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GS-2


Government Policies

Justice Rohini to head sub-categorisation panel: (The Hindu)

Context

President Ram Nath Kovind appointed a commission to examine the sub-categorisation of other backward classes(OBC) to ensure that more backward among the communities can access the benefits of reservation

About Sub-categorisation panel

  • It is a 5 member panel headed by retired Chief justice of Delhi high court G.Rohini
  • It will examine the extent of inequitable distribution of benefits of reservation among the caste or communities included in the category of OBC with reference to such class included in central list.

India and Djibouti’s geopolitical scrum: (Indian Express, Editorial)

Context

  • Indian President Ram Nath Kovind’s first visit abroad to Djibouti and Ethiopia suggests India’s realization of geopolitical significance of a region, the Horn of Africa.

Who all are the constituents of the Horn?

The four different states constituting the Horn —

  1.   Somalia,
  2.   Ethiopia,
  3.   Eritrea and
  4.   Djibouti

Also, Yemen across the Red Sea is described as one of the world’s pivotal regions.

What does the visit signify?

  • India does not have an embassy in Djibouti. The president’s visit suggests Delhi is now ready to end its prolonged neglect of Djibouti and re-engage the region strategically.
  • The emphasis is on “re-engagement”, for modern India has a long tradition of critical involvement in the Horn.

What is the importance of the Horn for India?

  • Djibouti’s location at the confluence of the Red Sea with the Indian Ocean and the crossroads connecting Africa, the Middle East and Asia is of utmost importance.
  • The barren land with population less than a million, the region’s multiple conflicts, both interstate and intrastate have made it a very attractive piece of geopolitical real estate.

China’s development in the Horn

  • Beijing’s infrastructure development in the Horn led to the launch of the Belt and Road Initiative by President Xi Jinping.
  • One of the more visible infrastructure projects in the region has been the 750 km-long rail link between landlocked Ethiopia and Djibouti.
  • China’s geopolitical interest in the Horn has come into sharp focus over the last decade with the regular deployment of naval units to combat piracy in the Gulf of Aden.
  • As per an accord signed last year, Beijing has secured the rights to a base in Djibouti that can host up to 10,000 soldiers until 2026. This is the first ever foreign military base for China.

What is the current scenario?

  • Many regional powers are now trying to shape the strategic landscape of the Horn through military bases and armed interventions.
  • Djibouti has reported to host military facilities of Saudi Arabia and Qatar; Eritrea has bases for UAE, Saudi Arabia and Qatar; UAE and Turkey have facilities in different regions of Somalia.

Where does India stand?

  • India is somewhat late in joining the journey for political influence in this critical corner of the Indian Ocean.
  • The President’s visit will hopefully lay the foundations for a comprehensive engagement with Djibouti and the Horn of Africa

GS-3


Infrastructure

Premium trains run with empty seats: (The Hindu)

Context

Railway minister piyush goyal announce reviewing of flexi fares scheme by public transporter

About Flexi fare scheme

  • Came into effect on september 2016
  • First 10% of the seat is booked at the regular fare. thereafter , the fare increases by 10% with every 10% of the seats booked
  • Not applicable for 1st class AC and executive class
  • Applicable to all premium trains (Rajdhani, shatabdi and durunto express)

Impact

  • Train fare cost more than the flight therefore passenger are choosing flight.
  • Almost 30% of the train seats remain vacant on any given day.
  • Even though premium trains runs with vacant seats railway revenue has increase by Rs.500cr.

Tackling the economic slowdown: (The Hindu, Editorial)

Brief Overview

  • In the background of a slowdown in economic growth for five consecutive years, the author of this article makes a case for greater public investments in infrastructure.

Why is growth important

  • The government needs tax revenues to supply public goods and services. These tax revenues depend upon national income.
  • Growth is required for employment generation as demand for labour exists only when there is a demand for goods.

Transforming the economy to meet the challenge

  • The government says it is working for transforming the economy.
  • They identify the issues of ease of doing business, labour market reforms, land reforms.
  • However, the economy today is far less regulated than in 1991 and all governments since then have been working on bringing in “more structural reforms”.
  • It is difficult to relate slowing domestic growth to sluggish world trade trade as 2016-17 was a year of good exports.
  • The argument made for land and labour market reforms as pre-requisite for accelerating growth today must be able to account for how the economy came close to achieving 10% growth in the late 1980s and during 2003-08 when the policy regime was no more liberal than it is now.

Case for a fiscal stimulus and increased public investment in infrastructure

  • Capital formation has steadily declined for 6 years now.
  • Capital formation or investment, generally drives growth in the economy.
  • Investment is an immediate source of demand as firms that invest buy goods and services to do so.
  • It also expands economies capacity to produce.
  • There are two sources of investments in an economy- public and private.
  • Private investment is unlikely to revive on itself in a slowing economy.
  • Increase in public investment by the government will not only increase the demand and quicken growth but it may be expected to encourage private investors as the market for their goods expand.

But what about the higher deficit caused by increased public investments?

  • Economists caution governments against running a higher deficit due to increases public investments, for the fear of inflation.
  • However, in any such assessment, the increase in inflation must be offset by the growth achieved due to greater public investment.
  • Also, the increase in inflation is likely to come due to shortage of agricultural products.
  • Therefore, any plan of increasing the growth must address the problem of agricultural shortages.

The way forward

  • Since 2014, the government is focussing on the supply side by making it easier for the firms to produce. But now, we are facing a demand shortage.
  • The correct approach shall be to aim to balance the budget over growth cycle.
  • That is, the deficit may be increased when the economy slows and may be contracted when the economy quickens.
  • Repair and reconstruction of India’s creaking infrastructure is the direction in which greater public investments must flow.

The cost of electricity: (The Hindu, Editorial)

Context:

  • How can electricity be made affordable, reliable and secure

What are the levels of the cost of electricity?

  • The cost of electricity can be divided into plant-level costs, grid-level costs, and other costs
  • Plant-level costs consist of capital, operation and maintenance, and fuelling cost
  • For nuclear power plants, capital cost is high, but fuelling cost is low
  • For coal-fired power plants, capital cost is low, but fuelling cost is high
  • The capital cost of solar and wind is continuously decreasing; fuelling cost is nil

What are the factors determine the price of electricity?

  • Currently, there is no specific pricing policy assigned to the electricity operators in India
  • A distributor buys electricity from a generator and adds transmission, distribution charges and profit (margin) to it
  • Also, the complex interactions among various generators connected to the grid system influence the price of electricity

What is the benefit of variable renewable energy (VRE) sources?

  • They have nil-fueling cost. Example: solar energy

What are the components of Grid-level costs and the VRE?

  • Grid-level costs have several components like grid connection, grid extension and reinforcement, short-term balancing costs, and long-term costs for maintaining adequate backup supply.
  • The generators with large capacity based on variable renewable energy (VRE) sources have been connected to the grid in recent times.
  • VRE sources demand much higher backup, grid connection and reinforcement costs. This aspect needs attention during policy formulation.
  • A grid manager must ensure the balance of variable renewable energy and base-load technologies (coal, nuclear, hydropower etc.) to meet the peak load in the evening when solar power is not available.
  • According to the Nuclear Energy Agency system cost of VRE sources is much higher than nuclear and coal.

What are the non-categorized or other costs?

  • They include those arising from the influence of electricity generation on health, influence on existing generation capacity due to adding new capacity, cost of accidents, security of supplies and net energy gain for society
  • In the Economic Survey 2016-17 (Volume 2), the term ‘social cost of carbon’ was used to represent the economic cost of greenhouse gas emissions
  • The survey also adds health costs, costs of intermittency, the opportunity cost of land, cost of government incentives and cost arising from stranded assets
  • The survey estimates that the total social cost of renewables was around three times that of coal

What is the way out?

  • India needs to cater a policy framework that integrates all low-carbon energy technologies with coal in a manner that ensures reliability and security of electric supply along with affordability and climate resilient development

Powerful challenge: (Indian Express, Editorial)

Context

  • 2017 witnessed electrification of nearly 14,500 villages but the problem of power connection taints this achievement.

What are the challenges?

  • The government’s record is sullied by the fact that reportedly more than a fourth of the households in the “electrified villages” do not have a power connection.

How to tackle the problem of reliable supply?

  • Ensuring reliable supply requires improving the health of discoms.

The UDAY Scheme and the Saubhagya Scheme

  • The UDAY scheme, launched in 2015, has made some headway in improving the finances of the state discoms.
  • The losses registered by these companies have been more than 20 per cent less this year.
  • Saubhagya allows them the scope to lower tariffs to people covered under the scheme.
  • UDAY makes it obligatory on the states to pay for all the future losses of discoms.

What is the Saubhagya Scheme?

  • The significance of the Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or the “Saubhagya” scheme changes the metric for measuring progress in electrification from the village to the household-level.
  • Beneficiaries for free electricity connections under the Saubhagya scheme would be identified using the Socio Economic and Caste Census (SECC) 2011 data.
  • The scheme covers the Unelectrified households not covered under the SECC 2011. These households would also be provided electricity connections under the scheme on a payment of Rs 500, which shall be recovered by discoms in 10 installments through electricity bills.
  • Free or subsidized connections will take care of the last-mile connectivity.
  • Government will ensure that Saubhagya ropes till in the panchayats and other village-level institutions.

The fiscal myth: (The Hindu, Editorial)

Overview

  • Slow growth in the last few quarters, with growth in GDP dropping to 5.7% has led to speculation that the government might resort to increased spending to boost economy.
  • While there has been no official announcement of a fiscal stimulus yet, government is looking at ways to revive the economy.
  • Many have justified the idea saying that in the absence of help from Reserve Bank of India, the government is right to take things into its own hands.

What is the argument behind government spending?

  • The argument that government spending can revive the economy and put it on a high-growth path is based on weak economic logic.
  • Support for aggressive fiscal stimulus measures comes from the belief that it can put more money in the hands of citizens, thus spurring them to spend and boost demand in the economy.
  • This is the famous Keynesian “multiplier effect” that economists talk about as a tool to counter economic downturns.
  • Apart from the fact that citizens do not necessarily have to spend the money they receive from the government, the logic of fiscal spending is found wanting on various other levels.

Logic of fiscal spending

  • Contrary to Keynesian orthodoxy, insufficient demand is often not the primary reason behind an economic slowdown.
  • Instead, it is only the side effect of production shocks, like the chaos induced by the implementation of the goods and services tax (GST), that cause the income levels of people to drop and, in turn, affects their ability to spend.
  • Fiscal stimulus does nothing to address the root of the problem, which is disruption in production rather than insufficient demand.
  • Fiscal spending is a zero-sum game, wherein resources are misallocated from their original use towards other ends.
  • Taxes that the government collects to spend on the economy, for instance, come out of the pockets of citizens who would otherwise spend it according to their own tastes. Such taxes also weigh negatively on an economy that is already reeling under the impact of other disruptions to production.
  • When government borrows from the credit markets to fund its spending habits, it distorts the spending and saving decisions of citizens.
  • Even when additional fiscal spending is funded, for instance through deficit spending funded by the central bank, the misallocation of resources is unavoidable.
  • While fiscal spending is praised for its ability to employ idle resources, it also impedes the movement of such resources towards more productive employment.
  • In fact, fiscal spending can artificially prolong a recovery by delaying economic adjustment.

Way forward

To foster recovery, government must undertake pro-market reforms that can help the economy to quickly recover from the shocks of demonetization and GST.

Chauvinist winds over India: (The Hindu, Editorial)

Context

Debates over refugees, the right to dissent, or gender violence, suggest that India is becoming a nation devoid of compassion for those who are persecuted.

What is our stance on Rohingya?

  • Government in the Supreme Court is defending its decision to deport Rohingya refugees.
  • Intelligence agencies say Rohingya are a threat because some amongst them are terrorists and/or criminals.
  • The Home Ministry says they are illegal immigrants, and many say that we must put security above concern for refugees.
  • Government spokespersons say defensively that India has neither signed the 1951 Convention of the UNHCR (the United Nation’s Refugee Agency) nor its 1967 protocol, and so it is not bound to take refugees.

Risks from Rohingya refugees in India

  • That there are Rohingya terrorist groups is proven.
  • Some Rohingya have also been guilty of killing Hindus and Buddhists in Myanmar’s Rakhine state.
  • India cannot call Rohingya refugees illegal immigrants when 16,000 of them are registered with the UNHCR and are clearly fleeing from the pogrom conducted in the Rakhine state.
  • The UNHCR is one of the few stellar non-governmental institutions whose work is a credit to all of the UN.
  • The UNHCR’s efforts with Syrian and Rohingya refugees deserve support, especially since the organisation was critical to India’s support for refugees during the 1971 Bangladesh war, and helped ensure their safe return.
  • Despite India not signing the convention, the UNHCR has generally praised India as a host country.
  • The number of Rohingya refugees in India is estimated to be 40,000 while the UN warns of an exodus of close to a million.

Is there a worsening of Indian polity?

  • The shift towards chauvinism is not unique to India’s polity.
  • Waves of similar and more extreme chauvinism swept the U.S. and Europe from the 1990s on first in response to refugees from the Balkans war and then to 9/11, and post-9/11 to the rise of Islamist terrorism and refugees from the wars in West Asia.
  • India’s own neighborhood has long been communal towards religious minorities, whether they are Hindus in Fiji, Pakistan, Sri Lanka and Bangladesh; Muslims in Myanmar and Sri Lanka; or Christians and Ahmadis in Pakistan.
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