9 PM Daily Brief – October 14th,2020

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GS-2

  1. Efficient implementation of the NEP policy
  2. Quadrilateral home truths: On QUAD
  3. Functioning of the RTI

GS-3

  1. Issues plaguing the banking sector
  2. Small stimulus package

9 PM for Preliminary examination

FACTLy

1.Efficient implementation of the NEP policy

Source: The Indian Express

Syllabus: GS-2- Education

Context: The successful functioning of NEP 2020 requires a five point implementation plan to help it in working.

What are the contributors to policy failure and how it can be avoided?

  • Bob Hudson, David Hunter and Stephen Peckham had identified four contributors to policy failure :
    • Overly optimistic expectations
    • Implementation in dispersed governance
    • Inadequate collaborative policymaking
    • Impulses of the political cycle
  • A better understanding of the processes is needed through which policy moves and how, at each of these points, policy can best be supported. Four sequential points can be identified: Preparation; tracking; support; and review.

What is the five-point implementation plan to help implement NEP?

  • A vision to build intellectual and social capital for developing collective consciousness for implementing the NEP.
    • Interventions: It includes coordination and cooperation between the Centre and states; legislative interventions, including passing new laws and/or amendments to existing laws.
    • Finance: An increase in the budgetary framework and rise of financial resources with involvement of inter-ministerial discussions along with regulatory reforms.
    • Advisory body: The PM’s Task Force on Higher Education Reforms can be an advisory body including experts from public and private Higher Education Institutions (HEIs) to ensure time-bound implementation with fixed accountability.
  • There is a need to establish a National NEP Implementation Standing Committee with select vice-chancellors / directors of universities/ institutes.
    • It will create and monitor the NEP Implementation Plan in a time-bound manner; and will have specific powers and functions, including thematic sub-committees and regional committees.
  • The National Education Ministers’ Council with Education Ministers of all states and UTs needs to be constituted. 
    • The Council will be an important institutional mechanism to monitor the implementation of NEP in states and UTs, and will also serve as a forum to discuss and address implementation issues.
    • It will navigate through the diverse perspectives of state governments.
  • The idea of Institutions of Eminence (IoE) spoken by the Prime Minister contains the vision to develop world-class universities in India.
    • In 2016 then Finance Minister promised to provide “an enabling regulatory architecture” so that “10 public and 10 private institutions” would emerge “as world-class teaching and research institutions” which led to the establishment of IoEs.
    • The vision of IoE needs to be integrated with the NEP implementation plan, and IoEs need to be empowered with more freedom, flexibility, autonomy and resources.
  • The National Higher Education Philanthropy Council needs to be constituted which will be headed by the Education Minister with private sector participation.
    • Nearly 70 per cent of Indian HEIs are private, and more than 70 per cent of Indian students study in private HEIs. Thus, financial resources need to be raised that are critical for the establishment of more private HEIs.
    • This will require new and innovative institutional mechanisms, tax incentives, donation frameworks to incentivise the Indian corporate sector to contribute in the form of individual and corporate philanthropy.
    • The Philanthropy Council could help promote potential donors for establishing three new endowment funds :
      • Higher Education Infrastructure Development Endowment Fund
      • Higher Education Student Scholarship Endowment Fund
      • Higher Education Research Grants Endowment Fund

Way forward

  • We will need to create stakeholder incentives; formulate instruments in the form of legal, policy, regulatory and institutional mechanisms; build reliable information sources; develop adaptability across HEIs; develop credibility through transparent actions and participation of all stakeholders; and develop s

2.Quadrilateral home truths: On QUAD

Source: The Hindu

Syllabus: GS-2-Important International Institutions, agencies and fora – their Structure, Mandate.

Context: On October 6th, the foreign ministers of Australia, India, Japan and the U.S. held a standalone meeting in Tokyo.

What is QUAD?

  • The grouping of four democracies –India, Australia, US and Japan is known as the quadrilateral security dialogue or QUAD. It was first mooted by Japanese Prime Minister Shinzo Abe in 2007.
  • Objective: To check China’s ambition to exercise regional hegemony and to defend and strengthen a liberal international order while focusing on building an Indo-Pacific narrative.
  • Quad Plus: Expansion of QUAD that includes South Korea, Vietnam and New Zealand.

What is the way forward for QUAD?

For QUAD to be successful as a geopolitical construct, it needs to learn four lessons drawn from the Asia’s history and geopolitics. These are:

  • Firstly, there is no such thing as an ‘Indo-Pacific system’. Instead, historically, there were two Asian systems- a) an Indian Ocean system and b) an East Asian system.
  • Secondly, the Indo-Pacific region do not have any prior experience of long-lasting peace, prosperity and stability.
  • Thirdly, the sea lines of communication acts like a connective tissue that links the Indian Ocean to the Western Pacific. It is also an important arena of leverage vis-à-vis Chinese shipping and resource flows. This leverage should be used appropriately on India’s terms.
  • Finally, the Quad has an important role to play to check China’s expansion in the Indian Ocean. India should focus on interoperable cooperation with its Quad partners to address the naval challenges posed by China in the Indian Ocean Region.

3. Functioning of the RTI

Source: The Hindu

Syllabus: GS-2- Policy

Context: Government determining the tenure and salaries of all Information Commissioners is an attack on the transparency and a blow to the right to information regime.

What is RTI?

  • The right to information was upheld by the Supreme Court as a fundamental right under Article 19 of the Constitution, which guarantees every citizen the right to free speech and expression.
  • The RTI Act was enacted in 2005 to provide an institutional regime of right to information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority.
  • The RTI law has been used by people to seek information to actively participate in decision-making processes and hold governments accountable.

What is the potential of the law?

  • RTI is the most widely used transparency legislation in the world as nearly six million applications are filed under the act every year.
  • A large proportion of these are filed by the poorest and the most marginalised who have understood the great potential of the law to empower them to access their basic rights.
  • It gives citizens a power to hold government departments accountable for delivery of food grains and social security benefits meant for those in distress, including migrant workers.
  • The RTI Act has also been put to effective use by citizens to shed light on corruption and illogical abuse of power by the state. 

Examples: RTI used to promote Transparency

  • Information has been accessed about the anonymous electoral bonds though which thousands of crores have been channeled into political parties.
  • The law has been widely used to seek information about availability of medical facilities, like ventilators and ICU beds during the Covid-19 crisis.
  • The Prime Minister’s Office has been queried about the expenditure of the PM CARES Fund set up to provide relief during disasters like the current pandemic.

How is there an attack on the transparency watchdogs?

  • Information Commissions at the Centre and in the States are the final judges empowered to act against violations of the legislation.
    • Amendments were made to the RTI Act which removed legal protection of fixed tenure and high status advised on the commissioners in 2019.
  • The government pushed the RTI (Amendment) Act which allows the Central government to determine the tenure and salaries of all Information Commissioners. It is an indicator that directions to disclose inconvenient information could invite adverse consequences.
  • Information Commissioners are not appointed in a timely manner by the government which has severely hindered the functioning of commissions.
    • Since May 2014, not a single commissioner of the Central Information Commission (CIC) has been appointed without citizens having to approach courts.
  • Vacancies in Information Commissions lead to large backlogs of appeals/complaints and long delays in the disposal of cases.
    • Six out of 11 posts of commissioners are currently vacant in the CIC, including that of the chief despite the orders of Supreme Court to fill all the vacancies.
  • The CIC is headless for the fifth time in the last six years and eight State Information Commissions are functioning without a chief.

Way forward

  • As the RTI law completes 15 years, it is again time for those whom it empowers; the citizens to state themselves and protect their fundamental right to information, which they achieved after a long struggle.

4. Issues plaguing the banking sector

Source- The Indian Express

Syllabus- GS 3- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context – There is complacency in policy circles surrounding the political and economic prospects of India when it comes to the public sector banking system in India.

What is the current condition of financial infrastructure of India?

Two recently published books reveal the sustained hollowing out of the financial architecture in India-

  • Quest for Restoring Financial Stability in India– by former deputy governor of the RBI, Viral Acharya.
  • Overdraft: Saving the Indian Saver– by former governor of the RBI, Urjit Patel.

There are some problems with the existing architecture.

  1. The state ownership of banks– The government is the dominant owner of public sector banks in India, which account for 63 per cent of deposits of the banking system.
    1. Prudential regulatory norms required for financial stability, if applied as they ought to be, will lead to a huge need for the government to recapitalize the banks; this would put a stress on the fiscal deficit. Hence, there is pressure from the government for regulatory forbearance, as the prudential norms are ownership neutral.
    2. Problem of moral hazard: Governments have used them as tools for macroeconomic management. This kind of state interface with the business of financial intermediation naturally induces extreme levels of moral hazard in the behavior of both debtors and creditors.
    3. PSBs are not incentivized to exercise due diligence since they expect regulatory forbearance and recapitalization in the event of rising NPAs on their books.
  1. Fiscal dominance in India– Fiscal dominance provides the basis for a “theory of everything” that impacts financial stability in the domain of the central bank. This includes banking regulation, debt management and timely disclosures of defaults, market regulation, capital flow measures and RBI profit transfer.
  2. Dependent Bureaucrats– The widespread perception that market regulators work under close government direction. The career progress of these individuals is typically based on their ability to implement political instructions. Hence, their very appointment destroys perceptions of competence and independence of the regulator.
  3. The chronically high fiscal deficits run by the consolidated public sector.

What are the possible solutions?

Dealing with this will require, at a minimum, three reforms.

  1. There has to be a wholehearted attempt at privatization of PSBs– In the last decade, the share of PSBs in overall lending has dropped sharply from 75.1% to 57.5% at present. As PSBs keep losing share, they will cause fewer headaches for the government and the central bank in the decades to come.
  2. The RBI needs to be relieved of its public debt management role.
  3. The RBI has to be empowered to act independently of the government- It is untenable for government-owned banks to be regulated by an agency that is itself reporting to the government.

Way forward-

  • Government needs to stop the practice of appointing favoured bureaucrats as heads of regulatory institutions.
  • There is a need to pay attention to the package of measures recommended to deal with the NPA problem while dealing with the Covid-induced scenario.

5.Small stimulus package

Source- The Hindu

Syllabus- GS 3-Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context-Union Finance Minister recently announced two sets of measures to generate consumption demand and boost capital spending in the economy.

What are the new measures announced to step up Capex by the Centre and the States?

  1. Leave Travel Concession (LTC) Cash Voucher Scheme: The Government has decided to give cash payment to employees in lieu of one LTC during 2018-21. Full payment on Leave encashment and tax-free payment of LTC fare depending on class of entitlement will be given.
  2. Special Festival Advance Scheme:  All central govt. employees can now get interest-free advance of Rs. 10,000, in the form of a prepaid RuPay Card, to be spent by March 31, 2021. It was meant for non-gazetted government employees. It is being revived as a one-time measure for gazetted employees too.
  3. Capital Expenditure Boost for States: A special interest-free 50-year loan to states is being issued. For ₹ 12,000 crore capital expenditure which is to be spent by March 31, 2021: (1) ₹ 200 crore each for 8 North East states; (2) ₹ 450 crore each for Uttarakhand, Himachal Pradesh; (3) ₹ 7,500 crore for remaining states, as per share of Finance Commission’s devolution.
  4. Other measure– An additional budget of Rs 25,000 crore for Capex on roads, defence infrastructure, water supply, urban development, and domestically produced capital equipment. This is expected to come through re-allocation of resources

What are the concerns related to these new measures?

  1. Too many restriction– Provisions like buying goods and services worth three times the fare, only in goods attracting GST of 12% or more through digital mode before 31st March etc. end the freedom of the consumer in decision making.
  • Eligible employees may find the scheme complex and too expensive to avail.
  1. Smaller size– Capex amounts are too small to have any meaningful impact on economic growth.
  • With the previous rounds of budgetary fiscal support of around 1% of GDP, current measures take total fiscal support to about 1.7% of GDP, which is small compared with the size of the growth hit and reflects India’s weak fiscal starting position.
  • ₹2,000 crore has been set aside for States that manage to complete three of four reforms mandated in the earlier Atmanirbhar Bharat package, in order to get additional borrowing leeway. Only some States may qualify for this.
  1. Limited Impact: As the measures are aimed at encouraging spending for government employees rather than private/vulnerable section (where job losses/income losses have been significant), the overall impact will be limited.
  2. COVID-19 impact– The pandemic restrictions have affected the ability to get new projects, just about ₹1.34-lakh crore of the budgeted Capex had been spent. The same problem will impact the new capital expenditure scheme.
  3. Negative impact on Tourism industry– LTC Voucher Scheme may impact the travel and tourism industry negatively if consumers choose to spend through the scheme. Demand in travel and tourism has already fallen significantly after the Covid-19 induced lockdowns and closed borders.

Way Forward-

  • The focus of these packages should not just be on conjuring a trickle-down stimulus from those with their jobs and savings intact but also on relief measures for those without.
  • These announcements should be the first steps of a broader, more ambitious fiscal package, which addresses the needs of stressed segments of the economy.

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