Q.1) What is Corporate governance? What needs to be done in order to strength corporate governance in India? (GS-3)
Recently, 21-member Committee on corporate governance headed by banker Uday Kotak has submitted its report to the Securities and Exchange Board of India (SEBI).
Meaning of Corporate governance:
- Corporate governance is about promoting corporate fairness, transparency and accountability.
- Corporate Governance deals with how a corporate is governed
- It is a set of system, processes and principles which ensure that a company is governed in the best interest of all stakeholders.
- It also helps in protection of shareholders interest, commitment of values and ethical conduct of business.
What need to be done in order to bring corporate governance into play?
- Corporate social responsibility is important in this regard. It helps in bringing social accountancy of firms towards the society at large while in turn pitching in their bit to help the government achieve socio-economic-political goals. It is significant in the following manner:
Clarity: Regarding the priorities of government thereby enabling corporates to channel the funds accordingly
Autonomy: To direct the receive to spend the fund
Incentives: Lack of incentives for complying with mandated provision.
Cooperation: Lack of cooperation and guidance from local bureaucracy to enhance the effectiveness of funds.
However, there are certain reinforcements that CSR bring in for corporates:
Goodwill: helps in brand building and loyal customers and greater retention of employees
No penalization: Government has not enforced any penalties in case of breach of targets thus avoided hurting the interests of donors.
Corporate governance is very essential for overall growth of the companies. Therefore, CSR is noble initiative to improve societal conditions especially to foster unity and inclusivity. Greater synergy by addressing the concerns of donor will go a long way in making far more effective.
Q2) The 14th edition of India-EU Summit was held recently in New Delhi on October 6. What were the positive outcomes of the summit? Why is it important for India to cement its bond with the EU? (GS 2)
The 14th edition of India-EU Summit held recently in New Delhi on October 6.
- The EU was represented by President of the European Council, and President of the European Commission. While the India was represented by Prime Minister Narendra Modi.
- The summit marked the 55th anniversary since the establishment of EU-India diplomatic relations.
- The leaders reviewed the wide-ranging cooperation under the India-EU Strategic Partnership. Recognising that India and the EU are natural partners, the leaders reaffirmed their commitment to further deepen and strengthen the India-EU Strategic Partnership based on shared principles and values of democracy, freedom, rule of law and respect for human rights and territorial integrity of States.
Positive outcomes of summit:
- India and EU reaffirmed their commitment to a “rules-based” international order and a “multipolar” world.
- This is significant because U.S. moving towards reneging on several international deals.
- Two sides have agreed to enhance cooperation at multilateral and bilateral interactions.
- Under the FTA, the issue of data adequacy and greater market access was discussed at length.
- The leaders committed to work in a result-oriented and mutually beneficial manner to further strengthen the India-EU Strategic Partnership by deepening their trade cooperation, enhancing investment flows in both directions and broadening dialogue and engagement on global and regional issues, including climate change, as well as migration and the refugee crisis, and resolved to further strengthen their bilateral and multilateral cooperation in these areas.
- The leaders commended the strong engagement of the European Investment Bank in India in a wide range of key sectors, in particular in the field of climate action and renewable energy.
Foreign Policy and Security Cooperation:
- The leaders reaffirmed their commitment to an open, free, secure, stable, peaceful and accessible cyberspace, enabling economic growth and innovation.
- They agreed that India and the EU, as the world’s largest democracies, need to support a rules-based international order that upholds agreed international norms, global peace and stability, and encourages inclusive growth and sustainable development in all parts of the inter-connected and multipolar world.
- The leaders strongly condemned the recent terrorist attacks in many parts of the world, underlining their common concern about the global threat posed by terrorism and extremism.
- The two sides reaffirmed their commitment to strengthening global non-proliferation efforts as highlighted at the India-EU Non-proliferation and Disarmament Dialogue in New Delhi on 18 July 2017.
- India and the EU reaffirmed their commitment to enhance maritime security cooperation in the Indian Ocean and beyond. Both sides noted the recent joint manoeuvres (PASSEX) between the EU Naval Force and the Indian Navy off the coast of Somalia, as a successful example of naval cooperation
- Both sides agreed to enhance the India-EU space cooperation, including Earth observation.
- India and the EU reiterated the importance they attach to human rights cooperation, including on gender equality and women empowerment in all spheres of life
- India and the EU reaffirmed their support for the continued full implementation of the Joint Comprehensive Plan of Action (JCPOA) regarding the Iranian nuclear issue
- Regarding the situation in Syria, India and the EU reaffirmed the primacy of the UN-led Geneva process and called for full support for the intra-Syrian talks with a view to promoting a political solution in Syria
- Both sides underlined the importance of ASEM as an informal platform for connecting Asia and Europe. Both sides also agreed to give new impetus to ASEM in the run up to the next ASEM Summit to be hosted in Brussels, where the focus would be on tackling global challenges together.
Terrorism, Rohingya discussed:
- Adopting a Joint Statement on Cooperation in Combating Terrorism, both sides agreed to take decisive and concerted actions against globally proscribed terrorists and terror entities, including Hafeez Saeed, Zaki-ur-Rehman Lakhvi, Dawood Ibrahim, Lashkar-e-Tayibba, Jaish-eMohammad, Hizb-ul-Mujahideen, Haqqani Network, Al Qaeda, ISIS (Da’esh) and their affiliates.
- India and EU also discussed the Rohingya crisis and urged Myanmar to implement the Kofi Annan-led Rakhine Advisory Commission’s recommendations and work with Bangladesh to enable the return of the displaced persons from all communities to Northern Rakhine State.
Why India needs to cement its bond with the EU?
- India and the EU should continue to welcome each other’s leadership roles in the world, because of commonly shared values.
- The EU is India’s largest trade partner and it is also, like India, wary of China’s political (the summit declaration makes a reference to freedom of navigation principles) and economic dominance.
- The EU is concerned about China flooding global markets with inexpensive steel and its response to China’s Belt and Road Initiative has been lukewarm, but the strength of China’s relationship with EU member states themselves is heterogeneous, with China trying to make inroads into Eastern and Central Europe through infrastructure investments.
- With around €100 billion in bilateral goods and services trade last year, India and the EU have a lot to gain from a trade deal.
- It will certainly pay for both India and the EU to keep each other close as they feel their way around the emerging international order.
- The European Union and India are natural partners. Every year, millions of Europeans come to India to discover this great country’s many marvels. There is even a local cricket team in my native Luxembourg, made up largely of Indian players.
- India is one of the world’s fastest growing economies; the EU is the world’s biggest open market and the world’s second largest economy.
- As the world’s two largest democracies, it is now time for Europe and India to infuse their relationship with a liberal vision for a transformed global order
Q.3) The digital revolution has made it possible for the services sector to deliver rapid growth and jobs more sustainably than the manufacturing sector. Discuss (GS-3)
The emergence of e-commerce platform is an example of how digital revolution can lower transaction costs, increase productivity as well as make it more inclusive.
- Expansion of digital technology can play a big role in improving rural access to banking.
- Financial inclusion can be achieved through last-mile connectivity
- Financial services will help in medium-size cities, small towns, and villages to become new drivers of growth.
- The digital revolution means it is possible for the services sector to deliver rapid growth and jobs more sustainably than the manufacturing sector.
Digital technology and growth:
- The new industrial revolution and digital technological changes have changed the growth drivers in developing and developed countries.
- These technological changes have enabled services to be the new driver of growth.
- The digital revolution, by lowering transaction costs in services and overcoming problems of asymmetric information, has made services more dynamic than in the past
- The emergence of e-commerce platforms is an example of how digital revolution can lower transaction costs, increase productivity as well as make it more inclusive.
- Internet-based businesses or services, fixed up-front costs can be high initially, but once the physical infrastructure is in place, each additional customer, user, or transaction incurs very little extra cost.
- Developing countries are relying more on services and less on manufacturing as drivers of growth and job creation.
Digital revolution in India is significant as it promises to bring a multi-dimensional metamorphosis in almost all sectors of the society including service sectors. From digitization in governance to better healthcare and educational services, cashless economy and digital transactions, transparency in bureaucracy, fair and quick distribution of welfare schemes all seem achievable with the digital India initiative of the present Government.
A look at Government initiatives in various sectors in past three years show how digital revolution in India is not only changing the way society functions but also bridging the gap between the haves and the have-nots of the country.