A failing state (Indian Express)

Mains Paper 2 : Heath
Prelims level : Acute encephalitis syndrome
Mains level : Details about Acute encephalitis syndrome

Context

• The death of children in Muzaffarpur due to AES, a preventable disease, shows that malnutrition needs to be addressed urgently.

Background

• More than 100 children in Bihar’s Muzaffarpur district have died of acute encephalitis syndrome (AES), with the state’s medical authorities initially blaming the deaths on the heat wave, hypoglycemia (sudden drop in blood sugar levels) and lack of awareness.

Reasons

• Now, belatedly, they have acknowledged the two most critical reasons for the deaths malnutrition and the inadequacy of primary health centres (PHCs).
• The state government’s lack of preparedness is indefensible.
• AES has struck Muzaffarpur with regularity in the summers since 1995.
• The disease claimed nearly 1,000 children between 2010 and 2014. It seemed to have become less virulent after 2014.

Study on AES

• In 2014 study by researchers from the Christian Medical College, Vellore, and the Centers for Disease Control and Prevention in Atlanta in the US showed how a combination of factors, unique to Muzaffarpur, sharpened the vulnerability of its children to the disease.
• The district is a major litchi-growing region and the study found that toxins present in the fruit were a source of AES.

Malnutrition problem

• But the fruit was a triggering factor only in the case of children who had not received proper nutrition, the study reported.
• It said that the toxins in the fruit assume lethal proportions when a poorly-nourished child eats litchis during the day and then goes to sleep without a proper meal.
• The links between the fruit and AES have been debated but most researchers agree that the disease affects only under-nourished children.

Poorly Equipped PHCs

• Medical literature has also shown that AES can be contained if the child is administered dextrose within four hours of the onset of symptoms.
• But every AES outbreak in the past 10 years has shown that Muzaffarpur’s PHCs the first point of healthcare for most AES patients — are ill-equipped to deal with the disease.
• Most of them do not have glycometers to monitor blood sugar levels.
• The Sri Krishna Medical College and Hospital, the designated hospital in Muzaffarpur to deal with the disease, do not have a virology lab or adequate number of paediatric beds.

Way forward

• However, the state government has not taken the cue from medical research.
• It does not have a special nutrition programme for AES-prone areas

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

GDP over-estimation argument is flawed (The Hindu)

Mains Paper 3 : Economy
Prelims level : GDP
Mains level : GDP growth estimation mechanism

Context

• The analytics used by Arvind Subramanian is incorrect on a number of counts
• Arvind Subramanian has written a working paper (‘India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications’) in which he argues that “actual GDP growth” may have been 4.5 per cent between 2011-12 and 2016-17, instead of the 7 per cent official estimate.

Arguments from Subramanian

• 17 “real indicators” are strongly correlated with GDP growth measured using the old 2004-05 series methodology but not with the new (2011-12) methodology,
• The growth rates for these indicators are “substantially lower in the post-2011 period than before” and
• In a cross-country regression that relates GDP growth of 70+ countries with just four indicators credit, electricity, exports and imports there is an econometric convergence between these and the official GDP estimates before 2011, but not after.
• GDP estimates are generated using a publicly available methodology that is well documented, and is based on a comprehensive estimate of all economic activities. GDP estimates use indicators to generate advance estimates, but not final numbers. Certainly, no cross-country regressions are used in generating GDP estimates.

Analytics used by Subramanian

• The analytics used by Subramanian to argue over-estimation is flawed.
• First, GDP estimates are always reported at current prices. Price deflators are then applied to calculate real GDP. But since Subramanian only compares real GDP growth estimates, there is no foundational basis to speak of “over-estimation,” since he has produced no alternative estimate of current price GDP.
• Second, the national income accounting framework estimates value addition of different economic activities, and not merely changes in indicators of these activities. It is, therefore, conceptually incorrect to relate levels of GDP to levels of indicators. High frequency indicators can, at best, signal changes in different sectors. They are not estimates of value addition by these sectors.
• Third, almost all the indicators used in the study are for the organised and commodity-producing sectors. Thus, the indicators inadequately cover the GDP base, significantly, services.
• Fourth, when assessing mis-measurement in national income, researchers examine data-related problems in moving from an establishment to an enterprise approach, changes in sampling frames, changes in definition, sampling and non-sampling errors, and other coverage issues in available data sets. Subramanian does nothing of the sort.

Correlation issue

• For these reasons, the paper has no analytical basis to opine on anything as fundamental (or grandiose) as over-estimation of India’s GDP growth.
• Subramanian argues that for his 17 indicators, the correlation with GDP growth reduces post 2011-12. However, such a change in correlation does not automatically imply an over-estimation of GDP.
• Part of the reason why the indicators show a low correlation with GVA estimates in the new series is because the composition of GVA (in terms of coverage and sectoral reclassification) has changed substantially.
• Subramanian does not control for this he cannot, because composition plays no role in his argument.

His assumption on GDP growth estimation

• Subramanian’s cross-country regression exercise involves underlying assumptions which are not acknowledged.
• He assumes (except in India) that there are no significant differences in how GDP is estimated in the countries chosen, such that the dependent variable can be regarded as reasonably homogeneous.
• The fact that India is an outlier cannot automatically lead to the inference that India’s growth has been over-estimated, simply because the drivers of India’s growth may have changed in the second period.

Not backed by theory

• But these things make no appearance in Subramanian’s argument. He does speculate on the causes of deviation (in his misplaced quest to establish over-estimation) but his speculations refer primarily to the use of deflators in organised manufacturing and in the services sector.
• These deflator issues are to do with moving from nominal to real GDP, and Subramanian leaves these issues for future research.
• An exercise of this nature could add value if grounded in a theory of growth for countries like India, to test whether India conforms to the posited theory pre and post 2011. But there is no theory backing this, purely data driven, exercise.
• Referees’ reports would likely raise these issues, inter alia, and an improved paper would no doubt emerge in due course.
• But in the working paper and press article, there is no analytical justification for the grand claim that GDP is over-estimated.
• For the rest, technical flaws notwithstanding, it confirms what we already know, that GDP growth has slowed in recent years. That’s about it.

Way forward

• The change in GDP estimation procedure was not done for the fun of it (the implicit assumption) but because there were compositional changes that had to be taken into account.
• These changes include wider coverage of activities (particularly in the manufacturing sector), reclassification of many sub-sectors, and use of new databases. They have, to some extent, altered the relation between value addition across sectors and volume based (physical) indicators.
• These should be examined critically and, in the case of the MCA database, this has been done by other scholars.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Time to crack the whip (The Hindu)

Mains Paper 3 : Economy
Prelims level : Not Much
Mains level : Highlighting the additional disclosures by SEBI

Context

• Strict enforcement may work better than higher disclosures in disciplining rating agencies.

Background

• Rating agencies, or rather their propensity to lock the stable doors after the horses have bolted, have been at the centre of the recent credit crisis in the debt market.
• Investors in bonds have been frequently jolted by instances of NBFCs rated ‘high safety’ (ILandFS, DHFL and Reliance Home and Commercial Finance, for instance) running into a crunch situation and delaying or defaulting on their repayments.
• Rating agencies have handed out multi-notch downgrades after their difficulty in servicing debt became well-known. This makes ongoing attempts by the Securities Exchange Board of India (SEBI) to hold rating agencies accountable for their opinions quite welcome.
• But SEBI’s expectation that investors will take rating agencies to task based on increasingly elaborate disclosures in rating reports, appears unrealistic.

Three key sets of additional disclosures

• SEBI has asked credit rating agencies to make three key sets of additional disclosures that put their credit opinions in context.
• One, it has asked them to reveal the cumulative default rates on rated securities over one, two and three-year time frames so that investors can assess their hits and misses.
• Two, they will be required to stick their neck out on the probability of default for each type of rating, so that investors can gauge the credit risk they’re taking on when buying bonds. SEBI has also laid down the tolerance level of defaults for each rating category.
• For instance, it expects AAA rated securities to carry a zero-default rate for one and two years, with a tolerance of 1 per cent for three years.
• Three, SEBI wants rating agencies to give their opinion on the liquidity situation of the issuer while taking note of sudden spikes in bond spreads that can be a precursor to default.

Outcomes of these disclosures

• While all these disclosures will no doubt add to the utility of rating reports, it is doubtful if retail investors will be able to derive much value from them.
• Retail investors in NCDs and public deposits tend to take third-party credit ratings at face value and seldom delve into the rating rationales put out by agencies.
• if they do, it is doubtful if they can decipher the implications of such jargon-filled qualifiers on their investments.
• While institutional investors may be able to make sense of such disclosures, they should in any case be relying on in-house expertise for independent credit assessment to justify their fees.

Conclusion

• After multiple rounds of changes to disclosure norms, it is time SEBI turned to stricter enforcement actions to discipline rating agencies.
• Writing new regulations or calling for more disclosures post facto cannot substitute for SEBI promptly hauling up rating agencies when they are found to be negligent.
• Now that it has a probability of default framework in place, SEBI must consider measures such as clawing back rating fees or even revoking licences for rating agencies who frequently fail in their fiduciary duty to warn investors off risky debt.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Preventing violence: on protection to doctors (The Hindu)

Mains Paper 2 : Heath
Prelims level : IMA
Mains level : Healthcare system in India

Context

• A law to protect doctors is good, and a health-care upgrade is essential

Background

• The attack on a junior doctor on June 10 over the death of a patient had sparked the agitation, which spread to other parts of the country when it appeared that the State government was reluctant to negotiate with the striking doctors.
• Now that Ms. Banerjee has reached out to young doctors and conceded that their demands are genuine, the government, in West Bengal and elsewhere, must focus on addressing the deficiencies afflicting the health-care system as a whole.

Reasons behind violence against doctors

• Reprisal attacks on doctors by agitated relatives of patients who die during treatment are known to happen.
• Such violence is invariably the result of systemic problems that adversely affect optimal attention to patients, such as infrastructural and manpower constraints.
• It is apparent that doctors work in stressful environments, sometimes under political pressure with regard to admissions.

Laws existing in several states

• Several States have enacted laws to protect doctors and other health-care personnel from violence.
• Last week, Union Health Minister Harsh Vardhan wrote to State governments highlighting the need for stringent action against anyone who assaults doctors.
• He asked States that do not have a law to protect doctors against violence to enact one, and circulated a 2017 draft of a law that envisaged imprisonment besides recovery of compensation from perpetrators for loss or damage to property.

Is such a law really effective?

• Ironically, West Bengal, the epicentre of a strike that involved nearly the entire medical fraternity across the country, has such a law too.
• Like the law in most other States, the West Bengal Act provides for a three-year prison term and a fine, which could go up to ₹50,000, to anyone indulging in violence against any “medicare service person”, which covers doctors, nurses, medical and nursing students and paramedical staff.
• The offence is cognisable and non-bailable.
• It also provides for recovery of compensation for loss.
• Many other States have similar laws, with the one in Tamil Nadu providing for a prison term that could go up to 10 years.
• It is clear that having this law did not prevent the incident that sparked the latest agitation.
• There are no figures available on how many times the medical service person protection law has been invoked.

Conclusion

• In any case, causing simple or grievous injuries to anyone is a criminal offence under the Indian Penal Code.
• Treating the issue as a law and order problem is just one way.
• The real solution may lie in improving health infrastructure, counselling patients about possible adverse treatment outcomes, and providing basic security in medical institutions.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Building confidence, BIT by BIT (The Hindu)

Mains Paper 3 : Economy
Prelims level : Bilateral investment treaties
Mains level : Bilateral investment treaties significance and scenarios

Context

• Indian bilateral investment treaties need to strike a balance between foreign investor interests and those of the state.

Highlighting the current economic scenario

• The GDP growth rate is at a five-year low, domestic consumption is sinking, the business confidence index has plunged, and India has recorded its highest unemployment rate in the last 45 years.
• To add to this list of woes is a claim made by Arvind Subramanian, India’s former Chief Economic Adviser, that India’s GDP has been overestimated.
• Foreign direct investment (FDI) equity inflows to India in 2018-19 contracted by 1%, according to the government’s own data.
• After an increase of 22% and 35% in 2014-15 and 2015-16, respectively, FDI equity inflows began tapering off since 2016-17 with the growth rate falling to 9% and then to 3% in 2017-18.

Lost opportunity

• This contraction in FDI inflows comes at a time when global supply chains are shifting base as a result of the ongoing trade war between the U.S. and China. India has failed to attract firms exiting China.
• Many of these supply chains have relocated to Vietnam, Taiwan, Malaysia and Indonesia.
• India is clearly not the natural/first option for these firms for a host of reasons, such as poor infrastructure, rigid land and labour laws, a deepening crisis in the banking sector and a lack of structural economic reforms.

Bilateral investment treaties terminated

• The decline in the FDI growth rate, despite the well-advertised improvement in India’s ease of doing business rankings, interestingly, has coincided with India’s decision, in 2016, to unilaterally terminate bilateral investment treaties (BITs) with more than 60 countries; this is around 50% of the total unilateral termination of BITs globally from 2010 to 2018.
• Unilateral termination of BITs on such a mass scale projects India as a country that does not respect international law.
• India also adopted a new inward-looking Model BIT in 2016 that prioritises state interests over protection to foreign investment.
• Since studies have shown that BITs positively impacted foreign investment inflows to India.

Bad regulation in bilateral investment treaties

• True, India’s BITs gave extensive protection to foreign investment with scant regard for state’s interests a characteristically neoliberal model.
• This design flaw could have been corrected by India negotiating new balanced treaties and then replacing the existing ones with the new ones instead of terminating them unilaterally, which has created a vacuum.

Reasons behind BIT claims increased

• Importantly, the design flaw was not the real reason for the increasing number of BIT claims.
• A large number arose either because the judiciary could not get its act together (an example being inordinate delays in deciding on the enforceability of arbitration awards) or because it ruled in certain cases without examining India’s BIT obligations such as en masse cancellation of the second generation telecom licences in 2012.
• Likewise, the executive — the Manmohan Singh government — got the income tax laws retrospectively amended in 2012 to overrule the Supreme Court’s judgment in favour of Vodafone and cancelled Devas Multimedia’s spectrum licences in 2011 without following due process, thus adversely impacting Mauritian and German investors.
• In correcting the pro-investor imbalance in India’s BITs, India went to the other extreme and created a pro-state imbalance as evident in the Model BIT.

Way forward

• Indian BITs should strike a balance between interests of foreign investors and those of the state.
• A certain degree of arrogance and misplaced self-belief that foreign investors would flock to India despite shocks and surprises in the regulatory environment should be put to rest.
• Clarity, continuity and transparency in domestic regulations and a commitment to a balanced BIT framework would help India project itself as a nation committed to the rule of law, both domestically and internationally, and thus shore up investor confidence.
• As the 2019 World Investment Report confirms, since India is fast becoming a leading outward investor, balanced BITs would also help in protecting Indian investment abroad.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Apathy and denial (Indian Express)

Mains Paper 2: Governance
Prelims level: Not Much
Mains level: Describe the work process under manual scavengers

Context

• Among the most significant steps undertaken by the Narendra Modi government in its first term was ending the culture of silence around sanitation.

• Unfortunately, the zeal of the Swachh Bharat Mission does not seem to have percolated to those at the bottom of the social and economic pyramid in urban India.

Highlights of the incident

• The death of seven people three hotel staff and four cleaners in Dabhoi, a town in Vadodara district, Gujarat, while cleaning a septic tank, is a shameful symptom on many counts.
It highlights how the provisions of the Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013 continue to be flouted.

• The deaths are also a reminder of the fact that official statistics, including in Gujarat, serve only to brush under the carpet the fact that manual scavenging continues.

Sewers cleaning manually must be stooped

• According to the Gujarat Safai Kamdar Development Corporation, sewers are no longer cleaned manually.

• Yet, as recently as June 2018, four cleaners died after inhaling noxious fumes in a sewer in Vadodara.

• This seeming contradiction can be explained, at least partially, by the fact that private contractors, some of which are reportedly employed by municipalities across India, frequently flout the safety provisions of the 2013 Act.

• State governments appear to be in denial of this reality: An inter-ministerial task force set up in 2017 found in its survey across 12 states that the number of manual scavengers was under-reported by about 400 per cent.

• The implication is clear most states either severely under-report, or are simply unaware, of the scale of the problem.

Key measures needed

• The municipalities and state governments across the country, following the example of Delhi and Hyderabad, must ensure that every sanitation worker is provided with equipment that ensures their safety.

• This must include basic materials like gloves, masks and helmets, to the sewer-cleaning machines that the Delhi Jal Board is ensuring that former manual scavengers, and the families of those who have died manual scavenging, are provided through low-interest bank loans.

• The operators in the private sector must be given both carrot and stick: Any violation of the Prohibition of Manual Scavengers Act must be dealt with severely and the use of the latest technology incentivised.

Conclusion

• Finally, the Swachh Bharat’s ambit must, on a mission mode, ensure that the apathy and denial that has surrounded the practice of manual scavenging, both in governments and the society at large, be put to an end.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

We should join WTO e-commerce talks (The Hindu)

Mains Paper 3: Economy
Prelims level: WTO members
Mains level: WTO e-commerce talks

Context

• E-commerce and growing protectionism were two key topics of discussions at the G20 ministerial meeting at Tsukuba, Japan, on June 8 and 9.

• New Delhi will soon have to take a decision on whether or not to join the WTO’s plurilateral group on trade rules in e-commerce.

• Earlier this year, 77 WTO member-countries came together to negotiate trade rules in e-commerce.

• India is negotiating an e-commerce chapter in the Regional Comprehensive Economic Partnership (RCEP) agreement.

• Among the 16 RCEP member-countries, 11 (including China) are a part of the plurilateral group. It is, therefore, important for the new government to review India’s stance.

Background

• In the past decade, fast growth of technology and development of different business models have led to double-digit growth of trade in e-commerce.

• UNCTAD estimated that the global e-commerce market was at $29 trillion in 2017.

• India was ranked ninth in terms of global e-commerce sales then.

• The flow of data now contributes more to the world’s GDP than flow of physical goods.

• The rise in importance of data and its intangibility have made the regulatory framework governing data flows complex.

• While it is increasingly difficult for countries to regulate technology, there are concerns that growing digitalisation may increase the risks to national security and consumer privacy.

• To enforce government right to vigilance and consumer data protection, a number of developed and developing countries are implementing data localisation measures.

Concerns for WTO member countries

• The European Union (EU) has implemented the General Data Protection Regulation (GDPR), while China’s Cybersecurity Law of 2016 prohibits or severely restricts routine cross-border transfers of information.

• India’s Draft National E-commerce policy is aimed at enacting a data protection regulation based on the Srikrishna Committee recommendations.

• Two concerns of WTO member-countries are localisation and the growing oligopolistic powers of few global multinationals.

• The plurilateral group created by the WTO member countries is negotiating global trade rules in e-commerce.

• To understand whether India should be a part of the plurilateral group, a survey of 50 stakeholders was conducted by researchers in ICRIER.

• Majority of the respondents opined that India should participate in the plurilateral e-commerce negotiations so as to play a major role in decision-making.

Participation matters

• Most Indian business and export promotion councils feel that taking a hard position of staying out of the negotiations can adversely impact India’ trade relations with key export markets such as the US.

• Some survey participants felt that the disincentive to participate may be due to the lack of data and information and/or lack of preparedness.

• In this context, the government may start sponsoring research for data collection on what component of the SME businesses are through e-commerce platform, whether such platforms have helped SMEs to access the global market and integrate into global value chains, and what is the business model of the e-commerce companies and their source of funding, among others.

• They also suggested that India should enact the Personal Data Protection Bill based on the Srikrishna report to ensure data security.

Key highlights from this survey

• The survey also found that barriers which adversely impact efficient business models and restrict investment in logistics infrastructure but are not able to help the domestic companies to gain global scale should be reviewed and replaced by policies which address the issues faced by domestic start-ups and SMEs.

• A number of e-commerce companies and their express delivery service providers pointed out that commitments to deliver within a certain date and/or time cannot be made to customers unless e-commerce companies and/or the express delivery companies in their network have control over the inventory.

• The restrictions on FDI in inventory-based model cannot be adhered to if a firm, on the one hand, has an efficient business operation which meets customer requirements and satisfaction and, on the other, has a fast-track growth strategy.

• Indian express delivery companies pointed out that being a part of the network of global e-commerce companies have led to 40 per cent increase in their B2C sales and 20 per cent increase in their B2B sales. Given that GST supports a single market model, if the restrictions on inventory-based models are removed, they can be a part of the most efficient inventory management system, which will reduce logistics costs.

Data security

• While all survey participants agree on the need for data security and protection, they have raised concerns about the way in which the policy have been implemented and, at times, without stakeholders’ consultations.

• The RBI said that the entire data relating to payment systems should be stored in a system “only” in India.

• While the payment companies had no objection to share the data real-time with the RBI, they are concerned about their ability to do risk management and fraud in the context of international trade-related payments if data mirroring/sharing is not allowed.

• Localisation of data has been a key component of the Draft National E-commerce Policy, but the policy fails to define key terminology like community data and sensitive data.

• Lawyers are also divided as to what are the constitutional rights of citizens in a democratic country and how that is ensured under the proposed policy.

• While the policy is drawn with the objective of creating infrastructure and jobs in the country, there are no studies on how much infrastructure is needed, do we have the capacity to manufacture to meet the requirements, can we meet the requirements in three years as proposed, and what would be the impact on trade balance and imports.

Conclusion

• Given these policy gaps, the high-level trade committee may review the current regime, look at global best practices.

• To examine the inputs given by different stakeholders and then develop India’s e-commerce policies and negotiating strategies at the WTO.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Unleashing the potential of urban India (The Hindu)

Mains Paper 1: Society
Prelims level: Urbanisation
Mains level: UK's City deals models may guide reform in metropolitan governance structure

Context

• The Global Metro Monitor 2018 reports that 36% of employment growth and 67% of GDP growth were contributed by the 300 largest global metros, with those in emerging economies outperforming those in advanced economies.

The relevance of metropolitan cities

• Metropolitan areas concentrate and accelerate wealth as these are agglomerations of scale that concentrate higher-level economic functions.

• Nine Indian metros feature in the top 150 ranks of the economic performance index.

• By 2030, India will have 71 metropolitan cities, of which seven would have a population of more than 10 million.

• Clearly metropolises are going to be a key feature of India’s urbanisation and will play a crucial role in fuelling growth.

About the constitutional provisions regarding metropolis

• Article 243P(c) of the Constitution defines ‘metropolitan areas’ as those having “population of ten lakhs [a million] or more, comprised in one or more districts and consisting of two or more municipalities/panchayats/ other contiguous areas, specified by the governor through public notification to be a metropolitan area”.

• It recognises metropolitan areas as multi-municipal and multi-district entities. It mandates the formation of a Metropolitan Planning Committee (MPC) for preparing draft development plans, considering common interests between local authorities, objectives and priorities set by Central and State governments, and investments likely to be made in the area by various agencies.

• To ensure the democratic character of the MPC, it is mandated that at least two-thirds of the members of the committee must be elected by and from among the elected members of the municipalities and chairpersons of the panchayats in the metropolitan area, proportionate to the ratio of their respective populations. The size and manner of filling such seats are left to the State’s discretion.

Key concerns with MPCs

• Janaagraha’s Annual Survey of India’s City-Systems (ASICS) 2018 found that only nine out of 18 cities mandated to form MPCs have constituted them.

• Where constituted, their functionality is questionable, with the limited role of local elected representatives raising further questions on democratic decentralisation.

• Thus, the provision for an MPC has not introduced robust governance of metropolises, as the metropolises continue to be a collection of parastatals and local bodies in an entirely fragmented architecture.

The City Deals’ model of UK

• The U.K. has rolled out ‘City Deals’, an agreement between the Union government and a city economic region, modelled on a ‘competition policy style’ approach.

• The city economic region is represented by a ‘combined authority’.

• This is a statutory body set up through national legislation that enables a group of two or more councils to collaborate decisions, and which is steered by a directly elected Mayor.

• This is to further democratise and incentivise local authorities to collaborate and reduce fragmented governance, drive economic prosperity, job growth, etc.

• ‘City Deals’ move from budget silos and promote ‘economic growth budget’ across regions.

Examples from other countries

• The U.K. has established nine such combined authorities. Australia adopted a regional governance model along these lines in 2016 and has signed four City Deals till date. Meanwhile, China is envisioning 19 seamlessly connected super city clusters.

• India, however, is yet to begin the discourse on a governance framework for the future of its metropolises.

• It is yet to recognise that disaster management, mobility, housing, climate change, etc. transcend municipal boundaries and require regional-level solutions.

• The World Bank notes that despite the emergence of smaller towns, the underlying character of India’s urbanisation is “metropolitan”, with towns emerging within the proximity of existing cities.

Way forward

• It is time India envisions the opportunities and challenges from a ‘city’ level to ‘city-region’ level.

• The Central government must create a platform to build consensus among State governments.

• Perhaps, the Greater Bengaluru Governance Bill, 2018, drafted by the Expert Committee for Bruhat Bengaluru Mahanagara Palike Restructuring, could offer direction.

• It proposes for a Greater Bengaluru Authority headed by a directly elected Mayor, responsible for the overall planning of Greater Bengaluru with powers for inter-agency coordination and administration of major infrastructural projects across the urban local bodies within the area. However, this Bill is yet to see the light of day.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

A blinkered understanding of migration (The Hindu)

Mains Paper 2: Indian Diaspora
Prelims level: Not much
Mains level: Issues of the draft emigration Bill

Context

• The draft emigration Bill is more about managing the export of human resources than being a humanitarian framework.

Benefits of emigration

• A large emigrant population has many benefits for India:

• The much-discussed international remittances (which touched $80 billion in 2018)

• A positive impact on foreign direct investments, trade and foreign relations. The Indian diaspora also provides much needed philanthropic activities in health and education to help achieve the Sustainable Development Goals.

• There is another side to the Indian emigration story, which is characterised by information and power asymmetries in the global labour markets to include exploitation, inhuman living conditions, violence and human rights violations.

Background

• Since Independence, a steadily increasing number of low-skilled emigrants moved to destinations in West Asia. In order to safeguard their rights and welfare, the government enacted the Emigration Act, 1983.

• So, in an effort to update and upgrade this framework, a draft Emigration Bill, 2019 was released.

Abolishment of two different types of passport

• What is most positive about the draft Bill is the inclusion of all students and migrant workers within its purview and the abolishment of the two passports (emigration clearance required and emigration clearance not required, or ECR and ECNR) regime based on a person’s educational qualifications.

• This will significantly improve the collection of migration flow data when compared to the current system, which excludes most migrants leaving India.

Key highlights of the crucial exclusions

• For instance, Indians reuniting with family members abroad .

• These “dependent migrants” have increasingly little economic or political freedom at their destinations, an example being the recent attempt by the Trump administration in the U.S. to repeal the employment eligibility of spouses of high-skilled H1B immigrants (a majority are from India).

• Also alarming are numerous instances of Indian spouses being ‘lured’ abroad in marriage and then stranded or exploited.

• Between January 2015 and November 2017, the government received 3,328 such complaints.

• The perception is that undocumented migrants are those persons who leave India through informal channels, but most migrants become irregular on account of expired visas/permits.

• In West Asia, when migrant workers flee their employers to escape exploitation, a single police complaint can make them ‘undocumented’ for no fault of theirs.

• The intermediaries play an instrumental role in minimising information asymmetries and migration costs.

• Thus, any regulatory framework needs to balance strong disincentives for migrant welfare-destroying practices with the efficient supply of affordable intermediary services for prospective workersand students.

• To effectively ensure their welfare, any emigration policy framework needs to be considerate of the complete migration cycle: the pre-departure, journey, destination and return.

• The 2019 draft Bill addresses only the first three parts of the cycle while completely ignoring return migration.

• Globally, one in four migrants today is a return migrant.

Other issues with emigrants

• There is no complete database number of Indian migrants abroad.

• There is also an erroneous assumption that Indian migrants in a developed destination country have sufficient protection and welfare.

• The draft Bill personifies the government’s primary view of emigration policy as a means for managing the export of human resources rather than a humanitarian framework to safeguard Indian migrants overseas.

Conclusion

• Without drastic changes to the draft Bill’s approach, we will miss the opportunity to fulfil the hard-fought shared objectives of the Global Compact for Safe, Orderly and Regular Migration.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Serious concerns over Bt brinjal (The Hindu)

Mains Paper 3: Agriculture
Prelims level: GMO
Mains level: Concerns related to Bt Brinjal need to be addressed.

Context

• Bt brinjal genetically modified (GM) to resist the brinjal fruit and shoot borer (an insect), was found growing illegally in Haryana.

• This was a different Bt brinjal from the one developed by the Indian company, Mahyco, in which Monsanto has a 26% stake.

• Mahyco’s Bt brinjal has been under a moratorium since 2010. Even as the government clamped down on the illegal GM crop, some farmer groups have demanded the release of Mahyco’s Bt brinjal and other GM crops in the regulatory pipeline. But is Bt brinjal actually ready for release?

Key impacts highlighted

• The National Institute of Agricultural Economics and Policy Research anticipates that if Bt brinjal performs as Mahyco proposes, brinjal output will increase and retail prices will fall, benefiting consumers far more than farmers.

• The report ignores the scenario that companies might charge premium prices for Bt brinjal seeds, in which case farmers may not benefit at all.

• The National Institute of Agricultural Economics and Policy Research anticipates that if Bt brinjal performs as Mahyco proposes, brinjal output will increase and retail prices will fall, benefiting consumers far more than farmers.

• The report ignores the scenario that companies might charge premium prices for Bt brinjal seeds, in which case farmers may not benefit at all.

• The Dr. Y.S.R. Horticultural University highlighted crucial deficiencies in the characterisation of Bt brinjal, and in the environmental impacts assessment.

• The ecologist, Madhav Gadgil, warned of contamination of India’s diverse brinjal varieties.

• Biodiversity is critical for nutrition and sustainability, and the government’s own task force on biotechnology (2004) had recommended that no GM crop be allowed in biodiversity-rich areas.

• Further, a majority of the technical expert committee appointed by the Supreme Court (in the public interest litigations over GM crops), recommended a ban on genetically modifying those crops for which India is a centre of origin or diversity. Brinjal happens to be such a crop.

• Many health researchers and professionals, and scientists such as immunologist have argued that Bt brinjal poses risks to human health.

Key responses from government

• Bt brinjal found no support from State governments. Kerala and Uttarakhand asked for a ban on GM crops.

• States with substantial brinjal cultivation, i.e. West Bengal, Odisha, Bihar opposed the release pending rigorous, extensive testing.

• As did Chhattisgarh, Tamil Nadu, Karnataka, Madhya Pradesh, and undivided Andhra Pradesh.

• In 2012 and 2017, respectively, the Parliamentary Standing Committee on Agriculture and the Committee on Science & Technology, Environment and Forests assessed the GM controversy.

• Both committees expressed grave concerns about lapses in the regulatory system.

• In fact, the Committee on Agriculture was so alarmed by the irregularities in the assessment of Bt brinjal, that it recommended “a thorough probe by a team of eminent independent scientists and environmentalists”, which never happened.

• Further, both committees endorsed labelling GM foods to protect a consumer’s right to know.

No scientific consensus

• There is a moratorium on Bt brinjal because there is no scientific consensus on its safety and efficacy, and because the States and Parliament have profound misgivings about the regulatory system.

• In recent years, pests have developed resistance to Bt cotton, forcing farmers to spray lethal pesticides.

• This led to over 50 deaths by pesticide-poisoning in Vidarbha in 2017.

• A GM-based strategy of pest control is unsustainable, all the more so since farmers, already pressed for land, ignore the government’s recommendation to plant refuge crops.

Way forward and conclusion

• The government must detail the steps it has taken since 2010 to address the scientific lacunae,

• It clarify precisely how Bt brinjal will benefit farmers.

• This put the infrastructure to ensure labelling into place, and

• To demonstrate how Bt brinjal fits in with sustainable farming and biodiversity conservation.

• As things stand, Bt brinjal runs counter to the framework for agricultural development and farmers’ well-being devised by parliamentary panels and the government’s own task forces and expert committees.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

A grim future in Israel (The Hindu)

Mains Paper 2 : International Relations
Prelims level : India-Israel
Mains level : Effective of international policies

Context

• With criminal indictment imminent on charges of corruption, Israel’s Prime Minister Benjamin Netanyahu pulled off a fourth consecutive win in general elections to the Knesset on April 9.
• Though tied on seats with his main rival, Mr. Netanyahu has a clear pathway towards power in coalition with a bloc of right-wing allies.
• As with earlier wins, eked out by strongly running against counsels of sanity from the diminishing peace camp, he has pulled the political centre of gravity sharply, yet again, to the ultra-right.

Sources of support

• Mr. Netanyahu’s opponents within Israel say that Mr. Trump effectively created a publicity video for him with a decree during the late days of the campaign, recognising Israel’s annexation of the Golan Heights.This followed Mr. Trump’s gift on the 70th anniversary of Israel’s formation last year, shifting the U.S. embassy from Tel Aviv to Jerusalem and consigning the Arab third of the city’s population to a future of indefinite occupation.
• The comatose peace process, which was never more than a charade enabling the U.S. to keep its coalition of allies in the Arab world, was declared dead then.
• Even Mahmoud Abbas, the normally acquiescent Palestinian Authority President, has refused all offers to resume talks since.
  Strong campaign
• Mr. Netanyahu’s campaign rhetoric since his debut in politics was often called out for incitement against the Palestinians.
• He excelled himself this time, vowing in the last days of the campaign to never allow a Palestinian state and to annex parts of the West Bank.
• He is also on record telling Knesset colleagues that controlling the entire territory between the Jordan river and the Mediterranean is indispensable “for the foreseeable future”.
• And he has been unapologetic about “living forever by the sword” if that be Israel’s need.
• The people of Gaza have lived through this experience after the fraudulent Israeli withdrawal of 2005 which converted the densely populated strip into the world’s largest open air prison.
• March 30 marked a year since the people of Gaza began their “great march of return”, a mass mobilisation demanding the UN-mandated right of refugees to return home.
• No less than 70% of the 2 million people in Gaza are refugees from villages and towns razed to establish Israel.

The view from India

• India continues to be among the biggest overseas patrons of the Israeli military-industrial complex. Increasingly, in the public discourse, Israel is portrayed as the role model that a “new India” should emulate in terms of its security posture in a troubled neighbourhood.
• The cause of Palestinian freedom continues to gain token homage, but the myth that this commitment can be “de-hyphenated” from India’s relations with Israel looks increasingly hollow.
• A renewal of India’s commitment to Palestine should run concurrently with fighting back against the growing expressions of intolerance in political life and the shredding of the fabric of secular democracy.
• With Israel taking another perilous turn to the right, India’s endorsement of the Boycott, Divestment and Sanctions movement, today the only option to gain justice for Palestine, seems a moral imperative.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

The first image of a black hole (The Hindu)

Mains Paper 3 : Science and Technology
Prelims level : Black Hole
Mains level : Discoveries of space science

Context

• On April 10, the Event Horizon Telescope collaboration showed the world the ‘unseeable’: the very first image of a black hole.
• The black hole itself cannot be seen, because light cannot escape its intense gravitational attraction.
• The so-called event horizon that envelops the black hole is the point of no return and any object transgressing this boundary is lost. Just outside is a region where a photon (light quantum) can orbit the black hole without falling in.
• This is called the ‘last photon ring’, and this is what the EHT imaged, seeing in effect the silhouette of a black hole. About a hundred years after the black hole made its way into physics through Albert Einstein’s general theory of relativity.

LIGO collaboration

• After the LIGO collaboration first directly observed the gravitational waves made by the merging of two black holes, the ‘dark star’ had finally been imaged.
• The Higgs boson was detected 50 years after it had been postulated, and gravitational waves were observed a century after Einstein predicted them.
• Visual proof of the existence of black holes comes a century after they appeared in scientific literature. In a collaborative effort, eight telescopes around the world were used for the experiment.
• The challenges included making each observe the same broad range of wavelengths around 1.3 mm and having precise atomic clocks at each location, so the data could be combined.
• A black hole marks the end of spacetime as commonly understood, and nothing that enters it can escape from the tremendous gravitational attraction.

Way forward

• However, this is no real danger, as black holes are located at distances that humans do not have the power to scale.
• The EHT set out to image two candidate supermassive black holes — Sagittarius A*, which is 26,000 light years from the earth, at the centre of the Milky Way, and another which is 55 million light years away at the centre of the Messier 87 galaxy in the Virgo galaxy cluster. But the first image was of the more distant one.
• The very long baseline interferometry technique linked radio dishes of telescopes across the world to produce a virtual telescope the size of the earth.
• This was needed to obtain the high resolution required for this measurement. Combining data from telescopes, each with different characteristics, was a separate challenge.
• Cutting-edge developments from computer science related to image recognition were used.
• This experiment endorses the diversity of collaboration just as much as it does unrelenting patience and good faith in the power of science and reason.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

An ideal Bankruptcy code (The Hindu)

Mains Paper 3 : Economy
Prelims level : IBC
Mains level : Key highlights of the IBC

Context

• The World Bank conducts an annual examination to gauge the ‘Ease of Doing Business’ in nearly 200 economies and ranks them on ten sets of parameters, which include ‘Resolving Insolvency’.
• India ranked 142nd in ‘Ease of Doing Business’ for 2015. In terms of resolving insolvency, the country ranked 137th.
• The government set an ambitious target of breaking into the top 50 on this index, and initiated a plethora of institutional reforms, including an overhaul of the insolvency framework.
• After four years, India ranks 77th, up by 65 places, in the aggregate rankings, and 108th on ‘Resolving insolvency’.

Key features

• The Indian insolvency regime has many welcome features. Its primary focus is revival of an ailing firm, while recovery by creditors is an incidental outcome.
• The World Bank methodology, however, captures the incidental outcome. Secured creditors have absolute priority over other claims in insolvency (liquidation) proceedings. ‘Getting credit’, instead of ‘Resolving insolvency’ parameter captures this feature.
• This article does not examine the appropriateness of the scope and methodology of measuring ease of doing business by the World Bank.
• Instead, it attempts to assess how India measures up on the ‘Resolving insolvency’ parameter, as articulated by the World Bank.
• The ongoing annual examination of the World Bank measures the perception of stakeholders in respect of insolvency parameter on two indicators, namely, recovery rate and the strength of insolvency framework, as at end-December 2018.
• The recovery rate is a function of time, cost and outcome of insolvency proceedings. In addition to reviving ailing firms, the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (Code) have returned 210 per cent of liquidation value for creditors.
• They are realising on an average 48 per cent of their claims through reorganisation, as compared to the erstwhile regime which recovered 26 per cent.
• The Code provides a timeline of 180 days to conclude a corporate insolvency resolution process (CIRP), extendable by a one-time extension up to 90 days. Probably, no other regime in the world mandates a time-bound resolution. This push has meant that proceedings under the Code take on average about 300 days, including time spent on litigation, in contrast with the previous regime where processes took about 4.3 years.
• The insolvency resolution process cost, which includes fee of insolvency practitioner and other professionals, and expenses related to meetings of committee of creditors (CoC), public announcements, filings and litigations, etc., have been 0.5 per cent of the realisation by the creditors in contrast with a cost of 9 per cent under the previous insolvency framework.

Cost reduction

• Given the significant reduction in cost and time of insolvency proceedings, the Code has become the preferred mode for insolvency resolution of a defaulting firm.
• This explains why about 15,000 applications were filed with the Adjudicating Authority for initiation of CIRP during the last two years.
• There are thousands of instances where debtors have settled their debts immediately on filing of an application for initiation of CIRP, but before it was admitted.
• There are settlements after admission of an application also. With realisation of 48 per cent of claims through reorganisations coupled with pre-admission and post-admission settlements, the Code has proved to be an efficacious remedy even for loan recovery.
• With the Code in place, the defaulter’s paradise is lost.
• The strength of an insolvency framework is a function of four indices relating to commencement of proceedings, management of a firm’s assets, reorganisation proceedings, and creditor participation.

Managing the assets

• As regards management of a firm’s assets, the Code facilitates continued operations of the firm during CIRP.
• An insolvency practitioner manages the affairs of the firm as a going concern and protects and preserves the value of its property.
• He may discontinue overly burdensome contracts and file applications with the Adjudicating Authority for avoidance of vulnerable transactions.
• He may also raise interim finance to carry on the business of the firm. The interim finance and the cost incurred in raising such finance is included in the insolvency resolution process cost, which gets priority over all other claims in the insolvency proceeding.
• The Code prohibits discontinuation of supply of essential goods and services to the firm during CIRP.
• The Code envisages a resolution plan for reorganisation of a defaulting firm.
• The identification and approval of the best resolution plan require two abilities, namely, the ability to restructure the liabilities and the ability to take commercial decisions.

Role of CoC

• In view of their abilities, the CoC typically comprises financial creditors. Where there is no financial creditor, it comprises operational creditors.
• Irrespective of the composition of the CoC, other stakeholders have a right to receive the agenda and participate in the meetings of the CoC and the claims of all creditors, who are not part of CoC, are also met through reorganisation.
• In sync with the objectives of the Code, a resolution plan is required to balance the interests of all stakeholders and dissenting creditors and assenting creditors get similar treatment.
• The CoC takes major decisions on behalf of the firm under CIRP. It appoints the insolvency practitioner to run the operations of the firm as a going concern and run the process as well.
• Any creditor may seek any information about the firm’s business and financial affairs from the insolvency practitioner.
• Any creditor may contest the decision of the insolvency practitioner accepting or rejecting its own claims or claims of other creditors.
• Though the Code does not envisage sale of assets of the firm during CIRP in view of its focus on revival, it allows limited sale under stringent conditions, with prior approval of the CoC.

Conclusion

• It is a matter of satisfaction that within two years of the enactment of the Code, the Indian insolvency regime has all the essential elements and practices that any mature insolvency regime ought to have.
• It bagged the award for the ‘Most Improved Jurisdiction’ for 2018 from the Global Restructuring Review.
• Hopefully, it will also pass with flying colours in the ongoing examination of the World Bank.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Missing remedies: on West Bengal doctors' strike (The Hindu)

Mains Paper 2 : Heath
Prelims level : IMA
Mains level : Healthcare system in India

Context

• An attack on doctors at a medical college hospital in Kolkata over the death of a patient has become the focal point of an agitation by medical professionals that is causing distress to tens of thousands.
• There can be no argument against the doctors’ primary demands a safe working environment and measures to ensure that unsuccessful treatments do not become a trigger for reprisals.

Background

• The Indian Medical Association, which seeks to look after doctors’ interests and the well-being of the community, has endorsed the demands and called for a strike on June 17.
• Whatever the provocation, the violence that severely injured a doctor is indefensible, and the guilty must be brought to book.Yet, the remedy cannot lie solely in new legal provisions for offences that are already covered by special laws in some States, and in the Indian Penal Code.
• On the other hand, there are clear factors that are deepening the social divide.
• Chief among these are neglect of the public health sector, unaffordable treatments under a predominantly commercialised care delivery system, State governments’ reluctance to fill vacancies in public hospitals, and the increasingly high cost of medical education in the private sector.
• Some of these concerns were underscored in a review of violence against doctors by the National Medical Journal of India two years ago.

Highlighting the incident

• The effort to end violence against doctors and medical professionals must start with the understanding that doctors and patients do not have an antagonistic relationship, and barriers to care created by systemic deficiencies need to be eliminated.
• In the Kolkata case, it should be ascertained whether there was a delay in treatment due to manpower shortage, as the patient’s kin claim. The police statement indicates that a communication breakdown aggravated the situation. It did not help that Chief Minister Mamata Banerjee took a hard line against the agitating doctors early on, without giving negotiations a fair chance.
• Considering the consequences of the breakdown for patients in several States where doctors have responded to protest calls, it is essential for Ms. Banerjee to reach out to the medical community and restore normality.
• The IMA should help arrive at a solution that can address the concerns of both doctors and patients.

Way forward

• To institute better systems to counsel patients and remove unreasonable expectations about treatment outcomes.
• The NDA government’s National Health Policy, which commits to raising public expenditure on health to 2.5% of GDP, must pay as much attention to scaling up infrastructure and the capabilities of government hospitals.
• As to providing financial protection for treatment in expensive private hospitals. It is the public hospitals that the poor come to, looking for compassion.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

A home in space (Indian Express)

Mains Paper 3: Science and Technology
Prelims level: ISRO space mission
Mains level: India’s achievement in space technology

Context

• ISRO has declared its intention to build a permanent space station for itself, possibly in the next five to seven years. After the mission to moon and Mars and a proposed manned space flight before 2022, this is the next logical step for the agency.
• ISRO would be undertaking many prolonged space exploration projects and sending many astronauts into space, such that it would require a permanent station for itself.

Background of Space mission

• For four decades since its inception in the early 1960s, ISRO had, apart from building its capacities, focused primarily on harnessing space technologies for societal benefits.
• Yash Pal, the first director of Space Application Centre in Ahmedabad, once described India’s space mission as “almost a sociological programme” as much as a technological programme.
• Vikram Sarabhai, the father of India’s space programme, used to repeatedly make the point that India must be second to none in the application of advanced technologies to “the real problems of man and society”.
• Even as late as in 2015, Prime Minister Narendra Modi got all government departments to sit down with ISRO and identify the areas where space technology could help them achieve their objectives.

The proven capacity of ISRO

• In the next phase, beginning this century, ISRO established itself as a reliable and economical launcher of commercial satellites.
• It demonstrated its capabilities to launch all kinds of satellites and delivered close to 300 payloads of foreign countries in space in the last 12 years.
• This service is likely to continue since it generates the much-needed revenue to fund ISRO’s various missions.

New Mission into space explorations

• However, ISRO is signalling that it is now ready to take a leap into space exploration. Chandrayaan-2 and Gaganyaan are, in fact, heralding ISRO into this new phase.
• There is a mission to the sun coming up next year, while another to Venus has also been announced.
• More inter-planetary explorations, and possibly a human flight to the moon, are also in the pipeline.

Way forward

• The space station is a facility India would need in the context of missions such as these and more.
• NASA’s International Space Station, the only one functional right now, is slated to retire by 2025, or latest by 2028, and no replacement for it has been confirmed so far.
• It is likely that future space stations would be commercial facilities, available to anyone for a fee. For an agency that is still to execute a successful human space flight, all this might seem a little premature.
• And the proposed five to seven-year timeline to achieve it, surely, is ambitious. But ISRO is known to set ambitious targets, and achieve them as well.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Welcome measure (Indian Express)

Mains Paper 3: Economy
Prelims level: ESI contribution
Mains level: Labour reforms

Context

• In a welcome move, the Union government has announced a significant reduction in the contribution by workers and employers towards the employees’ state insurance (ESI) scheme.

Background

• From July 1, the overall contribution to ESI is slated to decline from 6.5 per cent to 4 per cent, with employers’ contribution falling from 4.75 per cent to 3.25 per cent, and that of employees from 1.75 per cent to 0.75 per cent.

Benefits

• Lower Cost of hiring and formal jobs – This decision, which lowers the cost of hiring for employers, should be seen in conjunction with recent initiatives such as the Pradhan Mantri Rojgar Protsahan Yojna (PMRPY) that aim to boost the creation of formal jobs by lowering the costs associated with formalisation.
• The ESI Act provides for medical care and cash benefits in case of contingencies to employees drawing a salary up to Rs 21,000 per month. It is one of the pillars of the social security architecture in the country.

Key Issues highlights

Contribution far exceeds the benefits

• A look at its accounts shows that the current levels of contribution far exceed the benefits disbursed by it in fact, only around half of the contributions are paid out as benefits.
• In 2016-17, while total contributions stood at Rs 16,852 crore (including interest income of Rs 3,069 crore), total expenditure incurred for medical benefits was only a fraction at Rs 6,409 crore.
• This growing divergence between collections and disbursement has led to a substantial build up of its reserves.
• At the end of March 2018, its corpus stood at Rs 73,303 crore, up Rs 13,920 crore from last year. Between 2012 and 2017, it earned Rs 19,993 crore as interest income alone on this corpus.
• But this rise in income hasn’t translated to greater benefits.

Key highlights of the standing committee on labour’s report

• As the standing committee on labour noted in a report last year, people continue to be deprived of the benefits of the ESI scheme “due to lack of coverage of ESIC scheme, poor functioning of hospitals, etc”.
• This suggests that contributions can be substantially lowered, while maintaining benefits at current levels.

Way Forward

• Prohibitive mandatory contributions such as the provident fund/employee state insurance tend to act as deterrents to formalisation.
• As the experience of PMRPY has shown, lowering these costs tends to have a positive impact on formalisation.
• In fact, much of the recent rise in the EPFO subscriber base is on account of PMRPY.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Reversing the scale of priorities (The Hindu)

Mains Paper 3: Environment
Prelims level: Sustainable development
Mains level: Environmental impact assessment

Context

• In the weeks ahead, the Supreme Court will hear arguments on an appeal filed against a judgment of the Madras High Court in P.V. Krishnamoorthy v. The Government of India.
• There, a series of notifications acquiring land for a proposed eight-lane expressway connecting Chennai to Salem were quashed.
• The Supreme Court has already denied, with good reason, the National Highway Authority of India’s urgent request for a stay of the judgment. Such an order would have rendered unavailing the High Court’s lucidly reasoned ruling.
• The quality of the High Court’s verdict is such that, when the appeal made against it is heard, the Supreme Court could find that the judgment demands a wider, national embracing.

Question of procedure

• The eight-lane highway is part of the “Bharatmala Pariyojana”, a centrally sponsored highways programme, aimed chiefly as a corridor for more efficient freight movement. The intended highway between Chennai and Salem will cover more than 250 km, and, once constructed, will cut its way through a slew of agricultural and reserve forest lands.
• Although the High Court framed a series of questions that required answering, the ultimate controversy in the case came down to this: was an environmental impact assessment (EIA) required before efforts were made to acquire land for the highway project? If not, at what stage of the project was such an assessment required?
• According to the petitioners, many of them landowners, the state had failed to obtain an environmental clearance for the project before acquiring land and had thereby violated its responsibilities.
• What is more, in any event, such permission, they argued, could hardly be obtained since it was clear that the project would have a deleterious impact on the forests, the surrounding water bodies and the wildlife of the region.
• The government denied this. It argued that its power to acquire land under the National Highways Act, 1956, was unconditional.
• There was, it said, no law mandating an EIA before efforts are made to acquire private land. In its belief, a notification under the Environment (Protection) Rules, 1986, which required an EIA for the construction of a new highway, did not decree such an assessment for the purposes of securing the land.

Sustainable development

• Recognising this, in 1987, a United Nations-backed committee led by the former Norwegian Prime Minister Gro Brundtland proposed a long-term strategy which called for sustainable development, among other things.
• This programme, radical at the time, titled “Our Common Future”, defined the principle as an endeavour to ensure that any development “meets the needs of the present without compromising the ability of the future generations to meet their own needs.”
• Since then, sustainable development has been viewed as something of a mantra in environmental jurisprudence. So much so that in India, even before the principle crystallised into a binding international norm, the Supreme Court in Vellore Citizens’ Welfare Forum (1996) read the idea as intrinsic to India’s constitutional structure.
• “The traditional concept that development and ecology are opposed to each other is no longer acceptable,” wrote Justice Kuldip Singh. “‘Sustainable Development’ is the answer.”

Primacy to the environment

• Sustainable development can, therefore, work only if the environment is seen as valuable for its own sake. The Madras High Court does this in its judgment in Krishnamoorthy.
• To argue, as the government did, that an EIA wasn’t required before land was acquired for a highway, as the court recognised, was to effectively place the cart before the horse.
• As the court pointed out, the highway in question here was a greenfield project that was intended as an altogether new road to be constructed on virgin land.
• In such a case, to eschew an EIA before land was obtained would have created irreversible effects that would have had a bearing not only on the environment, but also on the social and economic life of the landowners.
• “The land of an agriculturist,” wrote Justice T.S. Sivagnanam, for the court, “is vital to sustain his livelihood.
• The land provides dignity for the person.”
• The judgment, therefore, not only holds the state accountable for the violation of basic notions of due process, in exercising the power of eminent domain, but also sees the possession of farmlands by farmers as an article of faith.
• But most importantly, the ruling deepens a commitment to the protection of forests and waterbodies. It places the environment in a position of primacy over unthinking measures of ostensible development.

Conclusion

• The Madras High Court has effectively reversed the prevailing scale of priorities.
• This is especially remarkable since it comes at a time when the government is seeking to further weaken the existing norms for environmental clearance.
• That such efforts at diluting environmental protections are underway when it has become increasingly apparent that climate change represents an existential threat ought to alarm us into action.
• One way to act is to compel the state to look beyond exercises of balancing, as the High Court does, and to see nature as intrinsically valuable.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Crypto conundrum (The Hindu)

Mains Paper 3: Economy
Prelims level: Crypto currencies
Mains level: Regulate digital currencies

Context

• The Centre’s reported plans to criminalise cryptocurrencies 10 years in jail for holding, selling or dealing in cryptocurrencies seem a tad excessive.
• If implemented, it can send wrong signals to investors, geeks, digital entrepreneurs and technologists on India’s understanding of not only cryptocurrencies but also on how we look at blockchain, the ground-breaking technology that powers cryptocurrencies.
• Ever since the elusive Satoshi Nakamoto introduced the complex, digitally-mineable Bitcoin, cryptocurrencies have drawn confused responses from central banks, governments and bankers.

Reasons behind worrying

• A currency that is not based on any real economic activity, unlike a sovereign currency whose value is based on the relative value of a tradeable basket of goods and services, cannot prima facie inspire much comfort.
• Bitcoin’s value, astronomical even now at about $8,300 but much below January 2018’s stratospheric levels, is based on demand for a fixed supply of Bitcoins in the future it cannot exceed 21 million in number, of which 18 million has already been mined.
• Cryptos are feared not just for their sheer speculative propensities, but also for their capacity to undermine sovereign currencies (the latter is an exaggerated apprehension).
• However, it does not make sense to go overboard and criminalise merely adventurous crypto speculators. There are no official or other data available that point towards misuse of cryptocurrencies for illegal ends.

Steps needs to be taken by the government

• Governments the world over have banned cryptocurrencies as a medium of exchange, and India is no exception.
• Yet in India, an estimated 30 lakh Bitcoins are reportedly in circulation. From a value of a little over ₹60,000 at the start of 2017, the Bitcoin now commands a value of nearly ₹6 lakh, with a global market cap of $10.2 trillion. Cryptos are recognised in the US as an asset class.
• Firms like Paypal, Uber, Visa and Mastercard have all signed up as part of the consortium to control it. Each has invested $10 million.
• Criminalising possession of cryptocurrencies will impact such investments.
• Bankers and investors now consider the cryptocurrency market at par with derivatives. The NYSE plans Bitcoin futures through a platform called Bakkt.

Conclusion

• Underlying the crypto movement is a libertarian belief: Cryptos are an alternative asset to fiat currencies; controlled by none, they cannot be manipulated by governments with vested interests.
• Legalising the cryptomarket can help beneficiaries emerge from the shadows and make productive investments in an economy witnessing a digital transformation.
• Crypto conduct calls for regulation, but not outright criminalisation.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

India must reclaim its lost digital space (The Hindu)

Mains Paper 3: Economy
Prelims level: Not Much
Mains level: International Trade

Context

• India will not join the e-commerce negotiations at the WTO until issues like data flow and welfare to the poor are resolved.
• This firm articulation by Commerce and Industry Minister Piyush Goyal at the G20 Ministerial at Tsukuba, Japan, on June 8 and 9 underlined that India would not bow to pressure on an issue on which India’s digital future hinges on.
• Most of us are unaware that away from the public glare a quiet battle is raging for control of the global digital business. At the core is the US quest to continue its dominance of digital business.
• Today, US technology firms dominate the digital business. But continued dominance would require the free flow of data across countries.
• The US and its allies are doing everything to ensure this. The outcome of this battle would decide the fate of the digital business in most countries.

What should India do?

• The US firms Google, Facebook, Amazon, Airbnb, Visa/Mastercard, Uber, Netflix and Instagram may appear to be doing different activities. But, their main business is data.
• They track our digital transactions, chats, roads we travelled, countries we visited, hotels we stayed, restaurants we ate, food we ordered, medicines we bought, and bars we visited. The game is in collecting extensive data free of charge and selling value-added services created from this data.
• Data has another significant use. Remember Siri or Alexa. Developing such Artificial Intelligence (AI) tools requires scanning terabytes of unstructured data to identify patterns of our thoughts, actions, behaviour and create applications for all conceivable areas.
• The problem is most data is generated in China and India. India produces more data than the US and the EU put together. China does not share data with US firms. So if India also restricts data flow, it will hit the US-AI strategy.
• Today the US is collecting data freely from all countries, except China. But the US knows this will change soon. Technology and business models are easy to replicate at low cost. Soon as India and other countries develop similar tools, they may regulate data flows preferring local firms over the US firms. Or these countries may decide to charge for data. Any of this will kill the US business model. The US is putting in all its might to stop this from happening.

Main disadvantages

• First, governments would have no control over violations caused by digital business. Online sites recruit terrorists, peddle child porn, traffic drugs. We have seen the allegations that Russia manipulated US presidential elections in 2016 through social media.
• Facebook peddles fake news, and Google search results can distort public opinion. National laws will not apply as people behind such sites sit in other countries.
• Second, free flow of data creates digital monopolies that hurt competitors, so crucial for the growth of the sector. Monopolies make competition difficult for new firms, buy the promising ones, and if nothing works, copy the best features.
• The deep pockets allow e-commerce firms to use billion dollar sales, discounts and cash-backs to lure buyers.
• Domestic stores can never survive such onslaught. Countries suffer all adverse consequences but get no payments even though the data belongs to home users.
• As digital business becomes big, payment for import of digital products would soon be a significant forex issue.

Four-point plan

• Quickly introduce central laws regulating e-commerce, data protection, data localisation, cyber security, etc. New draft e-commerce policy is a welcome step. Clear laws with proper regulations on data flow will signal global and local firms to invest in India.
• Develop national champions. This has been our weak area. Set up free email service, and create an India focussed search engine. Invest in high capacity cloud servers, and make them available at low prices. Hosting on Indian servers must be attractive for local businesses. NIC has the expertise and already developed many platforms for government uses. The government may revive NIC, hiring the best talent for AI research and other vital areas.
• Create a coalition of like-minded countries. Countries still do not grasp the significance of data flow, server localisation, etc. India must educate them. Once our laws and platforms are ready, we may take the call to join any international negotiations.
• Be aware of the consequences of not joining the negotiations. Few experts argue India should join the talks and say what suits it. They forget the history of WTO negotiations. The US writ always prevails. The US uses grants, diplomacy, threats and sanctions to pursue its agenda.

Way forward

• Today, only 73 of the 164 WTO members support negotiations on e-commerce. If India, viewed as a software giant, joins, all remaining countries will participate.
• This will soon ensure the de facto dominance of the US in digital business becomes de jure.
• On the business side, few experts fear that India’s ITES exports will suffer if we do not join the WTO negotiations.
• The truth is, US commitments under the WTO rules on services govern India’s access to the US market. New e-commerce rules cannot take liberty back.
• Digital business accounts for a third of global GDP now, and its share will only increase.
• Reclaiming our lost digital space should be our top priority as best jobs and high growth would flow from this. An important enough issue to invest our national pride.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials

Can international rules help prevent national self-harm? (Live Mint)

Mains Paper 2: International Relations
Prelims level: Not Much
Mains level: Global governance challenges

Context

• US President Donald Trump has used national security as a justification for his tariffs on steel imports, his threatened tariff hikes on autos and the tariffs he recently vowed to impose on Mexican imports.
• “If you don’t have steel, you don’t have a country," he declared (to cite just one example).
• While Trump’s national-security claim seems absurd on the face of it, it raises difficult questions for the word trade regime and global economic governance more broadly.

Global governance challenges

• The critical challenge of global governance is determining the dividing line between policy domains in which nation-states are free to do as they please and those that are regulated by international agreement.
• In a world economy that has become increasingly interdependent, pretty much everything that one country does spills over to others.
• But such spillovers are not by themselves a sufficient reason to constrain national autonomy.
• Consider public education, gasoline taxes or highway speed limits. Each of these policies has consequences for trade partners.
• Improved skills alter a country’s comparative advantage and hence others’ trading opportunities.
• Gasoline taxes and speed limits affect demand for oil and hence prices on world markets. Such policies are not regulated internationally, and doing so would be widely—and rightly considered absurd.

Two classes of problems

The global public goods (or bads):

• The policies that benefit the world at large but produce little or no benefit at home. Controls on greenhouse-gas emissions is a key example.

The second class of problems is so-called beggar-thy-neighbour policies:

• To actions that produce economic benefits at home only to the extent they harm others—and generate global inefficiency in the process.
• A classic example is the cartelization of some scarce commodity to extract monopoly prices from trading partners.

Case of national security

• World Trade Organization (WTO) principles are vague and remain largely untested in practice.
• The relevant text seems to open the door very wide by saying “Nothing in this Agreement shall be construed to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests."
• And yet, in a recent ruling in a case not involving the United States, the WTO has adopted the position that it can review national decisions in this area and judge their appropriateness.

Way forward

• Global governance enthusiasts must reckon with the fact that most policy mishaps in the world economy today as in the case of Trump’s tariffs occur as a result of failures at the national level, not because of a lack of international cooperation.
• Trump’s tariffs are bad policy not because they harm certain other countries, but rather because they impose substantial costs directly on the US economy.
• Global arrangements cannot be relied on to prevent such domestic failures, and they are as likely to be captured by special interests as domestic political processes with far less democratic legitimacy.
• External constraints may in fact aggravate domestic governance failures, insofar as they empower particular distributional coalitions at the expense of the broad public.
• It is doubtful that such a light mode of global governance would make a difference when it comes to Trump’s trade follies.
• But at least it would deny Trump (and other nativist politicians) any basis for the chronic complaint that the WTO and other international bodies are trampling on national sovereignty.

  Online Coaching for UPSC PRE Exam

  General Studies Pre. Cum Mains Study Materials