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GS-2


Rigid alliances will be avoided: India

Rigid alliances will be avoided: India

Context

  • Joining the first official-level meeting of the new quadrilateral grouping in the Asia Pacific region, India stressed that it will avoid rigid geopolitical alliances.

What shall be India’s new policy?

  • Launching a new policy-oriented club for diplomats in view of the global uncertainties, India will have an “open-minded approach” to international politics.

Cautionary position

  • India will continue to adopt a cautionary position regarding the budding groupings and alliances in the morphing world order.
  • This is the second time in a week that the top diplomat of India has sounded a note of caution in international affairs.
  • Mr. Jaishankar had earlier downplayed the meeting, arguing that the alliance was one of the many such groupings that India had recently participated in.
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China condemns Kovind’s Arunachal trip

China condemns Kovind’s Arunachal trip

Context:

  • China is of the view that India should refrain from complicating the border dispute when bilateral relations are at a crucial stage.
  • This came up in the light of the President Ram Nath Kovind’s recent visit to Arunachal Pradesh.

What is the argument?

  • China has always been objecting the visits of Ministers and senior officials to the Arunachal Pradesh.
  • India has dismissed these objections, maintaining that Arunachal Pradesh is an integral part of the country and Indian leaders are as free to visit the State as they are to any other part of the country.

What is the way out?

  • Both countries are in the process of settling this issue through negotiation and consultation and seek to reach to a fair and reasonable solution acceptable to all.
  • Before any further atrocities both the countries should work for peace and tranquility.
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In ICJ, it’s down to the wire for India, U.K

In ICJ, it’s down to the wire for India, U.K

Context

  • The 12th round of voting to break the deadlock between India’s Dalveer Bhandari and Britain’s Christopher Greenwood for re-election to the International Court of Justice (ICJ), will be a test of the depth and durability of New Delhi’s international partnerships.

Majority required

  • The winning candidate needs to get a majority in both the General Assembly (GA) and the Security Council (SC), but 11 rounds of voting so far ended with India winning in the former and the U.K. winning in the latter.

Historical challenge

  • It is the first time in UN history that the candidature of a permanent member of the Security Council is challenged in the way it has been by India.
  • In the last round of voting at the SC, the U.K. got nine votes against five for India, with one abstention.
  • The U.K. has indicated to members of the SC that it plans to invoke a clause that has never been used to suspend voting and move to a conference mechanism of the GA and the SC, if the first round of voting does not yield a clear outcome.
  • The conference mechanism involves three members of the GA and three of the SC jointly selecting the winner. India has told member countries that this would amount to bypassing the desire of an overwhelming majority.
  • The first is the headcount in the GA. India has ended up at 121 in the last round and is trying to push it up. If India gets two-thirds, at 128, India wins.
  • The second battle line is in the SC, which will vote simultaneously. India hopes that its votes will increase from five.
  • More than six members of the SC have been assuring India their votes, but the count indicates that not all of them are keeping their promise. The 10 non-permanent members of the SC are Bolivia, Egypt, Ethiopia, Italy, Japan, Kazakhstan, Senegal, Sweden, Ukraine and Uruguay.

Conference mechanism

  • The third line of battle is if the U.K. presses for conference, which will also have to be approved by the SC.
  • In this case, the voting will be public, and members who are now playing a double game will not be able to do that.
  • They will have to publicly take a position on whether or not they support the U.K.’s demand for suspension of voting.
  • Though the U.K. has nine votes in favour of its candidate, it is unclear if it has those nine votes to stall the voting process itself in an open voting. The U.K.’s strategy will depend on its own assessment of how it stands on this count.
  • This will be a moment for reckoning for India as well; as it will show the extent of the support it gets from various countries.
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Losing the war, winning the peace(The Hindu)

Losing the war, winning the peace(The Hindu)

Context

  • The article talks about the 1962 war, which proved to be a catastrophic defeat for India

About the war

  • The Chinese assault on the Thagla Ridge early in the morning of October 20, 1962, which turned simmering military tensions into open war.
  • The way the authorities and people of Arunachal Pradesh the North-East Frontier Agency (NEFA) experienced the war was the most crucial element

NEFA’s struggle

  • When large-scale fighting erupted between China and India, it did not take long for NEFA’s civilian officials to realise their entire administration was in jeopardy.
  • The retreat of the Indian Army entailed that of the civilian administration. Dozens of administrative centres were evacuated, leaving most of northern NEFA unoccupied and open for Chinese occupation.
  • Gains in the Aksai Chin aside, the People’s Republic of China (PRC) occupied significant portions of NEFA.
  • Government stores, supplies, equipment, furnishings, weapons and often buildings were systematically damaged, eaten or destroyed.
  • On January 17, 1963 the Chinese still occupied Tawang. resumed his duties a few days later.

What was the status post-war?

  • India’s frontier officials were worried that it lost trust among inhabitants, as they fled leaving them vulnerable  
  • The Raj’s eastern Himalayan frontier had barely been administered and remained poorly explored.
  • Gaining the loyalty of the Mishmis, Monpas or Adis was an aim in itself, if they were to become Indian citizens. Winning them over was key.

China v Indian influence

  • The problem was that Indian officials’ state-building per force had to contend with the PRC’s own efforts in nearby Tibet.
  • China too faced an uphill struggle to concretise its hold there, and it too needed border inhabitants’ cooperation.
  • On the contrary, the 1962 War offered China a chance to gain the upper hand in it.
  • There is much evidence that the PRC’s occupation of northern NEFA was a sort of public relations exercise vis-à-vis local people.
  • Indian officials came back to Tawang to find that no women had been molested and nothing taken without payment; houses, monasteries and possessions were intact.
  • The story of NEFA’s occupation suggests that, among other things, the 1962 War was China’s chance to prove to Himalayan people that it was the better state whereas a weak India could neither protect nor deliver.

Conclusion

  • Many inhabitants expressed both their disappointment at having been left behind and their support for Indian authorities’ return.
  • They made concrete demands to ensure that the disappointment would not re-occur, and that their support would be rewarded.
  • China had won the war on both fronts, military and political; yet this had not been enough to win people over, especially since many people had heard of repression in Tibet from refugees passing through.
  • The Indian state might be weaker and less efficient, but from the inhabitants’ standpoint it was less of a risk, and offered more chance for negotiation.
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Raja Mandala: New ripples in the oceans

Raja Mandala: New ripples in the oceans

Context:

  • Even though the Indo-Pacific quad  brings India, United States, Japan and Australia together, India needs to observe the bilateral maritime security cooperation with Paris in the Indian Ocean.

What is the importance of India-France partnership?

  • The India-France partnership has never been more urgent than it is today.
  • The rise of China, the renewed tensions between Russia and Europe, the uncertainty in the US political trajectory, and the loosening of the old alliances demand more leadership from middle powers like India and France.
  • Nowhere are the possibilities greater than in the maritime domain.

After being a member of the quad, what are essential bilateral parameters India needs to follow?

  • India needs to elevate its bilateral security cooperation with the members of the quad as well as other partners in the Indo-Pacific.
  • To begin with, France is at the top of that list. Because:
  • France has territories in the Western Indian Ocean and South Pacific and has been a maritime power in the region for nearly four centuries.
  • Paris has military bases in the Indian Ocean.
  • It has the lead role in the Indian Ocean Commission that brings together the island states of Mauritius, Seychelles, Madagascar, Comoros and the French territory of Reunion.

Adding new members to the quad:

  • There has been much of debate on getting France to join the quad.
  • The quad is a flexible mechanism to coordinate the approaches of like-minded states to promote their shared political objectives in the Indo-Pacific.
  • It is a work in progress and will take time to achieve institutional goals and make a real impact.
  • But the expansion is possible when this quad is eventually up and running.

Conclusion:

  • The new regional framing will help develop the much needed depth to the India-France strategic partnership through maritime burden-sharing and reinforcement of each other’s positions in the Indo-Pacific.
  • India needs to discard its military isolationism, develop productive defence diplomacy, and embark upon deeper security cooperation with its partners through bilateral, minilateral and multilateral mechanisms
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Split term between India, UK, suggests Thailand envoy

Split term between India, UK, suggests Thailand envoy

Context

  • Thailand’s ambassador to India Chutintorn Gongsakdi has suggested a unique way out for the elections of a judge at the International Court of Justice by splitting the term of the judge between India and the UK.

Suggestions

  • The ambassador advised that the term should be split into six years each, adding one year each for good measure.
  • The deadlock was broken with the New Zealand for World Trade Organization’s director-general by splitting the 4-year term by 3 years each.

Election of the ICJ judge

  • At stake is the election of the judge at the ICJ, which is hearing the crucial Kulbhushan Jadhav case, and the Indian nominee, Dalveer Bhandari, a former judge from the Supreme Court of India, is standing for re-election.
  • Bhandari will be competing with UK’s candidate Christopher Greenwood, and there have been six rounds of voting. While Bhandari has got a simple majority at the UNGA, Greenwood has led the contest at the UNSC.

The procedure of ICJ election

  • According to UN rules, the one who gets absolute majority in both the UNSC and UNGA is the winner.
  • Since there has been a fractured verdict, India is hoping to get two-third majority at the UNGA and claim “moral victory”.

The joint conference

  • UK is pressing for the convening of a “joint conference” between the UNGA and UNSC under Article 12 (1) of the ICJ statute.
  • A joint conference would be a meeting between six countries – three each from the UNGA and UNSC. As per the ICJ statute, the joint conference has full freedom to decide on a name for the court and need not confine itself to official candidates.
  • But, how these countries will be selected is not clear, since the ICJ rules are silent on the issue. This option has been last used in 1921.
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GS-3


ISRO open doors to private sector

ISRO open doors to private sector

Context

Indian Space Research Organisation (ISRO) recently issued a tender to the private industry for Assembly, Integration and Testing (AIT) of 30-35 satellites.

How would the tendering be done?

  • ISRO has issued a Request For Proposal (RFP) to the private industry to build 30-35 satellites over three years.
  • Under this, 4-5 companies would be selected after evaluation and awarded parallel contracts.
  • They would be responsible for the AIT of satellites at ISRO facilities.
  • Private industries first would get training at the facilities of ISRO, in the next step they will build their own facilities after gaining enough expertise

Why this arrangement?

  • ISRO currently launches 3-4 launches per year but the demand is for 16-18 satellites.
  • ISRO is planning to launch 58 satellites in the next 3-4 years.
  • In-house capacity of ISRO is limited. So it is looking to offload 30-40% of the work to the private sector.
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Beyond the News- Tejas and beyond: How short the IAF is of fighters, what options it has now

Beyond the News- Tejas and beyond: How short the IAF is of fighters, what options it has now

Context

  • IAF is well short of the strength required to face up to a two-front threat.
  • To be prepared for a two-front collusive threat, from China and Pakistan, is the government’s mandate for the IAF.

What is the present scenario?

  • The Air Force is authorised 42 squadrons of fighter aircraft, which is the bare minimum it needs to dominate a two-front conflict.
  • Each squadron of the IAF has 18 aircraft; this number that can sometimes be a little higher depending on the number of trainers in the squadron.
  • India has developed its indigenous single-engine Light Combat Aircraft (LCA) Tejas
  • The five LCA Tejas supplied to the IAF by Hindustan Aeronautics Ltd (HAL) are part of a contract for 40 aircraft, 20 in Initial Operational Clearance (IOC) configuration, and 20 in the Final Operational Clearance (FOC) configuration.

What are the awaiting deals?

  • The Air Force is also committed to buying another 83 LCA Tejas
  • These fighters will be the improved Mark-1A version, which is still in the design stage.
  • The IAF is getting 36 French Rafale, besides the balance Russian Sukhoi Su30MKI fighters.

What are the alternatives?

  • The option is to buy some other foreign single-engine fighter, and this is the route the IAF is currently exploring.
  • The American F-16 and Swedish Gripen are in contention for the supply of 114 fighters, 18 of which will come in flyaway condition, and the rest will be made in India.
  • India is also developing the next generation Advanced Medium Combat Aircraft (AMCA), and the IAF expects to have its first squadron in service by 2032.

What is the way ahead?

  • India must develop and promote its indigenous defence industry and the IAF must remain committed to LCA Tejas, the nation’s security is paramount.
  • A right balance needs to be found a mix of LCA Tejas Mark-1 and Mark-2, AMCA, and some foreign fighter aircraft.
  • A decision must be made before the IAF’s fleet has depleted to critical levels, and India is forced to make emergency imports at very high costs.
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Mullaperiyar: T.N. moves SC against parking project

Mullaperiyar: T.N. moves SC against parking project

Context:

  • The southern bench of the National Green Tribunal (NGT) gave green signal to Kerala’s proposal of a mega car parking project in the water spread area of the Mullaperiyar dam.
  • But the Tamil Nadu government raised a strong opposition against the decision.

What is the project?

  • The  various construction projects includes parking for the tourist vehicles and construction of reception blocks, cafeteria, sewage treatment plant, eco-shops complex, toilets, dining block, office block, road work, and road work for battery operated vehicle, developing different thematic arboretums, landscaping, etc.
  • Purpose of the project: project is intended for tourism and commercial activities.

What are the reasons for the Tamil Nadu government to oppose the project?  

  • The construction and the water spread area of the dam falls within the leased area of the Tamil Nadu government.
  • The construction would environmentally affect the catchment area; the water spread area of the dam and consequently the waters of the reservoir.
  • The waters of the reservoir are used for drinking and irrigation purposes by the people of five districts of Tamil Nadu.

What are clarifications put forward by NGT?

  • The Tribunal clarified that no clearance is required to be taken by Kerala under the Forest Conservation Act, 1980.
  • It holds that such activities do not amount to diversion of forest land and utilisation of forest land for non-forest purpose attracting the provisions of the Forest (Conservation) Act, 1980.

Mullaperiyar Dam:

  • The Mullaperiyar Dam or Mullaiperiyar Dam is a masonry gravity dam on the Periyar River in the Indian state of Kerala.
  • It is located 881 m (2,890 ft) above mean sea level, on the Cardamom Hills of the Western Ghats in Thekkady, Idukki District of Kerala, South India.
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An app to get tiger count right

An app to get tiger count right

Context

  • In the forthcoming All-India Tiger Estimation, the authorities have planned to eliminate the process of manual recording of signs of the carnivore and other habitat details. Field data collection for tiger listing is set to go digital in order to reduce human error and provide more reliable estimates.

M-STRiPES (Monitoring System for Tigers-Intensive Protection and Ecological Status)

  • An app named M-STRiPES was developed by the Wildlife Institute of India, Dehradun.
  • Though the app has already been in place in some national parks, its usage and application has been made mandatory only now, for the fourth All-India Tiger Estimation.
  • The use of the app would ensure a more robust estimate. With the availability of M-STRiPES, human error will be eliminated.
  • It is a free app that will be made available to staff participating in the tiger census exercise, and they will feed in their observation during the carnivore sign survey and transect marking. Details such as pellet density, vegetation status and human disturbance, if any, will also be recorded.

Training for staff

  • The field staff and senior officials of the Forest Department will be trained on how to use the app at a programme in Bandipur and Mudumalai from December 5 to 7.
  • The key technical staff involved in operation of the software will undergo an advanced training course in Delhi in December.

Similar apps

  • Bandipur had Hejje or Pugmark, an Android-based app, while BRT started with Huli.
  • The GIS-based app will give real-time data on forest habitats besides providing live update of monitoring and patrolling activities.
  • The nationwide introduction of M-STRiPES paves the way for greater standardization and elimination of inconsistencies in data interpretation.

Counted every four years

  • The national tiger estimates are conducted once in four years, with the first conducted in 2006. That exercise pegged the tiger count at 1,411, with the statistical lower limit pegged at 1,165 and the upper limit, 1,657.
  • The Western Ghat landscape, comprising Karnataka, Kerala, Tamil Nadu and Goa, accounted for 776 tigers in 2014, with the Bandipur-Nagarahole-Mudumalai-Wayanad complex harbouring 570 tigers — reckoned to be the world’s single largest tiger population in a landscape.
  • The last nationwide assessment, held in 2014, pegged the tiger figures across the country at 2,226.
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A fine balance

A fine balance

Context

  • The GST’s anti-profiteering body must not become a tool of harassment

About the National Anti-Profiteering Authority

  • The National Anti-Profiteering Authority is empowered to crack down on firms that fail to pass on the ‘benefits’ of the tax regime to consumers.
  • The authority can order businesses to reduce product prices or refund to consumers ‘undue benefits’; in extreme cases it can impose a penalty on errant firms and cancel their registration as taxpayers.

Why is it important?

  • The trigger for setting up the authority is clearly the recent large-scale reduction in tax rates on more than 300 items, of which about 200 rate changes were to come recently
  • The government is keen on ensuring that consumers have a better perception of the GST’s ground-level impact.
  • While wholesalers can still implement this, reaching every last retailer is a challenge.
  • Firms have been warned that the entire retail chain must reflect revised prices in order to avoid anti-profiteering action

What is the way ahead?

  • The government must ensure that the authority’s powers are used transparently and only where there is genuine consumer/public interest at stake. Else, it runs the risk of making profit itself a bad word.
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It’s the real economy

It’s the real economy

Context:

  • Moody’s has upgraded the Government of India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive.

What are the benefits from the upgrade?

  • The higher rating for India signals a lower risk grade for the government’s debt.
  • It also lowers the cost of raising it.
  • Other borrowings benchmarked to the government also stand to benefit.
  • The likelihood of revisions by other rating agencies has increased.

What are the factors of concern?

  • Even though there has been a significant growth, but non-agricultural production, investment and consumption in the economy is not doing well.
  • It’s the same with infrastructure and construction.
  • Consumer and investor sentiments haven’t got any better.
  • Capital goods and consumer durables output was lower in the first half of the year than that in the same period last year, as production contracted.
  • Festive and post-harvest season spending was expected to boost demand, but it remained to be weak.
  • The industrial performance this year so far is weaker than 2012-13, the worst year growth-wise under the United Progressive Alliance (UPA) government.

What is the scenario for exports?

  • Exports had been showing encouraging signs of recovery.
  • But as for a month, there has been a slight decline in the employment-intensive sectors of leather, gems, jewellery, handicrafts, readymade apparel and carpets.

Factors for the decline:

  • Exporters blame the break in the trend on a liquidity crunch owing to the infirmities in the goods and services tax (GST) system.
  • They complain that their refund claims were not released for four months.
  • Smaller firms with limited access to working capital have taken.

What is the way ahead?

  • The National Democratic Alliance (NDA) government will have to preserve its fiscal rectitude and encourage States to shun populism and adventurism.
  • If corrective steps are not taken, at the current rate of loss in industrial growth momentum, this year’s result may turn out to be worse.

What is Moody’s?

  • Moody’s is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets.

What is credit rating?

  • Credit rating is the assessment of the credit worthiness of a borrower in general terms or with respect to a particular debt or financial obligation.
  • A credit rating can be assigned to any entity that seeks to borrow money – an individual, corporation, state or provincial authority, or sovereign government.
  • Credit assessment and evaluation for companies and governments is generally done by a credit rating agency such as Standard & Poor’s or Moody’s
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India Inc: who’s growing, who’s slowing

India Inc: who’s growing, who’s slowing

Context

  • Have demonetization and the rocky transition to GST brought Indian businesses to a grinding halt.
  • Ever since the Central Statistics Office (CSO) released its GDP estimates for the April-June 2017 quarter, pegging growth at 5.7%, there has been a heated debate on the implementation of demonetization and GST.
  • Over 1015 companies filed their results for the last six quarters beginning April-June 2016 and ending July-September 2017. Studying their sales growth patterns threw up these findings.

Consumption revives

  • The note ban delivered a severe blow to consumer confidence.
  • Almost every consumer-facing sector saw a sharp dip in sales for the October-December 2016 quarter — the months when the note ban was in force.
  • Most sectors charted a quick recovery from that blow. Some have even seen growth rates return to levels better than a year earlier.
  • Aggregate sales growth for Fast Moving Consumer Goods (FMCG) companies slumped from 6.5% in July-September 2016 to 2.9% in the demonetization quarter.
  • Automobile sales shifted into first gear from 13.2% growth in July-September 2016 to 4.2% in the October-December quarter.
  • Sales for retailers fell off a precipice from a 31% growth to a measly 1%. Consumer durable sales, already sluggish before demonetization grew at just 3.5% in the note ban quarter.

The bounce – back

  • All of these sectors experienced an unexpectedly quick bounce-back from the note ban. FMCGs saw growth pick up to 9.6% in the January-March 2017 quarter itself.
  • Consumer durables saw sales growth zooming to 13% in the quarter immediately following demonetization, further accelerating to 20% and 16% in the subsequent quarters.
  • Even paints, a discretionary purchase item, saw a doubling of growth in January-March 2017 from the note ban trough.

The GST roll-out impact

  • The GST roll-out didn’t pose as much of a challenge for the listed firms. Consumer goods such as FMCG, apparel and automobiles saw a blip in April-June 2017, but were back on the fast track by July-September 2017.
  • In fact, listed firms in FMCGs, paints, durables, apparel and automobiles have all demonstrated their strongest growth in the last two years in the latest July-September quarter.

Impact on services lags goods

  • Consumer services, however, had experienced a different outcome. Revenue growth for telecom, entertainment, hospitality, and media took a sharp knock in the quarter in which demonetization occurred.
  • Telecom services went from 7.1% growth in July-September 2016 to a 1.7% contraction in October-December 2016.
  • Entertainment (multiplexes, cable TV providers) saw a halving of growth from 14% to 7% and media firms’ (newspapers, broadcasters, television channels) slowed sharply from 9.2% to 1.2%.
  • Growth in these sectors has continued to be feeble through 2017, with the GST transition probably playing a role in unresponsive sales.

Why have consumer goods taken less of a hit from GST than consumer services?

  • GST tax structure has reduced the indirect tax burden on most consumer goods, fitting them into lower rate slabs than before but it has raised effective taxes on services.
  • Consumer goods firms have therefore been able to use the savings from GST to entice consumers back with discounts and lower selling prices. But service providers, who are already victims of intense competition in their sectors, haven’t had this luxury.
  • Commentary from most consumer goods firms suggests an improvement in volume growth in the latest quarter. In the case of services such as telecom or hotels, competition has lowered tariffs.

Impact on Capital goods — divided

  • The investment leg of the economy did not fare well. Revenue numbers for turnkey infrastructure developers, construction firms and real estate developers were already shrinking in the quarter prior to the note ban (July-September 2016).
  • After the note ban, they experienced an inconsistent recovery over the next two quarters to hit a growth patch by April-June 2017. But the latest July-September 2017 quarter has seen them back in the despair.
  • These firms received some order flows from the Government splurge on roads, railways, rural electrification and the Bharatnet this fiscal. But the flows have dried up lately as the Centre has tightened its purse strings.
  • Private sector capital expenditure continues to recede.
  • However, not all capital goods makers struggled with poor order flows, those that cater to consumer firms managed business-as-usual.
  • Auto components, cables and telecom equipment have seen a steady improvement in growth rates through the three quarters of 2017, ending the July-September quarter with growth of 14%, 33% and 14% respectively. These firms seem to have benefitted from the trickle-down effect of demand revival in their user industries.
  • The sectors such as steel, cement, mining, metals and refineries showed a strong hold.

Impact on Export-oriented sectors

  • Jewellery, software and pharmaceuticals displayed declining growth in the first three quarters of 2017. Textiles and shipping shrank last year and managed a mild revival this year.
  • GST apart, sector-specific issues have also played villain to some export-oriented sectors.
  • For software services, the backlash against offshoring and changing business models has posed a challenge.
  • For pharmaceutical exporters, pricing pressure on generics in the U.S. market and regulatory crackdowns has hit growth.
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The danger of electoral bonds

The danger of electoral bonds

Context

  • The electoral bonds characterstic of keeping secrecy and anonymity makes it an instrument to ease the flow of black money to political parties

Paradise Papers leaks

  • All these Indians on the Paradise Papers leaks had their association with shell companies set up to siphon vast sums of money out of India and into a tax haven under the cloak of secrecy.
  • The electoral bonds share with tax havens the two characteristics that make the latter such attractive destinations for black money: secrecy and anonymity.

What may be the implications?

  • The 255th Law Commission Report on Electoral Reforms observed that opacity in political funding results in “lobbying and capture” of the government by big donors.
  • According to the NGO, 69% of the income of political parties is from unknown sources. But even the 31% from known sources pertains only to the income that the parties declare to the Income Tax (IT) department.
  • The source of funding for political parties is unknown for the greater chunk of a party’s income in any official record neither with the Election Commission (EC) nor with the IT department.

Are there any laws against such anonymous funding?

  • There is a declaration norm, traditionally governed by four legislations: the Representation of the People Act (RPA), the IT Act, the Companies Act, and the Foreign Contribution (Regulation) Act (FCRA).
  • Under these laws, political parties have to declare the source and the amount donated for all contributions above ₹20,000.
  • The government set the ball rolling with the Finance Act 2016, which amended the FCRA to allow political parties to accept donations from foreign companies.
  • The Reserve Bank of India Act was also amended to enable the issuance of electoral bonds, which would be sold through notified banks.

What electoral bonds do?

  • Electoral bonds are essentially bearer bonds that ensure donor anonymity.
  • In a nutshell, a foreign company can anonymously donate unlimited sums to an Indian political party without the EC or the IT department ever getting to know.

What is the government’s stance?

  • But both the banks report to the RBI which is subject to the Central government’s will to know, though it remains to be seen if the former’s autonomy can withstand the latter.
  • The government’s stated rationale for introducing electoral bonds was that they would protect donors from harassment by enabling anonymous contributions.
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Infra status for logistic sector 

Infra status for logistic sector 

Context:

  • The Centre has granted infrastructure status to the logistics sector.
  • It allows availing loans at competitive terms that come along with the status.

What is the reason for this grant?

  • High logistics cost reduces the competitiveness of Indian goods both in domestic as well as export markets.
  • Thus, development of logistics would give a boost to both domestic and external demand thereby encouraging manufacturing and job creation.
  • It will also reduce the cost of capital in transportation and warehousing.
  • It also seeks instrumental in improving country’s GDP

What are the benefits of infrastructure status?

  • Infrastructure industries get longer maturity loans compared to typical manufacturing sector.
  • They are also eligible for slightly higher equity ratios while applying for the loans.
  • They can do refinancing with specialised lenders like IDFC, IIFCL, etc.

What are the benefits of the logistic sector after the infrastructure status?

  • It will enable the logistics sector to avail infrastructure lending at easier terms with enhanced limits
  • Give access to larger amounts of funds as external commercial borrowings (ECB)
  • Give access to longer tenor funds from insurance companies and pension funds and
  • It will be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL)

What is logistics infrastructure?

  • Logistics infrastructure means and includes multi-modal logistics park comprising inland container depot (ICD) with minimum investment of 50 crore and minimum area of 10 acre, cold chain facility with minimum investment of 15 crore and minimum area of 20,000 square feet, and/or warehousing facility with investment of minimum 25 crore and minimum area of 1 lakh square feet.
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Farm policies for India

Farm policies for India(Indian Express)

Context

  • Farmers from across the country are out on Delhi’s streets agitating just as the discussions for the 2018 budget are beginning.

Government policies designed

  • The “one-size-fits-all” policy created for the farm sector is self-destructive in design and programmes meant to double farmer incomes are collapsing.
  • The Pradhan Mantri Fasal Bima Yojna (PMFBY) is a classic case where the best intentions of the prime minister were cluttered in the policy’s fine-print.
  • The PMFBY was designed to provide crop insurance and the Central government shares part of the premium subject to conditions.
  • To receive the Central government’s share, the state will have to follow the central government’s guidelines.
  • Simply allowing each state to design its own crop insurance scheme and yet receiving the Central government share of the premium would yield the desired results.
  • An incentive of Rs 75 lakh per mandi is given by the Centre to the states for linking each market with E-NAM, the electronic platform for trading commodities.

What are the recommendations?

  • Rather than forcing E-NAM on states, incentivizing each state to have the electronic platform which meets the basic criteria of interoperability with other states would have been the correct path.
  • The Central government shouldn’t negotiate international trade treaties on agriculture commodities without the consent of the state governments.
  • To compensate these annual losses, states should demand that the Centre set a floor price for all such farm produce, where only the Central government shells out the shortfall between the market price and floor price via a “Price Deficiency Payment”.
  • To prepare Indian farmers for global integration, funding for programmes such as the Rashtriya Krishi Vigyan and the sub-mission on agriculture mechanization should be doubled and the funding ratio should be changed from 60:40 to 80:20, where the Central government’s contribution rises to 80 per cent.
  • The fault of banks has been established by the RBI through an in-house study conducted by the Financial Inclusion and Development Department with a verdict that there were no way the loans could have been repaid.
  • A class action lawsuit for the complete waiver of all such farm loans should be constituted.
  • For farmers to prosper, hundreds of changes are required but, more importantly, a devaluation of the Indian rupee is essential.
  • Even how funds devolve to the states in a federal structure has to be looked at afresh by the 15th Finance Commission.
  • Each state needs to be nudged and funded to create a data bank and adopt a block-chain process for government decision-making.
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