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GS-1


Role of women

Liberalization’s impact on gender discrimination: (LiveMint, Editorial)

Context

Economic reforms have not reduced gender discrimination.

What is the issue?

  • Conventional wisdom suggests that gender discrimination should have declined in India because of the economic liberalization in early 1990s.
  • Increased market competition forces firms to eliminate inefficient discriminatory practices, including gender discrimination.
  • The room for hiring their own “types” is less when firms face intense competition.
  • Market competition works in favour of women, as women are more competitive, and offer cheaper and more flexible labour.
  • Evidence suggests that India’s economic liberalization has not reduced gender discrimination. It may have worsened in many respects.

Analysis of Sector-wise employment of women

  • The share of females in manufacturing employment has not increased much over last two decades.
  • Female activity is largely concentrated in the unorganized sector. The concentration of female entrepreneurs in low-wage industries has grown over time.
  • Despite many competitive reforms that India has undertaken, this pattern of gender-based segmentation has been increasing over the years.
  • Women entrepreneurs are more dominant in industries that pay lower average wages.
  • Within the manufacturing sector, female ownership shares are highest and typically exceed 50% in industries related to chemicals and chemical products, tobacco products, and paper and paper products.
  • Among service industries, female ownership shares exceed 30% in industries related to sanitation and education.
  • Inadequate infrastructure also affects women more than men, because women are often responsible for a larger share of, and often more time-consuming, household activities.

What drives the gender balance of new enterprises?

  • Empirical results suggest that an industry with more incumbent female employment has a greater female entry share.
  • Among district-level traits, a higher female-to-male ratio, an age profile emphasizing working age population, and better quality infrastructure appear important.
  • Access to major cities does not influence the gender balance of entrepreneurship, but infrastructure access within a district does.
  • Better electricity and water access may reduce the burden of women in providing essential household inputs for their families, and allow for more time to be directed toward entrepreneurial activities.

What can India do to reduce gender discrimination?

  • India’s 73rd Constitutional Amendment Act, passed in 1992, instituted one-third seat reservations for women in local governance bodies.
  • The political empowerment of women had huge beneficial effects.
  • The political reservation for women has gained India global recognition.
  • However, India’s economic liberalization and increased market competition has not eliminated gender segmentation.
  • India’s gender balance in entrepreneurship and jobs remains among the lowest in the world.
  • Globalization and trade policy have made a limited contribution towards India’s convergence in gender segmentation.
  • However, improved physical and human infrastructure, and domestic pro-competitive reforms have reduced gender segmentation.
  • Gender will play a bigger and more strategic role in India’s future growth.
  • This growth will come in many forms: increased female labour force participation, improvements in productivity, elimination of gender discrimination in access to bank loans, and increased voice and political representation.
  • Finally, empowering half of the potential workforce has significant economic benefits beyond promoting gender equality.

GS-2


Effects of developed and developing countries policies

India under U.S. pressure to scale down ties with North Korea: (The Hindu)

Context

  • Following the North Korean missile tests, visiting U.S. officials have asked India to cut down ties with Pyongyang.

Why such pressure?

  • American pressure on the issue has been rising over the last few months even as India joined Japan last week in describing North Korea as a common threat.
  • An India-Japan joint statement issued at the end of Japanese Prime Minister Shinzo Abe’s visit last week called upon North Korea to roll back its nuclear and missile programmes.
  • India and Japan have pledged to work together to deal with the current serious situation and called on the international community to rigorously and fully implement relevant United Nations Security Council resolutions to maximize pressure on North Korea.

Tweaks to pact with S. Korea mooted: (The Hindu)

Context

  • India is looking to plug loopholes in its Free Trade Agreement (FTA) with South Korea following concerns over a recent sudden surge in imports of gold and related articles from that country.

What is the issue?

  • There is a probability of ‘criminal angle’ behind the recent rapid rise in imports of the yellow metal from South Korea.

What is the reason behind the rise?

  • The rise is due to certain firms, ‘owned and operated by some Indians’, allegedly misusing the India-South Korea FTA that allows duty-free import of the precious metal and its articles.

Is GST the cause behind it?

  • With the Gold imports from South Korea shooting up to $340, the implementation of the Good and Services Tax (GST) from July 1 led to the import surge.

What was the previous way of functioning?

  • Pre-GST, gold imports through the non-FTA channel attracted a 10% basic customs duty (BCD) and an additional 12.5% countervailing duty (CVD), while those from the FTA route were levied a 12.5% CVD, the FTA thus eliminating the customs duty on gold imports.
  • Under the new tax regime, a 3% GST replaced the CVD.

What does this replacement mean?

  • This meant gold imports from the non-FTA route attracted 10% BCD and 3% GST, while those from the South Korea FTA channel paid only 3% GST, which could be later claimed as input tax credit.

Why the issue of criminal angle?

  • The authorities are examining a possible criminal angle in such transactions as those entities were allegedly sending gold medallion directly from Dubai to South Korea and then exporting to India, violating FTA norms.
  • Under the FTA, duty-free import of gold medallion into India is currently allowed only if it has met the norm of ‘Change in Tariff Heading’ under the Harmonized System Code.

What does Change in Tariff Heading means?

  • This means one could send gold bars and rods from a third country to South Korea, convert them into medallion there, export to India and avail the zero-duty benefit.
  • Though the Centre had last month ‘restricted’ imports of jewellery, precious metal and related items from South Korea, official sources said it was only a temporary measure.

Conclusion

  • In an upcoming trade meeting with South Korea, India will push for inclusion of tighter norms in the FTA on imports of gold and its items to prevent misuse.
  • India will insist on a clause in the FTA specifying the criteria of (at least 35%) ‘value addition’ as well as ‘Change in Tariff Sub-Heading’ to ensure that the item has undergone substantial transformation in South Korea.
  • Only those furnishing the required certificate, stating the criteria have been met, will be allowed FTA benefits.

PDS digitisation moving at snail’s pace: (The Hindu)

Context:

  • The progress of the digitization of Public Distribution System

What is the project all about?

  • It was launched in 2012 at a cost of 884 crore to complete the automation of Public Distribution System – All fair price or ration shop
  • To enable online monitoring of stock positions.
  • To empower the government to track the movement of food grains – godowns to fair price shops
  • It aimed to ensure that food grains reach the right beneficiaries
  • To send SMS alert to beneficiaries

What is the progress made so far?

  • The project was given a mission mode by the NDA government (2014)
  • Out of 5.26 lakh ration shops, only 15% have been digitized in a 3 year period (2014 -17)
  • Less than 10,00 fair price shops had been digitized during the period of 2 years (2012 -14)
  • 11 states have not taken the elementary steps of digitizing fair price shops
  • The numbers are most stark in the North East region
  • Few states in North East region have cited connectivity issues for their inability to start the process

What is the government’s achievement?

  • Rs. 2.48 crore bogus cards have been deleted
  • It has saved a subsidy of Rs.15, 000 crore per annum

India and neighbors

Reading the tea leaves: (The Hindu, Editorial)

Context:

The emerging India-Japan alignment sets the stage for the reordering of the Asian strategic landscape

Two trend lines

  • The shift of the geopolitical centre of gravity from the Euro-Atlantic to the Indo-Pacific region and the rise of China.
  • Most of the rivalries are being played out in the crowded geopolitical space of the Indo-Pacific, and Asian economies now account for more than half of global GDP and becoming larger in coming years.

China’s policy:

  • According to China’s President Xi Jinping’s ‘two guides’ policy announced in February, China should guide ‘the shaping of the new world order’ and safeguarding ‘international security’.
  • China has suggested ‘a new type of great power relations’ to the U.S.
  • Its assertiveness in the East China Sea with Japan and in the South China Sea with its Association of Southeast Asian Nations (ASEAN) neighbours sends a signal that while multipolarity may be desirable in a global order, in Asia, China is the predominant power and must be treated as such.
  • During the past few years, it has set about creating a new set of institutions (the Asian Infrastructure Investment Bank and the New Development Bank) and launched the Belt and Road Initiative (BRI) to create a new trading infrastructure that reflects China’s centrality as the largest trading nation.
  • In addition to Gwadar, China is now converting the supply facility at Djibouti into a full-fledged military base.

Accelerating the trends:

  • By invoking ‘America first’ repeatedly, President Donald Trump has made it clear that the U.S. considers the burden of leading the global order too onerous. American allies, particularly in the Asia-Pacific, are nervous about Mr. Trump’s harangues that they are enjoying the benefits of the U.S. security umbrella on the cheap.
  • Recent nuclear and long-range missile tests by North Korea have added to South Korean and Japanese anxieties.
  • Japan has been particularly rattled by the two missiles fired across Hokkaido.
  • Another significant development was the Doklam stand-off between India and China .

Tussle areas:

  • Differences with China did not begin with Doklam.
  • It was preceded by the stapled visa issue for Indians belonging to Arunachal Pradesh and Jammu and Kashmir, growing incidents of incursions along the disputed boundary, blocking of India’s bid to join the Nuclear Suppliers Group last year.
  • Preventing the inclusion of Masood Azhar from being designated as a terrorist by the UN Security Council by exercising a veto.
  • The gap between India and China has grown, both in economic and military terms, and with it has emerged a more assertive China.

Critical dimension to the ‘global partnership’ between India and Japan:

  • It is against this backdrop that Japanese Prime Minister Shinzō Abe’s visit to India took place last week.
  • The relationship became a ‘Special Strategic and Global Partnership’, Japan was invited to join in the Malabar naval exercises and a Joint Declaration on Security Cooperation was concluded.
  • A singular achievement was the conclusion of the agreement for Cooperation in the Peaceful Uses of Nuclear Energy last year.
  • This was a sensitive issue for Japan given the widespread anti-nuclear sentiment (though Japan enjoys the U.S. nuclear umbrella) and (misplaced) faith in the Nuclear Non-Proliferation Treaty.
  • To deepen strategic understanding, the two sides initiated a 2+2 Dialogue involving the Foreign and Defence Ministries in 2010.
  • A memorandum on enhancing defence and technology/security cooperation was signed and talks on acquiring the amphibious maritime surveillance ShinMaywa US-2i began in 2013.
  • Trilateral dialogue involving both the U.S. and Japan and covering strategic issues was elevated to ministerial level in 2014.
  • Japanese participation in the Malabar exercises, suspended because of Chinese protests, was restored in 2015.
  • Once the agreement for the 12 US-2i aircraft is concluded with a follow-up acquisition as part of Make in India, the strategic relationship will begin to acquire critical mass.
  • The strategic partnership needs stronger economic ties.
  • Today, India-Japan trade languishes at around $15 billion, a quarter of trade with China while Japan-China trade is around $300 billion.
  • The Mumbai-Ahmedabad high speed rail corridor is more than symbolism, in demonstrating that high-cost Japanese technology is viable in developing countries and that India has the absorption capacity to master it.
  • Another major initiative is the recently launched Asia-Africa Growth Corridor to build connectivity for which Japan has committed $30 billion and India $10 billion.

India-Japan relations in good health: (Live Mint, Editorial)

Context

  • Visit of Japanese PM Shinzo Abe to India and the bonhomie between the two leaders.
  • Reaffirmation of special ties.

Factors that lead to the bonhomie

  • The rise of China.
  • The joint statement calls for “a free, open and prosperous Indo-Pacific region where sovereignty and international law are respected, and differences are resolved through dialogue, and where all countries, large or small, enjoy freedom of navigation and overflight, sustainable development, and a free, fair, and open trade and investment system.” It is understood that China, which is following an aggressive policy in the region, is targeted in the statement
  • The joint statement also endorses the principles on which India decided to sit out the Chinese Belt and Road Initiative (BRI).
  • The statement also does well to hint at the role of China in creating the international problems that North Korea and Pakistan today are.
  • Also, Japan has been unsure of the US commitment to its allies ever since Donald Trump started his presidential campaign.
  • The ICBM (intercontinental ballistic missile) capability of North Korea has aggravated Tokyo’s worries about the decoupling of the US-Japan alliance.
  • It is not clear whether the ASEAN (Association of Southeast Asian Nations) will be able to hold its own in the face of increasing Chinese assertiveness in the region.
  • Indo-Russian relations, a stabilizing factor in the past, are in flux.
  • In this scenario, India and Japan are the only major forces of stability in the Indo-Pacific.

How the two countries complement each other?

  • Japan’s Ageing population and India demographic dividend.
  • Japan’s advanced technology and India’s rich natural and human resources.
  • Japan’s excellence in manufacturing and India’s progress in the service sector.
  • Japan’s surplus capital which could be a source of FDI in India and India’ hunger for investments, growing markets and purchasing power of the middle class.

Special relationship with Japan

  • India is known to grant titles of “strategic partnership” very generously.
  • The relationship with Japan, however, is too special to be given the same treatment.
  • Therefore, the Indo-Japanese bilateral cooperation is carried out under the framework of a “special strategic and global partnership”.

Unprecedented momentum in the past 3 years

  • The commencement of the Mumbai-Ahmedabad high speed rail project (bullet train).

In the last three years,

  • Japan has been made a permanent participant in the Malabar naval exercises which also involves the US.
  • The two countries have inked a nuclear deal—Japan’s first with a non-signatory to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT).
  • The India-Japan-US trilateral has been upgraded to ministerial level.
  • A new trilateral at the foreign secretary level has been initiated with Australia as the third country.
  • In addition to these, the numbers on Japanese foreign direct investment (FDI) and overseas development assistance (ODA) to India have been climbing.
  • Last year has seen the highest ever disbursement of official development assistance from Japan in a financial year.
  • Other than the Mumbai-Ahmedabad high speed rail, many other high-profile projects like the Delhi-Mumbai Industrial Corridor (DMIC) and Mumbai Trans-harbour link project are under different stages of execution.

Areas of disappointment

There are disappointments too;

  • The trade numbers—below $15 billion annually in the last two years—do not reflect the economic ties between the third and the fourth largest (on purchasing power parity terms) economies in the world.
  • Long pending defence deals—especially the sale of US-2 amphibious aircraft to India—too haven’t moved forward.
  • However, these areas of slow growth cannot take away from the tremendous distance that has been covered elsewhere.

Future

  • The two countries are exploring cooperation on infrastructure and human development projects beyond India.
  • The Asia-Africa Growth Corridor (AAGC), if pursued with an unwavering focus, has the potential to become a serious counterweight to China’s BRI.
  • Unlike BRI, the AAGC promises to evolve a consultative mechanism towards identification and implementation of projects.

GS-3


Indian Economy. Planning, Growth and Employment

Decoding shell companies: (The Hindu)

Context

Recently, the Centre has initiated action against more than two lakh shell companies as part of Operation Clean Money. Also, SEBI has identified 331 companies and initiated action against them. Here is all you need to know about shell companies.

What are shell companies?

  • The Companies Act, 2013 has not defined what a ‘shell company’ is and as to what kind of activities would lead to a company being termed a ‘shell’.
  • Shell companies are typically corporate entities which do not have any active business operations or significant assets in their possession.
  • The government views them with suspicion as some of them could be used for money laundering, tax evasion and other illegal activities.

How are shell companies governed in India?

  • In India, there is no specific law relating to “shell companies.”
  • However, some laws help, to an extent, in curbing illegal activities such as money laundering and can indirectly be used to target shell companies — Benami Transaction (Prohibition) Amendment Act 2016; The Prevention of Money Laundering Act 2002 and The Companies Act, 2013.

How can a shell company be strike off?

  • Companies can be removed from the rolls of the Ministry of Corporate Affairs by two means: strike off by Registrar of Companies (RoC) — (Section 248 (1) of the Companies Act, 2013) and voluntary strike off — (Section 248 (2) of the Companies Act, 2013).
  • Voluntary closure can be done with the approval of the board and shareholders and the firm should have nil liabilities.

Under what conditions, can a company be striked off by the Registrar of Companies?

  • A company is strike off when it has failed to commence business within a year of incorporation.
  • Also if a company does not carry out any business or operation for a period of two continuous financial years and did not apply for the status of ‘dormant company’ under Section 455 of the Companies Act, then RoC issues a show-cause notice to such companies and their directors seeking their response within 30 days. If the response is not satisfactory, the company’s name would be removed from the register.

What is a dormant company?

As per Section 455 of the Companies Act, 2013, a company that does not have significant financial activity or has been inactive can apply to the RoC and declare itself a dormant company.

How is a shell company different from dormant company?

  • A dormant company gets its title in two ways: it has chosen to get a ‘dormant’ status from the RoC by way of an application and is in compliance of the requirements of Section 455.
  • Further, in case a company has not filed financial statements or annual returns for two financial years consecutively, the RoC shall issue notice and include it in the register of ‘dormant’ companies.
  • But a shell company is one which is typically suspected of illegal activities.

Time for caution: (The Hindu, Editorial)

Context

Last week, the current account deficit (CAD) widened to a four-year high of $14.3 billion in the first quarter of the current financial year, standing at 2.4% of gross domestic product, compared to 0.1% last year.

Causes of widening Current Account Deficit

The widening CAD was driven by a  number of factors:

  • Merchandise exports: One of the major reasons for the current deficit is the greater increase in merchandise imports than exports
  • Increase import of Gold:Imports increased because of a rise in demand for gold(almost threefold) due to the upcoming festive season and tweaks in trade pacts with countries such as South Korea
  • Services -Fall in exports of Services due to domestic industry issues and increased protectionism worldwide.
  • Lower farm growth and government expenditure.
  • The prolonged effects of demonetisation.
  • Introduction of a new tax regime(Introduction of GST)

Causes of a Surplus in Capital Account

  • Foreign investors starved of yield have been stepping up their investments in India, which remains one of the few places offering higher yields.
  • Compared to last year, net FDI almost doubled in the first quarter, while net portfolio investment jumped about six times. The strong inflow of foreign capital has also led to a significant increase in foreign reserve holdings, thanks to the Reserve Bank of India which has been busy buying dollars to weaken the rupee,while the rupee has appreciated by over 6% against the dollar this year.
  • Low global oil prices over the last two years have also helped contain a good portion of its import bills.

What could happen if the FED tightens it’s policy?

  • All this might change with the impending tightening of monetary policy by the U.S. Federal Reserve and other central banks and the end of the era of easy money policy.
  • Emerging Asian markets have been the biggest beneficiaries of loose monetary policy in the West, so any change in stance would most definitely affect them.
  • Indian companies, for instance, have aggressively tapped into the market for rupee-denominated foreign debt, which can work against them if the flow of foreign capital turns volatile.

Way forward

  • A strong capital account surplus,  has helped the country pay for its import bills without much trouble
  • In addition, the imports of Gold need to be checked.  Tweaks in FTA’s  with foreign countries should be corrected to check illegal trade from third parties. The example of in the current scenario is that of the Illegal imports from South Korea that is not even amongst the world’s major producers or exporters of gold and related products.
  • Effects of new tax regime should be carefully watched.
  • Incentives to exporters and increase in budget expenditure to their interest.
  • India should be prepared for the impending tightening of  monetary policy regime in U.S. and other countries as India has survived the current deficit on account of a strong capital account surplus.
  • Also, India should seek to resolve the impending issues with other countries and organisations such as EU(regarding IPR regime and others) so that the India-EU FTA process could be hastened which could prove to be a major boon for services sector. Similarly, India’s push for a Services pact along with a goods pact in RCEP is a Step in the right direction.

Al system can predict Alzheimer’s: (India Today)

Context

The news is regarding the development of an artificial intelligence system that can accurately identify signs of Alzheimer’s disease almost 10 years before the clinical symptoms appear.

About the research and its results

  • Researchers have developed a machine-learning algorithm to discern structural changes in the brain caused by Alzheimer’s disease.
  • Using MRI scans, the system detected early signs with 84 per cent accuracy by identifying changes in how regions of the brain are connected.
  • The idea was to teach the algorithm to correctly classify and discriminate between diseased and healthy brains.
  • The system distinguished between a healthy brain and one with Alzheimer’s with an accuracy of 86 per cent.
  • It could tell the difference between a healthy brain and that with MCI with an accuracy of 84 per cent. This shows that the algorithm could identify changes in the brain that lead to Alzheimers almost a decade before clinical symptoms appear.
  • Nowadays, cerebrospinal fluid analyses and brain imaging using radioactive tracers can tell us to what extent the brain is covered with plaques and tangles, and are able to predict relatively accurately who is at high risk of developing Alzheimers 10 years later.

The mysterious  windy Venus is revealed for the first time:

Context

For the first time, the night side of the Venus has been observed and how the atmosphere circulates on the night side of Venus on a global scale

What are the characteristics of the night side of Venus?

  • There is wind and cloud patterns in the night side of planet Venus and behaves very differently from the part facing the Sun.
  • The night side exhibits unexpected and previously-unseen cloud types, morphologies, and dynamics — some of which appear to be connected to features on the planet’s surface
  • Venus’ atmosphere is dominated by strong winds that whirl around the planet far faster than Venus itself rotates.

What is super-rotation?

  • Strong winds whirl around Venus which are faster than Venus’s own rotation speed.
  • This phenomenon, known as ‘super-rotation’, sees Venusian winds rotating up to 60 times faster than the planet below, pushing and dragging along clouds within the atmosphere as they go.
  • These clouds travel fastest at the upper cloud level, some 65 to 72 kilometres above the surface.

Why so much significance to night side of the planet ?

  • The focus has primarily on night side because it has remained poorly explored.
  • The upper clouds on the planet’s night side has been seen by thermal emission, but it has been difficult to observe them because enough detail could not be picked up.

What technique has been used to study the night side of the planet?

  • The Visible and Infrared Thermal Imaging Spectrometer (VIRTIS) on European Space Agency (ESA)’s Venus Express spacecraft was used to observe the clouds in the infrared.
  • Rather than capturing single images, VIRTIS gathered a ’cube’ of hundreds of images of Venus acquired simultaneously at different wavelengths.
  • This allowed the team to combine numerous images to improve the visibility of the clouds, and see them at unprecedented quality.
  • The VIRTIS images thus reveal phenomena on Venus’ night side that have never before been seen on the dayside.
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