GS: 2

International relations:

How To Act East (Indian Express)

Context

Improve security in Northeast to improve connectivity with South East Asia

Two key issues

  • Political will and dynamism for propelling India’s “Act East” policy needs to be complemented with urgent measures to address two key issues — lack of “security” and “connectivity”
  • Addressing them is necessary to make the Northeast (NE) the launchpad for India’s interface with South East Asia

Connectivity at three levels

Connectivity needs to be addressed at three levels — physical connectivity, digital connectivity and above all the emotional integration of the region with the rest of the country.

Myanmar and beyond

Road and railway networks connecting different parts of the region, as well as the rest of the country with the region, along with air/helicopter connectivity are essential for trade and businesses to flourish, to attract investments and put in place an ecosystem that is necessary to reach out to Myanmar and beyond.

For security

  • With respect to security, there is a need to think out of the box on priorities and carry out disruptive policy changes
  • These should be combined with a time-bound action plan to create a conducive environment for growth and prosperity.

Procedural issues: Long Delays

The implementation of projects has been dogged by procedural issues. Cases in point are the projects that intend to create road-rail-inland waterway connectivity between India, Bangladesh and Myanmar

Unutilized warehouses

  • At a recent NE connectivity conference, a Bangladesh delegate said that when connectivity projects were first envisaged at the highest level of leadership of the two countries 10 years ago, investors in Bangladesh set up warehousing facilities and other infrastructure at transit points
  • Because of time overruns, these have either been diverted for other activities or have folded up.
  • The land earmarked for the development of linkages has been utilised for other activities and may not be available or would cost exorbitant.

Indo Myanmar friendship road delayed

  • The Indo-Myanmar friendship road required approximately 80 odd bridges to be replaced/upgraded for it to become the Asian Highway 1
  • But after a delay of around seven years, it is slated to be completed in 2019 — perhaps later.
  • Also, the backward linkage from Moreh, the border town in Manipur, to Silchar in Assam and westwards to the Siliguri corridor has also been dogged by slow progress. 

Steps taken by the government

  • This is not to underplay the steps taken by the government in the last three years to facilitate integration
  • Intra-regional connectivity has been given an impetus by mandating its responsibility to a newly-formed centrally-monitored organisation for road development and physical connectivity in NE states
  • An internet gateway is being established via Bangladesh from Tripura for the digital integration of the region. 

Security is the main issue

The security environment will be the main factor in propelling the integration and development of the region

  • A secure environment is a pre-requisite for giving confidence to investors to operate in the region.
  • The parameters of gauging security needs have to be changed since they do not give a fair idea of the security situation in the region so for as developmental initiatives are concerned. 

Question raised

The number of violent incidents and counter-terrorist operations by security forces are declining but has the environment become secure?

No

The answer is no since there has been no let up in extortion, kidnapping, factional clashes and illicit tax collection.

Political backing to militancy

  • The militant groups enjoy political patronage.
  • Government policies pertaining to “suspension of operations (SOO)” and “ceasefire” with various militant groups need to account for the financial support these groups have.

Not a long term solution

In the long run, the system of SOO and CF needs to be stopped, as it is a case of “distributive injustice”.

Increasing Police effectiveness

Police effectiveness needs to be optimized

  • This requires “federalisng” the region’s police force in order to ensure coordination, sharing intelligence and joint operations
  • This force would not be under a state authority and would thus be insulated from extraneous pressures, including tribal affiliations
  • FIRs against individuals committing offences will be filed outside the state borders, negating local influences in justice administration
  • The official machinery should counter militant excesses and not abrogate their authority to the security forces under the excuse that the state has been designated a “disturbed area”.

Intellectual resonance

But there is also a need to look at development and trade outside the prism of security. The endeavour should be to create “intellectual resonance” in society for security and development

Conclusion

We need a comprehensive approach that combines reconciliation with an aggressive security policy.

Indian Constitution and Polity:

Bill to criminalise triple talaq passed in Lok Sabha (The Hindu)

 Context

Amidst protests from a few political parties, including those close to the BJP, the Lok Sabha on Thursday passed by voice vote the Bill that makes instant triple talaq or talaq-e-biddat a criminal offence, with a jail term of up to three years. 

Govt. refuses Congress’s plea for review by House panel

The proposed law would be applicable to the entire country, except in Jammu and Kashmir. It would make instant talaq punishable and would be a cognisable, non-bailable offence.

Historic step

Calling it a historic step, Union Law Minister Ravi Shankar Prasad said the Bill — The Muslim Women (Protection of Rights on Marriage) Bill 2017 — will act as a deterrent since there have been 100 cases of triple talaq even after the landmark judgment of the Supreme Court delivered in August this year.

  • He said that while 22 Islamic countries, including Pakistan and Bangladesh, had regulated instant triple talaq, there was no effective law in India
  • Neither Prime Minister Narendra Modi nor Congress president Rahul Gandhi was present in the
  • Lok Sabha when the Bill was passed.

Did not refer to Parliamentary Standing Committee

The Minister turned down demands from the Leader of the Congress Mallikarjun Kharge to refer the Bill to the Parliamentary Standing Committee on Law and Justice. 

Opposed the bill

Members from the Rashtriya Janata Dal, the CPI(M), the Samajwadi Party, the All India Majlis-e-Ittehad-ul Muslimeen and the All India Muslim League, as also parties considered close to the BJP, such as the Biju Janata Dal and the AIADMK, opposed the Bill, saying it was arbitrary and a faulty proposal being passed in haste. 

Might affect passage in the Rajya Sabha

Not having BJD and AIADMK on board will impact the bill’s smooth passage in the Rajya Sabha as the Opposition has more numbers than the NDA.

Key questions

  • Sushmita Dev, articulating the Congress’s support for the Bill, also raised key questions such as who would pay the subsistence allowance mentioned in the Bill to the wife if the husband was sent to jail
  • Dev asked the Law Minister if the government would create a corpus to help the victims.

Shah Bano Judgement

Speaking on behalf of her party, BJP MP Meenakshi Lekhi made an impassioned appeal in support of the Bill and attacked the Congress by reminding the party that it had opposed the Shah Bano judgement of the Supreme Court in 1986.

TnC Didn’t take part

Despite being second largest opposition party in Lok Sabha, Trinamool Congress members didn’t take part in the debate despite being present.

Legal excess (Indian Express) 

Context

The triple talaq bill is a textbook case of overcriminalisation

Quote

Every punishment which does not arise from absolute necessity, says Montesquieu, is tyrannical

Only as a last resort

In fact, criminal law should be used only as a “last resort” (ultima ratio) and only for the “most reprehensible wrongs”. 

Excessive use of criminal law a harsh reality of modern world

Excessive use of criminal law for purposes it is ill-suited to tackle is the harsh reality of modern state

  • Since 1977, 3,000 new offences have been created in England and in the US we have approximately 3,00,000 federal crimes today.
  • No figures are available about India, but every year we are enacting new criminal statutes both at the Centre as well as in the states
  • The triple divorce bill is yet another instance of overcriminalisation
  • Even the Supreme Court had noted that incidence of triple divorce is insignificant
  • Just like 2G scam, the media has played it out of proportion

The real problem

The real problem of Muslim women is education and employment.

The Irony

Consider the two current debates about matrimonial crimes.

  • First, we are advocating decriminalisation of breaches of matrimonial faith in the form of adultery
  • Second, we are not able to criminalise “marital rape” despite our revulsion against it

The Wolfenden Committee

The Wolfenden Committee Report (1957) in England said that “unless a deliberate attempt is to be made by society, acting through the agency of the law, to equate the sphere of crime with that of sin, there must remain a realm of private morality and immorality which is, in brief and crude terms, not the law’s business”.

Enforcing religious morality

  • The Union law minister, Ravi Shankar Prasad, while introducing the bill, surprisingly said, “The Supreme Court has held triple divorce as a sin.”
  • The bill is thus enforcing religious morality through the instrumentality of criminal law
  • If something is “sin”, let God punish the sinner

A civilised legal system should not enforce religious morality.

Bad Examples

  • Similarly, his reference to Muslim countries is problematic as these countries are bad examples for mature criminal law like ours
  • We cannot incorporate retributive character of Islamic criminal law and dated offences like apostasy and blasphemy and have punishments like stoning to death or cutting of limbs
  • The example of Pakistan’s ordinance of 1961 is wrong as courts have held divorce without notice to arbitration council as valid (Muhammad Sarvar v. State, PLD 1988 FSC42)

Deterrence

  • Since even capital punishment does not deter, this bill cannot be justified on the basis of deterrence as well.
  • Muslim clergy should, however, come forward and incorporate progressive reforms in Muslim Personal Law. 

Undermining autonomy of muslim women

From another angle too, the criminalisation of triple divorce is a unique case where law is dictating orthodox Hanafi Muslim women to continue in the relationship she considers “sinful”. Forcing the continuance of sexual relations in this situation seriously undermines “individual choice and autonomy”

Forced to live with the husband

On the one hand, we have so called “love jihad” curtailing “freedom to marry” a person of one’s choice and on the other, Muslim women are forced to continue with the same abusive husband, who has given them instant triple divorce

Choice should be left with women

Parliament and the apex court may declare triple divorce as void but they cannot compel husbands to have a loving relationship with their wives. Ideally, choice in these cases should be left with the women.

Power rather than justice

Unfortunately, “crimes” originate in the government policy and, therefore, criminal law reflects the idea of “power” rather than “justice”

The state may decide to criminalise and decriminalise almost anything, even influenced by the electoral needs of the party in government 

Example from history

  • While participating in the debate in Parliament, BJP MP Meenakshi Lekhi said that “with Narendra bhai Modi as their brother, they (Muslim women) need not worry about anyone”
  • Roman Emperor Claudius, who wanted to marry his brother’s daughter, procured an amendment in the crime of incest that permitted a marriage between a niece and her paternal uncle, leaving the law unaltered as to other marriages between uncles and nieces or aunts and nephews which continued to be considered incestuous.

Shouldn’t use criminal law in these three cases

Jeremy Bentham rightly says that we should not use criminal law in three cases

  • If there is no evil in the act legislature endeavours to prevent, where punishment would be inefficacious, and where punishment would be unprofitable, that is, the evil of punishment is higher than the evil of the act

Purpose of the criminal law

The purpose of criminal law is to forbid and prevent conduct that unjustifiably and inexcusably inflicts or threatens substantial harm to individual or public interests

No more a threat

Since the Supreme Court has set aside triple divorce, it no more dissolves marriages or threatens the security and well-being of the society. 

In case of Compelling state interest only

  • The state must demonstrate “compelling state interest” in criminalising any act
  • In other words, the government’s objective in recourse to criminal law must be essential, and the proposed law must be the least restrictive means to attain it
  • Such an objective is not justified if it could be achieved by other means.

Example

For example, the government has a legitimate objective in restricting children’s access to pornography. But filters are equally effective in achieving this objective and therefore, criminal law need not be used.

Lead to more divorces

The Narendra Modi government is doing a huge disservice to Muslim women as no husband on return from jail is likely to retain the wife on whose complaint he has gone to prison. The bill will lead to more divorces

The remedy is worse than the disease

The remedy to tackle triple divorce is thus worse than the disease

The bill also obliterates the distinction between “major” and “minor” crimes by providing the excessive and disproportionate punishment of three years. 

Solution within the Shariah

Ravi Shankar Prasad said in the Lok Sabha that the government has no intention of interfering in the Shariah

  • If so, the best option within the Shariah to reduce incidence of triple divorce should have been given a shot
  • The bill should have made mandatory incorporation of triple divorce’s prohibition in the nikahnama (prenuptial contract) itself
  • Muslim marriage being a civil contract, husband will be bound by it
  • We may also say in the nikahnama that in case of violation of this condition, the dower amount will be increased to five times or the wife will be entitled to punitive damages.

The old order changeth not (Indian Express)

Context

Many redundant laws have been repealed. But much of the deadwood waits to be removed, especially in states.

Government has done its part

  • The government has identified around 1,800 laws that require to be removed from the statute books
  • In the past three years, Parliament has repealed about 1,200 obsolete and unnecessary laws. This will decongest the statute books and promote ease of governance.

The oldest still remain

  • In India Code, in the list of existing statutes, two of the oldest are both from 1836 — the Bengal Indigo Contracts Act and Bengal Districts Act
  • Why should these remain on statute books? If 1,200 have been repealed, what about the remaining 600?

Union Statutes

How many statutes are there, statutes meaning those enacted by the Union government? While state-level statutes are also important, those aren’t part of India Code listing.

Desuetude

  • Statutes have to be specifically repealed, because in common with common law traditions, India doesn’t have a system of desuetude (In lawdesuetude is a doctrine that causes statutes, similar legislation or legalprinciples to lapse and become unenforceable by a long habit of non-enforcement or lapse of time.)
  • Unless specifically identified and repealed, statutes are open-ended and remain on the books.

Initiatives from the government

In 2014, there were three complementary initiatives

Ramanujam Committee

First, in September 2014, the PMO set up the Ramanujam Committee to identify central government statutes ready for repeal

  • The Ramanujam Committee gave us a database of 2,781 existing Union-level statutes
  • Of these, 380 were enacted between 1834 and 1949, before the Constitution came into being.
  • The Ramanujam Committee identified 1,741 old statutes that were ready for repeal
  • In other words, 63 per cent of central legislation could be repealed without affecting governance adversely

The Question

If the number is 1,741, why did the President say around 1,800 and what has happened to the 1,741?

  • The 380 statutes identified by the Ramanujam Committee in the database were enacted between 1834 and 1949, before the Constitution came into being
  • These may be “Central” laws, but after the Constitution, the subject matter may have moved to states under the Seventh Schedule
  • In at least two cases, I know of (there may be more) in 1976 and 1995, the Supreme Court has held, in such cases, amendment or repeal can only be done by state legislatures
  • Accordingly, the Ramanujam Committee identified 83 old statutes that could only be repealed by states. 

Second Initiative

The second was four reports (248 of September 2014, 249 of October 2014, 250 of October 2014 and 251 of November 2014) by the Law Commission on obsolete laws, “warranting immediate repeal”

100 Laws Repeal Project

The third was a 100 Laws Repeal Project by the Centre for Civil Society (CCS), in collaboration with NIPFP and Vidhi Legal Centre

The Math

Factoring all this in, the Law Commission identified 62 statutes that needed to be repealed by the states, in addition to 83 identified by the Ramanujam Committee. 1,741+62=1,803.

I think that’s the reason the President mentioned 1,800 laws

Focus on States

  • On eliminating such deadwood at the Centre, there has thus been quite a bit of actual action and focus shifts to states. I should also add there are an identified (post 1977) 144 state appropriation Acts that have to be repealed by the states
  • This is in addition to the Ramanujam Committee and Law Commission.

Repeal Law Compendiums

The CCS has now brought out Repeal Law Compendiums for five states — Chhattisgarh (25 statutes), Telangana (26 statutes), Uttar Pradesh (37 statutes), Maharashtra (21 statutes) and Karnataka (24 statutes)

Few States took action

  • To the best of my knowledge, only a few states have done something about eliminating such deadwood. I mean recently
  • For example, Tamil Nadu did repeal old statutes in 1951 and 1952, but that’s not what I had in mind. Odisha did some repealing in 1976
  • In Kerala, 697 statutes were repealed through an ordinance in 2005 and 102 through a Repealing Act in 2016
  • In Rajasthan, 248 old statutes were repealed in 2015. (In Rajasthan, there is an even more important reform of rationalising and harmonising the laws that remain, but that’s a different story.)
  • In 2016, the Maharashtra Repealing Act junked 64 old statutes
  • Gujarat repealed old statutes four times, in 2000, 2004, 2005 and 2006, adding up to 85 statutes
  • Karnataka repealed 137 in 2002 and 143 in 2017, while Telangana repealed 18 in 2017. In recent years, that’s a total of seven states 

Conclusion

It’s a bit odd that you don’t readily get a tally of which state has done what in eliminating deadwood. Why aren’t more states interested? Probably inertia.

Social issues:

Listen to these four girls (The Hindu Editorial) 

Context

The tragic suicide of students in Panapakkam in Tamil Nadu points to the crisis that grips India’s education system 

Child psychology

  • If you consult a typical textbook on adolescent psychology, you will find such emotions to be common
  • The text will probably dwell on identity, self-worth and petulance
  • Teachers are taught about these common symptoms, and those who learn them well enough to discuss them correctly get through their B.Ed. (Bachelor of Education) examination without much cramming
  • When they become teachers, they soon realise that passing the B.Ed. examination is a lot easier than dealing with real adolescents — boys or girls.

A poor record

The Panapakkam girls are reported to have been scolded by a teacher for their poor academic performance and told to call their parents. The girls decided to avoid that ordeal and embraced death instead, thereby displaying another familiar characteristic of the adolescent mind, namely, its preference for camaraderie in taking a decision.

The problem

As a nation, our record of dealing with adolescents is rather poor

  • To be an adolescent means that you don’t feel comfortable with what all is going on around you, but older people don’t find it easy to deal with you
  • This is partly because adolescent behaviour is often prickly and petulant
  • The larger reason, however, is that adolescents live in an ideal world and measure everyone, including parents and teachers, by their utopian standards
  • This is not merely an emotional response to an imperfect world; it is also proof of their fully developed logical capacity
  • By defying the adults surrounding them, adolescents develop their own identity as individuals. This is not easy, so they depend on their peers to plan and decide
  • Their private fantasies are mostly benign and transformative. We can say that adolescent dreams represent a nation’s wealth. In India, this wealth is mostly burnt up in preparation for examinations.

The case of Indian schooling

Ignoring or oppressing adolescents is not uncommon in other countries, but India’s case is somewhat extreme

  • Over more than a century, our system of schooling has honed its tools to oppress and defeat the adolescent
  • The tool used to subdue the rebellious adolescent mind is the Board examination
  • The term ‘board’ has acquired connotations of terror for the young on account of the darkness into which it pushes them before some are let back out into normal light and further education. Boards of examinations maintain a tight secrecy over how a young student will be marked and declared either ‘pass’ or ‘fail’
  • Social history is rife with instances of unwarranted failure and opprobrium of family seniors.

Fear of Board Exams

The matriculation examination is part of family lore in every part of India

  • Fear of failing in it and thereby closing all doors to a worthwhile future figures in many autobiographies written during the colonial period
  • Examination mania is instilled into the young mind from the start of primary schooling. Popular understanding of education, which is widely shared in political and official circles, equates learning with performance on tests
  • The nationwide industry that specialises in offering help in passing examinations and entrance tests makes no distinction between cramming, cheating and learning. The Class X examination continues to ‘fail’ millions every summer. 

The Class XI hurdle

If an adolescent successfully survives the Class X examination, his or her ordeal enters a more complicated phase, involving choice of subjects for the higher secondary examination

The Panapakkam girls who chose to end their lives were studying in Class XI. We do not know how they individually came to choose the subjects to study in this fateful class

Choice of elective subjects

  • For a vast majority of students moving into Class XI, the choice of elective subjects is made by their parents or senior siblings and teachers. Subjects are seen as tickets to the future
  • Some are regarded as solid tickets for a coveted future while others are seen as bogus tickets, carrying the risk of life-long stagnation

The almighty boards

  • These are, of course, stereotypes, but they persist as currency of practical wisdom in a blind market controlled by Boards
  • No principal, teacher or parent dares to demand openness from a Board about its procedures. A tight cover of confidentiality is maintained to conceal the abysmal quality of the marking system, question papers and the evaluation process. 

Problems compounded for girls

  • In the case of girls, school-related anxieties get compounded by older, entrenched anxieties associated with gendering
  • Family and kinship fuel the apprehensions that girls internalise early childhood onwards about their matrimonial future
  • Educating a daughter is often perceived as an investment towards her marriage
  • The fear of being viewed as a poor performer at school adds to the stress at home

Teachers unaware

  • Teachers usually have scant awareness of a student’s state of mind
  • When they ask students to bring parents to school, they assume this will create additional pressure to encourage harder work.
  • This simplistic logic carries great risk, as the Panapakkam incident shows.

Assessing the Boards

  • Boards responsible for the examination industry must realise that that it is no longer useful to install helplines to provide just-in-time advice for a 16-year-old in despair
  • The entire Board examination system and the culture associated with it constitute an endemic problem.
  • Plenty of ideas for reforming the Boards and the examination system they govern have been given over the years 

Isolated steps

  • Some of these ideas have been put into practice here and there, as isolated steps lacking a wider frame of reference to curricular reform
  • The National Curriculum Framework, 2005 insisted on coherence between reforms in curriculum, examinations and teacher training. This perspective continues to pose a challenge to an institutional structure marked by rivalry and turf wars. 

WHO to classify ‘gaming disorder’ as mental health condition (The Hindu)

Context

With more and more youngsters getting hooked on video games, both online and offline, the World Health Organisation (WHO) is set to classify gaming disorder as a mental health condition next year.

Nearly 7% of population that was studied exhibited symptoms of depression and anxiety, say experts

  • In the beta draft of its forthcoming 11th International Classification of Diseases, WHO has included gaming disorder in its list of mental health conditions
  • Mental health experts and psychiatrists said this is the need of the hour as nearly 7% of population studied for gaming and internet addiction exhibited symptoms of depression and anxiety, and somatisation, including behavioural changes and sleep disturbances.

DSM

The Diagnostic and Statistical Manual (DSM) of Mental Disorders -V, a diagnostic bible for mental health professionals published by the American Psychiatric Association, has already classified gaming disorder as a mental health condition

Blue Whale

Internet and gaming addiction had become an emerging psychological malady.

Especially, in the wake of Blue Whale and other such dangerous games, there is a need for parents to monitor their child’s activities at least till the age of 18

SHUT

Manoj Kumar Sharma, additional professor, SHUT (Service for Healthy use of Technology) clinic in NIMHANS, said: “Most cases we have studied exhibited psychosocial and behavioural changes affecting their daily activities. Such people not only develop physical health problems (disturbance in sleep patten and eating habits) but also develop psychological problems that has become a major concern for their family members.”

Scarce research in this area

In his paper titled ‘Video game addiction: Impact on teenagers’ lifestyle’ published in the National Medical Journal of India in 2015, Dr. Sharma said that despite the known harmful effects of addiction to video games, research in this area is scarce.

From Mid 1990s

  • Internet addiction began to arouse the interest of mental health researchers and clinicians in the mid to late 1990s soon after Internet became widely available in many countries
  • Internet addiction has since come to be labelled, defined in several ways, and promoted for inclusion in the DSM
  • Pointing out that Internet addiction also has an effect on social performance and lifestyle
  • Addictive use of Internet has an adverse effect in the form of irregular dietary habits and physical problems
  • It is also associated with insomnia, sleep apnea and nightmares

In Adults too

  • Among adults, it leads one to disregard crucial daily responsibilities such as work, academic, family, or social obligation
  • Although this addiction affects children and adults, not many adults come forward to seek help,” he added. 

Burden on caregivers too

In another study titled “Video game addiction and lifestyle changes: Implications for caregivers burden”, Manoj Kumar Sharma, additional professor, SHUT clinic in NIMHANS, has concluded that technology use is not only manifesting as addictive among users but also has an impact on the psychological well-being of caregivers.

  • The study was published in The Indian Journal of Psychological Medicine in 2016.
  • “Caregivers have expressed concern about the manifestations of excessive use of video game on users in the form of truancy from school to play, falling academic grades, decreased social activities; irritability if unable to play longer or advised to stop; increase in expression of aggression; and wrist pain and neck pain.
  • It also leads to presence of psychiatric distress among caregivers and loss of pleasurable activities
  • Any illness has an impact on the individual as well as those around in terms of physical, emotional, academic, cognitive, distress, and social dysfunctions,” the study pointed out

GS: 3

Economy: 

India leads in global milk production (The Hindu) 

Context

Union Agriculture Minister Radha Mohan Singh on Thursday said during the past three years, India has outpaced the global milk production with an annual growth rate of 5.53% compared with the 2.09% achieved globally

The occasion

He was speaking at the Consultative Committee meeting on Dairy Development held in New Delhi,

Level of production

Milk production, which was around 17-22 million tonnes in the 1960s, has increased to 163.7 million tonnes in 2016-17. Particularly, it has increased by 19% during 2016-17 in comparison to the year 2013-14. Similarly, per capita availability of milk has increased from 307 grams in 2013-14 to 351 grams in the year 2016-17. Similarly, the income of dairy farmers increased by 23.77% in 2014-17 compared to 2011-14

Number of schemes

Department of Animal Husbandry, Dairying and Fisheries (DAHDF) has initiated a number of schemes with the objective of doubling the dairy farmers’ income

Raising the income of dairy farmers

Dairy farmers’ income is being raised in two ways –

  • By raising milk production and productivity
  • By increasing the price of raw milk per kg

Shift towards technology

To achieve a shift towards a technology driven environment, DAHDF is working on a National Action Plan Vision 2022, where along with enhancing the outreach of dairy cooperatives to additional villages and milk producers, suitable provisions are being made to build additional milk processing infrastructure for processing additional volume of milk expected on account of higher milk production and meeting the increased demand for value-added products

Testing times (The Hindu Editorial)

Context

Financial Stability report released by RBI

News

The Central government has been working hard to address India’s twin balance sheet problem, but it hasn’t had much to show in the form of results. The Financial Stability Report released by the Reserve Bank of India, for one, suggests that India is still far away from solving the troubles ailing its banks and large business corporations

What does the report say?

According to the report released last week,

  • Rise of Gross NPAs: Gross non-performing assets (NPAs) in the banking system as a whole rose to 10.2% at the end of September, from 9.6% at the end of March
    • This, according to a research report released by CARE Ratings, puts India fifth among significant economies with the most NPAs
  • Further rise in NPAs expected: The RBI stated further that it expects NPAs to continue to rise to as high as 11.1% of total outstanding loans by September 2018, so the end to the bad loans mess seems nowhere near
  • Private sector banks also affected:The bad loans problem has also not spared private sector banks – these lenders have seen their asset quality deteriorate at a faster pace than public sector banks
    • Private bank NPAs increased by almost 41%, as compared to 17% in the case of public sector banks at the end of September
  • Rise of NPAs in NBFCs: Non-banking financial companies that compete against banks also saw a jump in NPAs
  • Positive signs: There are, however, some signs of hope as credit growth has begun to turn the corner and shown faster growth on a year-on-year basis when compared to March

What might help resolve the situation?

IBC should help: The resolution of bankruptcy cases, particularly against large borrowers that contribute a major share of bank NPAs, under the new Insolvency and Bankruptcy Code should help bring the NPA situation under some control

NCLT: Despite its many imperfections and the slow pace of resolutions by the National Company Law Tribunal, the Code can be helpful in cleaning up bank books in future credit cycles

Recapitalisation: The recapitalisation of public sector banks too can help increase the capital cushion of banks and induce them to lend more and boost economic activity

Way forward

Bad debt resolution and recapitalisation are only part of the solution as they, by themselves, can do very little to rein in reckless lending that has pushed the Indian banking system to its current sorry state

  • Systemic reforms: Unless there are systemic reforms that address the problem of unsustainable lending, future credit cycles will continue to stress the banking system
  • Reduce ownership in Banks: In this regard, the government will do well to consider the recent advice of the International Monetary Fund to reduce its ownership stake in banks and give greater powers to the RBI to regulate public sector banks efficiently

Conclusion

Structural reforms are the only long-term solution

SEBI tightens rating agency, MF norms (The Hindu)

Context

Tightening of norms by SEBI

What has happened?

The Securities and Exchange Board of India (SEBI) has tightened the norms for credit rating agencies (CRAs) and mutual funds (MFs) to reduce instances of conflict of interest

  • It also allowed complete integration of stock and commodity exchanges to enable both asset classes to be available for trading on a single platform

What has been done?

  • The SEBI board has increased the net worth requirement for rating agencies to ₹25 crore from the current ₹5 crore
  • It also decided that the promoter entity would have to maintain at least 25% stake in the rating agency for a period of three years
  • CRAs have also been barred from holding more than 10% in a peer rating agency. SEBI also said that CRAs would have to segregate their non-core activities into a separate legal entity to avoid any conflict of interest

“CRAs shall segregate their activities, other than the rating of financial instruments and economic/ financial research, to a separate legal entity.”

  • In the case of MFs, SEBI said a sponsor of a particular MF cannot hold more than 10% in any other MF entity. This assumes significance especially for UTI Mutual Fund, which has State Bank of India, Bank of Baroda, LIC and Punjab National Bank as shareholders. All the four entities have their own respective asset management companies

Deadline

  • Years’ time: While the SEBI statement said that “any existing non-conformity with the aforesaid requirements may be aligned within a reasonable time”, SEBI Chairman Ajay Tyagi said such entities would be given a year to resolve shareholding issues

Other important decisions

  • SEBI gave its nod for existing bourses to introduce equity or commodity trading facilities as they deem fit. In other words, BSE and NSE can now unveil commodity trading while Multi Commodity Exchange (MCX) and National Commodity and Derivatives Exchange (NCDEX) can start offering equity trading facilities
  • The integration, however, would come into effect from October 1, 2018

How this decision will help?

“BSE believes this decision will help participants in various markets a highly regulated, safer, more transparent trading, clearing and settlement framework when implemented fully. BSE has geared up itself for long to provide these facilities,”

Relaxation in regulatory norms

The regulator has also relaxed certain regulatory norms for easing investments by foreign portfolio investors (FPIs) and facilitating growth of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs)

‘Bitcoin too small in India to be regulated’ (The Hindu)

Context

Bitcoins and other cryptocurrencies will see increasing use in India, according to industry players, who say that, right now, the sector is too small to be regulated by the Reserve Bank of India (RBI) or Finance Ministry

Price volatility

Bitcoin companies also say that volatility in the cryptocurrency’s price is likely to continue since it is still attracting new investors with inadequate knowledge about the market, with speculation separately fueling the price fluctuations

Why there has been a sudden surge in fluctuations?

  • It is because some countries have legalised cryptocurrencies like Japan and Korea, and in the U.S. they have announced that there will be bitcoin futures trading. So, this not only gives a legal standing to it, it also opens the door to speculation
  • Also, people are seeing others put in ₹1 lakh and making 10% the very next day, so that is also bringing a lot of laymen into this, which may or may not be a good thing
  • Another reason for the price volatility, something that will continue for some time, is the disaggregated nature of the bitcoin market 

RBI’s caution

RBI has cautioned against its use, informing users, holders, investors and traders dealing with virtual currencies that they are doing so at their own risk

SEBI’s views

Securities and Exchange Board of India Chairman Ajay Tyagi recently said the cryptocurrency had so far not posed any systemic risk. He added that the government had formed a panel to examine it

What should government do if it wants to regulate bitcoin?

If government wants to then what it can do based on the best practices abroad, is to regulate the exchanges. These exchanges need to be regulated heavily, with proper audits, KYCs checks, limits on customers

  • Audit data: Data from these audits could then be used to develop a licensing system for firms that want to use bitcoins

Environment:

Growing forests (The Hindu Editorial) 

Context

A scientific national plan to expand good green cover is absolutely essential

Author’s contention

Author states that the disclosure in Parliament that the Centre is not ready with the rules to implement the Compensatory Afforestation Fund Act, 2016 demonstrates that the government’s resolve to meet a variety of environmental objectives, including major commitments under the Paris Agreement on climate change and the Sustainable Development Goals, remains woefully weak

Is Compensatory Afforestation Fund enough or even a sound remedy?

Evidence is not heartwarming.

  • The evidence on compensatory afforestation in a big project such as the Sardar Sarovar Dam, for instance, is not encouraging. About 13,000 hectares were compensated there, but only with patchy outcomes: healthy monoculture plantations having low biodiversity value came up in some places, while others resulted in unhealthy plantations with few trees

Diversion is inevitable

Diversion of forests for non-forest use seems inevitable to some degree, and the accumulation of about ₹40,000 crore in compensatory funds clearly points to significant annexation of important habitats. The task is to make an assessment of suitable lands, preferably contiguous with protected areas that can be turned over for management to a joint apparatus consisting of forest department staff and scientific experts

Commitments under Paris agreement

Putting in place a scientific national plan to expand good green cover is essential, since the sequestration of carbon through sustainably managed forests is a key component of the commitment made under the Paris Agreement

  • There is already a Green India Mission, which is distinct from the framework envisaged for compensatory afforestation

What is Green India mission?

The National Mission for Green India (GIM) is one of the eight Missions outlined under the National Action Plan on Climate Change (NAPCC). It aims at protecting; restoring and enhancing India’s diminishing forest cover and responding to climate change by a combination of adaptation and mitigation measures

  • It envisages a holistic view of greening and focuses on multiple ecosystem services, especially, biodiversity, water, biomass, preserving mangroves, wetlands, critical habitats etc. along with carbon sequestration as a co-benefit
  • This mission has adopted an integrated cross-sectoral approach as it will be implemented on both public as well as private lands with a key role of the local communities in planning, decision making, implementation and monitoring.

Mission Goals

  • To increase forest/tree cover to the extent of 5 million hectares (mha) and improve quality of forest/tree cover on another 5 Mha of forest/non-forest lands
  • To improve/enhance eco-system services like carbon sequestration and storage (in forests and other ecosystems), hydrological services and biodiversity; along with provisioning services like fuel, fodder, and timber and non-timber forest produces (NTFPs); and
  • To increase forest based livelihood income of about 3 million households

Independent audit

What the Centre needs to do is to enable independent audit of all connected programmes, in order to sensibly deploy the financial resources now available

Immense potential

It must be emphasized, however, that replacing a natural forest with a plantation does not really serve the cause of nature, wildlife, or the forest-dwelling communities who depend on it, because of the sheer loss of biodiversity. Yet, there is immense potential to augment the services of forests through a careful choice of plants and trees under the afforestation programme. All this can make a beginning only with the actualization of the law passed in 2016

Method of calculating net worth is not perfect

It is worth pointing out that the method used to calculate the net present value of forests, taking into account all ecosystem services they provide, is far from perfect, as many scientists point out

Conclusion

Some of the momentum for compensatory afforestation has come from judicial directives, but now that there is a new law in place, it should be given a foundation of rules that rest on scientific credibility 

Science and Technololgy: 

Interceptor missile successfully tested (The Hindu)

Context

Testing of missiles

What has happened?

India on Thursday successfully test-fired an Advanced Air Defence (AAD) interceptor missile, capable of destroying enemy ballistic missiles at low altitude, from a test range in Odisha

Backdrop

The missile is being developed as part the Ballistic Missile Defence (BMD) system and it was the third successful test this year

Direct hit

The endo-atmospheric interceptor made a direct hit with the incoming missile at an altitude of 15 km, completely destroying it. This version has been tested several times, proving its reliability

  • It should be noted that shooting down an incoming missile at lower altitudes is more complicated than shooting at higher altitudes due to the higher velocity of the missile

What does BMD consist of?

The BMD consists of two interceptor missiles,

  • The Prithvi Defence Vehicle (PDV) for exo-atmospheric ranges
  • The Advanced Area Defence (AAD) missile for endo-atmosphere or lower altitudes
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