national and state level and we have already started seeing the benefits of this structural change.
• “One Nation One Election” is also about one-time structural change.
• First align various cycles and then evolve a structure, by consensus, which can serve us for the decades to come. It is an idea whose time has come.

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Creating leaders out of civil servants (The Hindu)

Mains Paper 2 : Polity
Prelims level : Civil Servants
Mains level : Role and Qualities of a civil servant

Context

• There was a news report published in The Hindu (March 27, 2019) wherein a report, published jointly by Azim Premji University and Lokniti, was quoted.
• In this report it was clearly brought out that the citizen of the country had greater trust in the office of the Collector (manned by the IAS officers) than even the President and the Prime Minister.
• Unfortunately, there has so far been no concerted or sustained effort to manage senior civil service in a comprehensive manner.
• The steps have been ad hoc in nature. Lateral recruitment is also one such effort.
• What really needs to be done is to look at the manner in which recruitment takes place, the in-service training, transfers, assessment of officers, incentives and disincentives by way of promotions and selection to critical posts.

Leadership role

• However, before taking a call on these aspects, it would be essential to determine what is required in an officer who mans the senior civil service.
• Almost all the IAS officers occupy leadership positions right from the beginning of their careers, be it a Sub Divisional Magistrate, District Magistrate or Head of Department. Even in the Secretariat jobs, each officers has to lead a team.
• Hence, the objective should be to select such persons who have leadership qualities or have the potential to become leaders.
• The training should also centre around honing leadership skills. Perhaps this is not what is being done now.
• The selection by the UPSC is above board but the entrance exams primarily selects brilliant individuals by testing written communication skills, some analytical skills and general awareness.
• What it tests is the examinees capability to “crack” the exam, and various coaching institutes assist them in doing so.

Qualities

• A leader requires much more than that. He has to be able to build a team and carry it along with him by motivating those working with him.
• This entails setting up examples and even a few personal sacrifices. He has to excel in communication skills beyond the written one.
• He has to be ethical in his behaviour with a positive attitude. None of these are tested at the time of recruitment.
• We have tools today to assess these and are being used in the private sector and elsewhere in the world.

Age criteria

• The maximum age of entry into the civil service has gone up. Hence, to mould them into leaders becomes extremely difficult. They are already “hard boiled eggs”.
• Training assumes an important aspect in moulding these entrants into accomplished leaders.
• The maximum age of entry needs to be brought down to 26, as was the case a few decades ago.
• The training itself has to be focussed on imparting skills and attitude that would enable the officer to evolve as a leader.

Ethical behaviour

• Thus, more than individual activities, emphasis has to be given to group activities.
• It is during the training that the ethos and the purpose of the service needs to be drilled.
• Case studies-based methodology needs to be adopted to drive home the points.
• The officers have knowledge and they are capable of acquiring more of it.
• What is required is the transformation of attitude as an officer, the necessity and utility of ethical behaviour.
• Periodic upgradation of skills and learning from each other should be the focus of in-service training.
• This is imperative in the context of a fast-changing world both in terms of technology and management.

Assessment issues

• Annual Confidential Roles (ACRs) were an instrument through which officers were evaluated annually and their promotions were based on these ACRs.
• However, consequent to the Supreme Court order, these ACRs have ceased to be confidential as they have to be communicated to the officers.
• This has impacted the efficacy of ACRs as no officer wants to get embroiled with an officer dissatisfied with a grade.
• The 360 degree evaluation in vogue for the past few years is even worse as it is opaque and has had a demoralising effect on the civil service.
• Unlike the private sector, from where this concept has been borrowed, the one in practice in the government is a perfunctory one where assessment for empanelment is made on the basis of phone calls to peer group officers.
• No discussion is held with the officer who is being assessed and he is not even informed about the reason for not being empanelled.

Conclusion

• There is no harm in lateral entry of officers but whether that will improve governance is a moot point.
• Governance will perhaps improve only if senior civil service is itself managed appropriately.

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The forgotten funds (The Hindu)

Mains Paper 3 : Economy
Prelims level : Cess
Mains level : Cess structure and system

Context

• The government must utilise cess proceeds and publish an annual account of how they have been spent.
• In this period of accounting and accountability, as citizens, it is equally important to apply the same principles to the working of the government.
• A key area is the social accounting of the education cess, which is a compulsory contribution made by all taxpayers, both individuals and firms.

About cess

• A cess is levied on the tax payable and not on the taxable income.
• In a sense, for the taxpayer, it is equivalent to a surcharge on tax.’

To comparison with tax

• Direct taxes on income are compulsory transfers of private incomes (both individual and firm) to the government to meet collective aims such as the expansion of schooling infrastructure, an increase in health facilities, or an improvement of transportation infrastructure.
• A cess can be levied on both direct and indirect taxes.
• The revenue obtained from income tax, corporation tax, and indirect taxes can be allocated for various purposes.
• Unlike a tax, a cess is levied to meet a specific purpose; its proceeds cannot be spent on any kind of government expenditure.
• Recent examples of cess are: infrastructure cess on motor vehicles, clean environment cess, Krishi Kalyan cess and education cess.
• To make the point clear, the proceeds from the education cess cannot be used for cleaning the environment and vice versa.
• From the point of view of the government, the proceeds of all taxes and cesses are credited in the Consolidated Fund of India (CFI), an account of the Government of India.
• And the approval of Parliament is necessary to withdraw funds from the CFI. While the tax proceeds are shared with the States and Union Territories according to the guidelines by the Finance

Commission, the cess proceeds need not be shared with them.

• To meet specific socioeconomic goals, a cess is preferred over a tax because it is relatively easier to introduce, modify, and abolish.

What data show?

• In order to utilise the cess proceeds lying in the CFI, the government has to create a dedicated fund. As long as a dedicated fund is not created, the cess proceeds remain unutilised.
• The dedicated fund for primary education is the ‘Prarambhik Shiksha Kosh’, or PSK, (created in October 2005, a year after the cess was introduced) while that for higher and secondary education is the ‘Madhyamik and Uchchtar Shiksha Kosh’ (set up in August 2017).
• It is baffling why the government set up the dedicated fund for higher and secondary education in 2017, 10 years after the introduction of SHEC.
• It is also shocking that this fund has remained dormant as of March 2018.
• Moreover, data from the 2017-18 annual financial audit of government finances conducted by the Comptroller and Auditor General (CAG) show that ₹94,036 crore of SHEC proceeds is lying unutilised in the CFI.
• In fact, it appears that the government finally set up the ‘Madhyamik and Uchchtar Shiksha Kosh’ after consecutive CAG reports, repeated Lok Sabha queries, and newspaper articles.

To comparison with expenditure on education

• In 2017-18, the public expenditure on school and higher education was estimated to be ₹79,435.95 crore.
• In other words, the cumulative unutilised SHEC funds far exceeded the expenditure on both school and higher education for the year 2017-18.

Way forward

• Taxes in democratic societies indicate the presence of a collective socioeconomic vision aimed at improving livelihoods.
• Just as taxpayers have a responsibility to pay taxes, the government ought to ensure that tax proceeds are appropriately utilised.
• Since a cess is introduced with a specific purpose, it is completely unjustified when the proceeds remain unutilised for so many years.
• Moreover, in the current context of self-imposed fiscal discipline and the consequent reduction of public expenditure, the opportunity cost of unutilised education cess proceeds is significantly high.
• Finally, it is imperative that the government immediately begins utilising cess proceeds and also publishes an annual account of the manner in which they have been utilised.

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What a $5 trillion economy would look like (The Hindu)

Mains Paper 3 : Economy
Prelims level : Not Much
Mains level : Economic growth and expansion

Context

• At the meeting of the Governing Council of the NITI Aayog last week, Prime Minister Narendra Modi announced the target of a $5 trillion economy for India by 2024.
• It is necessary to think big when seeking to make a difference, for transformation does not come from modest plans.
• The Prime Minister will also use the drive to growth to place India’s official statistics on a firmer footing, so that we can be sure that economic policy-making is based on reality.

Without investment

• The importance of funding, and to an equal extent design, may be seen in the failure of the quite sensible aspiration, ‘Make in India’.
• Though technically applicable to every sector, it was clearly focussed on manufacturing. Articulated very early on in Mr. Modi’s first term (2014-19), and accorded a certain prestige in the pronouncements that followed, it played out as a damn squib.
• One of the reasons for this was the absence of commensurate investment outlay.
• To raise the share of manufacturing in the economy from its present 16% to 25%, an ambition declared by both the United Progressive Alliance and National Democratic Alliance governments, requires a scaling up of investment.

The wish list

• While lauding the efforts of leaders of early independent India, however, we would do well to remember their follies.
• Principal among them was the failure to articulate, possibly even adequately imagine, the contents of the economy that was being raced towards.
• If this is repeated now, a moment of triumphalism different in character but nevertheless there, it would amount to not having learned the lessons of history.
• Something missing from “internal production” and ‘Make in India’ is the difference these intentions would make to the lives of Indians. At least in the 1940s, the priority was to get the economy moving in the first place.
• This is no longer the issue.
• Today the economy must be evaluated in terms of how much it contributes to the ease of our living.

What would be some of the characteristics of a valuable economy?

To feel empowered by the economy

• Indians should feel empowered by the economy. We know that currently they do not feel so. India is placed very low in the United Nations’ World Happiness Report. Happiness, best understood as a sense of well-being, is directly related to empowerment, or being able to undertake the functionings we value.
• This is, in the first instance, related to being educated and experiencing good health. We are in India facing an education sector that is broken down and the majority are battling with almost non-existent public health infrastructure.
• The private sector has some worthy initiatives in these areas but they await an effective public presence on a gigantic scale.
• So, the first attribute of the valuable economy would be access to quality health and education for all.

Equality of opportunity

• For over three decades now income inequality has been rising in India. According to some measures, India is today more unequal than China, itself a society widely perceived as highly unequal.
• Now some part of inequality of opportunity is related to unequal distribution of income but a part of it is not. Gender inequality manifested as women having less opportunity in life is not going to go away with a re-distribution of income along class lines or across social groupings.
• India is a serious outlier in this regard, and becoming richer as a society may do little to change the status quo.
• Shockingly, a sex ratio, already unfavourable to women, has shown a secular worsening since 1947.
• Inequality in India can only be ended by equalising capabilities across individuals. Concerted public action via education is the means to this outcome.
• Income transfers, pushed relentlessly by policy entrepreneurs, evade the issue altogether.

Conserving nature

• An economy, whatever its size, cannot be meaningfully evaluated independently of the extent of presence in it of natural capital.
• By referring to the imperative for growth, to eradicate poverty, any effort to conserve nature has not just been ignored but treated with derision, by both right and left.
• This is no longer a credible political stance.
• Two-thirds of the world’s most polluted cities are in India, when we accept less than a fifth of its population.
• Air pollution shortens lives and lowers productivity, reducing the capacity to earn a living when alive.
• The poor are the most affected as they cannot afford to live in gated communities that somehow manage to commandeer scarce natural resources.
• Some part of environmental depletion in India is due to the pursuit of unbridled growth.

Conclusion

• This implies that any improvement in the life of the majority would require a re-alignment of the growth process so that it is less damaging.
• This would very likely require that we have slower growth but the process can be configured to channel more of it towards poorer groups.
• We may end up in a situation of less tangible goods in the aggregate than otherwise but one in which more people are happier than in the past.
• Such an economy is more valuable.

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Deadlock in Libya (The Hindu)

Mains Paper 2 : International
Prelims level : Libiya
Mains level : Highlighting the deadlock situation in Libya

Context

• Libya’s UN-recognised government’s decision to launch a peace initiative aimed at stabilising the civil war-stricken country is a welcome move.
• Prime Minister Fayez al-Sarraj of the Tripoli-based government has proposed setting up a national peace forum with help from the UN, to be followed by simultaneous presidential and parliamentary elections.
• Mr. al-Sarraj made the offer at a time when the rebel army of warlord Khalifa Haftar was fighting the Tripoli government troops on the outskirts of the capital.
• But an offer for peace alone won’t make any difference in the complex, war-torn polity.

Highlighting the deadlock situation in Libya

• The country descended into chaos after protests against dictator Muammar Qadhafi in 2011.
• A NATO invasion helped oust Qadhafi, but neither the foreign powers nor their local allies managed to fill the vacuum left by the regime that had been in power for four decades.
• Today there are two governments in Libya, one based in Tobruk and the other in the capital Tripoli.
• The self-styled Libyan National Army, commanded by Mr. Haftar, backs the Tobruk government and has captured huge swathes of territory, while the Tripoli government, which has international
  recognition, is defended by a host of militias, including Islamist groups.
• Mr. Haftar claims he is fighting terror groups and wants to unify Libya under his leadership, while Mr. al-Sarraj says his government is legitimate.

Resolve the crisis

• The current crisis was triggered when Mr. Haftar moved his troops to Tripoli in April 2019 to oust the government of Mr. al-Sarraj.
• But in contrast to other battles Mr. Haftar’s forces had fought in the east and the south, they were stopped on the outskirts of the capital by forces loyal to the government.
• Hundreds of people have already been killed, but both sides have refused to agree to a ceasefire despite international calls.
• The regional dynamics are also at play in the Libyan crisis. Egypt, Saudi Arabia and the UAE are backing Mr. Haftar’s forces, while Turkey and Qatar back the Tripoli government.
• When Mr. Haftar launched the Tripoli offensive, the U.S. had also taken a favourable view, President Donald Trump having talked to him on the phone. Libya illustrates what regime change wars could do to a country.

Conclusion

• Changing a regime using force could be easy as the examples of Iraq and Libya suggest, but rebuilding a new state is not, and it can’t be done with the aid of military power.
• All the countries that invaded the oil-rich north African nation and backed its paramilitary groups, including the U.S., Britain and their Gulf allies, should share some responsibility for Libya’s crisis today.
• At least now, they should look beyond their narrow geopolitical interests and use their influence to rein in the militias the war has unleashed and help establish order in the country.
• Prime Minister al-Sarraj’s offer could be a new beginning only if a ceasefire is reached, and respected, by all sides.

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