Download the compilation of all summaries of all the news articles here
- The article highlights India’s progress in eradicating multidimensional poverty
- Multidimensional poverty goes beyond the economic/income-based approach and takes into account different depreciations experienced by a poor person- such as poor health, lack of education, inadequate living standard, disempowerment, poor quality of work and threat from violence.
Multidimensional poverty index (MPI)
- Multidimensional Poverty Index (MPI) was developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP)
- The MPI has three dimensions: health, education, and standard of living. These are measured using 10 indicators
Multidimensional Poverty in India
- According to MPI 2018, India has lifted 271 million people out of multi-dimensional poverty in the 10 years between 2005-06 and 2015-16.
- Poverty rate fell from 55% to around 28% over the 10-year period.
- Multidimensional poverty is particularly acute and significant in the four states of Bihar, Jharkhand, Uttar Pradesh and Madhya Pradesh
- Delhi, Kerala and Goa have the lowest incidence of multidimensional poverty.
Note: The MPI used data from the third and fourth rounds of the National Family Health Survey (NFHS) to measure multidimensional poverty across 640 districts.
Significance of MPI:
- The MPI creates a vivid picture of people living in poverty within and across countries, regions and at a global level.
- MPI is not limited to an income-based measure of poverty but complements income measures of poverty and captures the multiple, overlapping disadvantages of poor people.
This is important because overlapping deprivations undermine people’s capacity to develop human capital and entraps them into the vicious cycle of poverty.
- MPI can be used to direct public resources to critical areas more efficiently. It can be used as a powerful tool to combat poverty and achieve sustainable development goals (SDGs)
- According to Indian Council of Medical Research (ICMR), the Zika virus behind the ongoing outbreak in Rajasthan is closely related to the virus that caused the Brazilian outbreak
- Zika is a flavivirus spread mainly by the Aedes aegypti mosquito which is also responsible for dengue and chikungunya.
- Additionally, infected people can transmit Zika through transfer of body fluids including sexual intercourse.
Symptoms and impact of Zika
- Symptoms include fever, rash, muscle and joint pain
- Also causes Congenital Zika Syndrome, in which babies of Zika-infected mothers are born with impairments such as microcephaly – an abnormally small head. Microcephaly at birth has no cure.
- In rare cases, patients also developed Guillain-Barre syndrome, which causes potentially fatal muscle weakness.
Zika in India:
- The first confirmed Indian case of Zika occurred in 2016 in Gujarat. The Zika strain was found to be close to a Malaysian Zika strain, isolated in 1966
- In 2018, there has been a Zika outbreak in Rajasthan and the virus is related to the one that caused Brazilian outbreak in 2015
Characteristics of the Rajasthan outbreak:
- Rajasthan outbreak is the largest in India, having affected 72 people.
- Unlike Gujrat and Tamil Nadu cases, the virus has been spreading efficiently from persons to persons via mosquitoes
- Despite screening of mosquitoes since 2016, the virus could only be detected in mosquitoes post the outbreak in Rajasthan
Steps to be taken:
- Since the outbreak is linked to uncontrolled mosquito breeding, vector control is utmost necessary to prevent future outbreaks
- There should be campaigns to educate and aware people living in the outbreak area to avoid sex, particularly with the intent of conceiving, till the outbreak is under control.
Union ministry of law and justice has ratified a proposal of women and child development ministry to remove the time limit and age limit for reporting cases of sexual abuse among children
|POCSO (The Protection of Children from Sexual Offences Act) Act 2012:|
- Need for amendment:
- Discrepancy in laws: Under Section 468 of CrPC, for any offence, including child abuse, the stipulated time limit for reporting an offence that is punishable by a fine is six months. But no time period forreporting of offences is mentioned in Section 19 of POCSO Act, 2012. Hence the ruling brings clarity on the issue
- Under-reporting: As per NCRB data, average reporting of rape is 6.3 per 100000 people, while a survey in 2007 revealed that 53% children had been sexually exploited
- Lack of understanding at tender age:The victim may not have had the mental capability to fully understand until later that what they were going through was a violation of their bodies
- Remembering the event later: Memories can sometimes remain suppressed until various triggers lead them to resurface
- Addressing life-long trauma: Often, children dont report such crimes as the perpetrator is a closely known person, thus carrying the trauma of sexual abuse till very late in life. Now, reporting can be done later saving victims from mental agony.
- Listing the perpetrators:The perpetrators can be added to the public sex offenders list even later in life, which could prevent re-occurrence of similar act
- This move should be complemented with measures to help survivors deal with repercussions of reliving the trauma; combat mental health effects; ensure psycho-social rehabilitation in assisting victims to lead a normal life and a similar change must be done for adult women too
- In the backdrop the recent failure of a Russian rocket launch, the article assesses India’s preparation to launch its human space mission, Gaganyaan
Failure of Russian rocket launch:
- On October 11 2018, the launch of Russian rocket Soyuz FG failed leading to the abortion of Expedition 57 to the International Space Station. Emergency operation was carried out and the astronauts landed on Earth 400km away from the launch site at the Russian Baikonur cosmodrome.
- Indian Space Research Organisation (ISRO) is preparing to launch India’s first human space mission-Gaganyaan by 2022
- If successful, India would become the fourth country to do so after Russia, the US and China
- GSLV Mk III is expected to make 10 flights, including two in the form of an unmanned human space launch vehicle, before it finally launches humans in 2022.
Significance of human-space flight:
- It will enable ISRO to achieve higher levels of reliability in launch and satellite technology.
- It will further enhance the capability of observing galactic phenomena and the earth.
Safety guidelines for human-space flight:
- NASA’s manual on human ratings of space systems underlines the prerequisites for the development of systems for human space flights.
- A human-rated system should accommodate human needs, effectively utilize human capabilities, control hazards and manage safety risk associated with human spaceflight.
- It should provide the maximum extent practical, the capability to safely recover the crew from hazardous situations.
- Further, the amount of heat generated, vibration caused or metallic changes in the payload capsule should be brought to human tolerance level. These factors are not needed to be considered in case of launching a mechanical payload
Steps to be taken:
- GSLV Mk III will need a human ratings certification before it can launch a human into space.
- The GSLV Mk III is an intelligent system with built-in redundancies, but for a final human rating the redundancies needed are of a higher order.
- In the backdrop of the recent Rafael controversy, the article discusses the issues with the offset guidelines of India’s defence procurement policy.
Defence Procurement Procedure, 2016, (DPP):
- It aims to develop world-class domestic defence and aerospace industry by promoting indigenous design, development and manufacturing of defence equipment, platforms, systems and subsystems. However, the offset guidelines in DPP have been hindrance to achieve this aim.
- These are a portion of a contracted price with a foreign supplier that must be re-invested in the Indian defence sector, or against which the government can purchase technology.
- Indian Offset Partner (IOPs) are defined as Indian enterprises engaged in making eligible products and/or services.
DPP Provisions empowering government:
- The government is given extensive control over selection of the offset partner.
- The government is empowered to evaluate offset proposals received in response to procurement tenders and conclude offset contracts.
- The DPP also provides that all offset proposals will be approved by the Union minister of defence, regardless of their value
- During the period of the contract, any change in the Indian offset partner will require the government’s approval.
Issues with offset investments/ procurements:
- Offset investments/ procurements are not subjected to public procurement safeguards.
- DPP gives complete discretion on choice of the Indian offset partner (IOP)
- Further, the definition of IOP is flawed. Focuses more on ownership and not on investments. It is argued that Indian ownership does not necessarily ensure growth of a sector
- Procurement policy recognizes the need for domestic private partnership, it does not mandate a fair and diverse procurement process for offsets. Therefore, foreign suppliers tend to partner with just one or two large industrial groups to discharge their offset obligations.
- Defence procurement should be subject to transparent processes to ensure all Indian companies, irrespective of their size are able to compete
- The focus should be on investments rather than ownership to ensure that companies of all sizes, including foreign companies who wish to manufacture in India, can grow and flourish
- Offset investments/procurement must be subject to public procurement safeguards
- The Union Ministry of Labour has urged States to issue orders permitting fixed-term employment (FTE) across industries.
- Fixed-term employment is a contract in which a company or an enterprise hires an employee for a specific period of time.
- Under fixed-term employment, workers are entitled to statutory benefits available to a permanent worker in the same factory, including work hours, wages, and allowances.
- In March 2018, the Centre notified FTE under which workers will be entitled to benefits available to permanent workers.
- The notification does not permit conversion of permanent posts into FTE ones but is aimed at turning contract workers into FTE ones.
- FTEs are expected to improve working conditions in industries, boost employment and execute specific projects efficiently in sectors like infrastructure.
- The present FTE rules are not clearly defined. They do not mention minimum or maximum term of an FTE and the maximum permissible number of consecutive FTEs.
- According to informal reports, industries are reluctant to provide FTEs due to rising costs and obligations
- States are not bound to accept the notification as FTE has been notified by an executive order, without the Parliament ratifying it. This is because labour is a Concurrent List subject, as per which the States are bound only by a central law.
- In order to promote employment through FTEs, the FTE norms should be laid down in a transparent and consensual manner
- Labour reforms should be accompanied with better social safety net- it is important to ensure better state-funded health and educational opportunities
- The FTE norms should be made ratified by the parliament for universal adoption across industries and states.
- Recently Saudi Arabian journalist Jamal Khashoggi disappeared which has triggered a diplomatic storm.
- About Jamal Khashoggi:
- He was a journalist who was once a Saudi government insider, but had gone into self-imposed exile in the U.S. in 2017. He’d become an outspoken critic of the Saudi Arabia’s powerful Crown Prince Mohammed bin Salman.
- About the diplomatic crises:
- An uproar was created over the disappearance and possible killing of journalist Jamal Khashoggi.
- A video footage outside the Saudi consulate in Turkey revealed that journalist Jamal Khashoggi visited the consulate for a divorce certificate, and left safely, but has not been able to offer any evidence for this.
- The Washington Post, for whom Khashoggi was a frequent contributor in its Global Opinions sections, has reported that U.S. intelligence officials intercepted communications of Saudi officials “discussing a plan to capture him.”
- Turkish media has published the names of 15 Saudi nationals who travelled to Istanbul the day Khashoggi disappeared. The individuals were military and intelligence officials, including a forensic expert etc.
- Implications of crises:
- The Crown Prince has launched a series of social reforms in Saudi Arabia, including allowing women to drive. But at the same time, the ultra-conservative Islamic kingdom has cracked down on dissent, arresting critics and human rights campaigners.
- The controversy is particularly damaging for Mohammed bin Salman (MBS), who spent millions to project himself as a social and economic reformer who could lead Saudi Arabia into the 21st century.
- Chief executives of some of the potential big-ticket investors, including JP Morgan, Blackstone and BlackRock, have already pulled out of an investment conference due to be held in Riyadh next week, which MBS is expected to address.
- Impact on Saudi relations with other countries:
- Turkey and Saudi Arabia are rivals for influence in the Middle East. Saudi Arabia calls allegations that it killed Jamal Khashoggi lies.
- Even U.S. President Donald Trump, a strong backer of the kingdom’s 33-year-old Crown Prince, warned of “severe punishment” if Riyadh was found to be responsible for the disappearance of the journalist.
- US Congress has been critical of the Saudi prince and his government in urging the Trump administration to take a harder line on the Saudi Arabia.
- Way forward:
- Any delay in letting the world know the truth about Mr. Khashoggi will only make matters worse for the kingdom, which is already known for its poor human rights record, including on MBS’s watch.
- The article discusses about India’s national security inadequacies which stem from the absence of a national security vision.
- Defence Planning Committee (DPC): In April 2018, the government set up a Defence Planning Committee (DPC) to assist in the creation of national security strategy, international defence engagement strategy, roadmap to build a defence manufacturing ecosystem, strategy to boost defence exports, and priority capability development plans etc.
- Strategic Policy Group : Earlier this month, it also decided to revive the Strategic Policy Group (SPG) within the overall National Security Council (NSC) system.
- Revival of these committees by the government in its final year in office raises question about national security performance and preparedness.
- Author observes that India’s neighbourhood policy continues to be in the doldrums and there is a clear absence of vision on how to balance, engage and work with the many great powers in the regional and the broader international scene.
- Author observe that recently there is deterioration in security environment. Both the overall violence in Jammu and Kashmir and ceasefire violations on the Line of Control reached a 14-year high in 2017, a trend that refuses to subside in 2018.
- Author rejects government claim of surgical strike as befitting response and observe that he surgical strikes hardly made any significant gains
- The pressure from China is also on the rise. The Chinese forces according to report of the Parliamentary Standing Committee on External Affairs are back in the Doklam plateau with more force. The report goes on to fault the government for “continuing with its conventionally deferential foreign policy towards China”.
- Lacunas in India’s defence preparedness:
- Absence of defence reforms: India spends close to $50 billion annually on defence and yet there are serious concerns about the level of our defence preparedness.
- Non-functional higher defence organisation: India’s defence policy is hardly with any political oversight or vision. There is little conversation between the armed forces and the political class, and even lesser conversation among the various arms of the forces.
- Absence of jointness in the Indian armed forces: India’s doctrines, command structures, force deployments and defence acquisition continue as though each arm is going to fight a future war on its own.
- Not only do the various arms of the Indian armed forces plan their strategies in silos but even their rhetoric is partisan. Eg. Army Chief, Gen. Bipin Rawat’s statement about the Army, not the armed forces as a whole, being prepared for a “two-and-a-half front war”.
- Chief of Defence Staff (CDS): The talk of appointing a Chief of Defence Staff (CDS) has all but died down. Leave alone appointing a CDS, even the key post of military adviser in the National Security Council Secretariat (NSCS) remains vacant. And the government seems to mistakenly think that by having the NSA chair, the SPG and DPC will take care of the fundamental problems in the country’s higher defence sector.
- The NSC, which replicates the membership of the Cabinet Committee on Security, almost never meets under the new regime, and the National Security Advisory Board, initially set up by the Vajpayee government, to seek ‘outside expertise’ on strategic matters, is today a space for retired officials. As a result, there is little fresh thinking within the government or perspective planning on the country’s national security or defence.
- Issues with NSA: NSA is not a legally-mandated one. So one might rightly wonder how an unelected and retired official with no parliamentary accountability has come to occupy such a crucial position in the country’s national security decision making, and whether this is healthy in a parliamentary democracy.
- All that the SPG and DPC would achieve is to further bureaucratise the national security decision making and centralise all national security powers under the PMO. While this might provide a little more coordination in decision making, these committees are hardly sufficient to get the country’s national security system back on track.
- To expect the NSA to chair all these committees and then action their recommendations while at the same time running the country’s national security affairs on a day-to-day basis is unrealistic, and would end up producing sub-optimal outcomes.
- Under the present system, where the ratio of revenue to capital expenditure in defence is roughly 65:35%, any serious attempt at modernisation would be impossible.
- Way forward:
- Ideally, India should have an overall national security document from which the various agencies and the arms of the armed forces draw their mandate and create their own respective and joint doctrines which would then translate into operational doctrines for tactical engagement.
- Latest research found a steroid compound produced only by sponges in ancient rocks and oils from India, Oman, Siberia, which are among the earliest forms of animal life
- Researchers at the University of California, Riverside in the U.S. tracked molecular signs of animal life, called biomarkers, as far back as 660-635 million years ago during the Neoproterozoic era.
- Researcher identified the biomarker, a steroid compound named 26-methylstigmastane (26-mes), has a unique structure that is currently only known to be synthesised by certain species of modern sponges called demosponges.
- This is dating back at least 100 million years before the famous Cambrian explosion of animal fossils
- The “Cambrian Explosion” refers to the sudden appearance in the fossil record of complex animals with mineralised skeletal remains 541 million years ago.
- Researcher are trying to find distinctive and stable biomarkers that indicate the existence of sponges and other early animals, rather than single-celled organisms that dominated the earth for billions of years before the dawn of complex, multicellular life
News: India’s first large outbreak of Zika, has been reported from Jaipur recently where 80 cases have been detected so far.
- In 2017, Union Ministry of Health reported four laboratory-confirmed cases of Zika virus disease, three in Gujarat and fourth case Tamil Nadu.
- State Health Department has advised people in the affected areas to stay indoors. Precautions are generally the same as for other dengue, i.e. to use mosquito nets and repellents apart from taking steps to prevent sexual transmission.
- There is no strict protocol to be followed during an outbreak and governments take usual mosquito control measures such as spraying of pesticides, use of repellents and focus on use of contraceptives.
- United nations recently released report regarding the population and fertility rates across the world.
- About the report:
- The United Nations Population Fund (UNFPA)’s released its flagship State of the World Population Report 2017 titled “Worlds Apart: Reproductive Health and Rights in an Age of Inequality”.
- Findings of the report:
- India’s Case:
- India’s population has doubled since 1971, from 566 million to 1.35 billion in 2016. The total fertility rate in urban India has already fallen below replacement levels of 2.1.
- India’s family size has steadily declined from 5.2 children per family in 1971 to 2.3 in 2016, which means the family size itself has fallen from 7.2 to 4.3.
- In India, 27 percent of girls were married under the age of 18, against a global average of 28 percent.
- Inter-state disparities: Although average total fertility for the whole country is 2.3 births per woman, it is above 3 in Uttar Pradesh, Bihar and Madhya Pradesh, and below replacement level in Maharashtra and West Bengal, and the four southernmost states.
- Gaps remain: The desired fertility rate of 1.8 in India is lower than the fertility rate of 2.3, which means many women are still having more children than they want.
- The shrinking size of families in India contributed to India’s economic growth in the 1980s and 1990s.
- India deserves special mention because it has, along with Bangladesh, El Salvador, Nepal, Myanmar and Nicaragua, fertility rates at near replacement level, despite having lower per capita incomes than other countries.
- Fertility and contraception: Like in Bangladesh and Indonesia in the 1970s and 1980s, fertility declined in India even in poor, rural areas when more women gained access to modern methods of contraception under government-run campaigns and improved availability of contraceptives services, including methods to space children.
- Gender wage gap: India, coupled with Pakistan, showed the largest gender wage gap in the South Asia region in 2016. The ratio of female to male income equality (higher the better) was just above 0.2 for both countries.
- The best regional performers were Nepal and Bhutan, with a ratio close to 0.6.
- According to the UNFPA graph measuring 90 countries, the only country to have a worse wage gap than India and Pakistan was
- Challenges to fertility:
- Low-fertility countries: Women face challenges in exercising their reproductive rights because of economic hardship, a lack of affordable housing, high childcare costs, and uncertain labour markets.
- Developed countries: Here fertility is affected by an increasing share of older people in their populations and higher associated health-care costs, as well as a shrinking labour force.
- Wars: In some countries where fertility has been steadily declining, economic shocks, wars and other crises can cause fertility rates to dip suddenly as couples choose to delay having children and then rebound after the crisis, when stability and security return.
- High-fertility countries: Here economic, social, institutional and geographic barriers may prevent women from accessing quality family planning information and supplies. Together, these barriers stop millions of people from exercising their reproductive rights.
- Way forward:
- Develop and invest in family planning programmes that aim to achieve zero unmet need for family planning services no later than 2030 to help attain the Sustainable Development Goals (SDG).
- Gender equality should be enshrined in all national policies and practices, and should be a central operating principle of all health-care systems.
- Consider conducting regular national reproductive rights “check-ups” to assess whether laws, policies, budgets, services, awareness campaigns and other activities are aligned with reproductive rights, as defined by the International Conference on Population and Development.
- Review demographic policies to ensure they enhance reproductive rights and empower individuals to realize their own fertility goals.
- The last round of Bhutan general elections are going to be conducted on October 18, 2018.
- The first round of elections in September 2018 witnessed defeat of the ruling People’s Democratic Party (PDP) against the Druk Nyamrup Tshogpa (DNT).
- In first round of elections DNT emerged winner followed by Druk Phuensum Tshogpa (DPT) second in line and PDP being last.
- According to the Bhutanese Constitution, only two parties can face off in the last round of general elections.
- So, DNT and PDP who represent opposites in terms of their experience are going to fight the last round to be held in October.
- Glaring trends in the first round of elections held in September 2018:
- While ordinary voter favoured the PDP, ultimately the postal ballots, used by government officials and their families as well as military personnel, swung the vote in favour of DNT.
- Votes were polarised between more prosperous Western Bhutan and less developed Eastern Bhutan.
- For example, the DNT and PDP won seats only in the western half while the DPT, won one constituency in the east, and only two in the west.
Impact on India-Bhutan ties:
- Regardless of which party comes to power, India-Bhutan ties are expected to be accorded their customary priority as Bhutan’s monarch, Jigme Khesar Namgyel Wangchuck, retains a considerable influence over the nation’s foreign policy.
- However, India must note that while the DNT has made “narrowing the gap” its motto, with India, the DPT, which lost elections in 2013 after India suddenly pulled fuel subsidies for Bhutan, has campaigned on the slogan of “sovereignty and self-sufficiency”. India should remained cautioned about it.
- The ‘China factor’ will also be closely watched for its impact, a year after the India-China standoff on the Bhutanese Doklam plateau.
- 2018 marks the 50th anniversary of formal relations between India and Bhutan, built on cultural ties, mutual strategic interests, and India’s role in building roads and assisting in hydropower projects that became the mainstay of the Bhutanese economy.
- Prime Minister Narendra Modi recently met chiefs of national and international oil and gas companies and other stakeholders to discuss the challenges posed by volatile oil prices.
- Oil prices have increased in 2018 on expectations that U.S. sanctions on Iran will strain supplies by lowering shipment from Iran. Brent crude breached four year highs to reach $86.74 a barrel in early October, the highest since 2014.
- Increasing tensions between the US and Venezuela, Indian rupee’s performance as Asia’s worst performing currency further worsened situation in India
About the meeting:
4.The meeting, coordinated by the NITI Aayog focussed on challenges posed by volatile oil prices and the US sanctions on Iran.
- Indian Prime Minister highlighted that the major oil consuming countries, face many other economic challenges including serious resource crunch due to rising oil prices. The cooperation of the oil producing countries would be very critical to bridge this gap.
- The government sought a review of payment terms with major oil producers to combat high oil prices.
- Saudi Arabia and UAE reiterated that the West Asian countries are interested in investing in India’s petroleum downstream segment, including petrochemicals, refinery and retail.
- Further, Saudi Arabia’s mining and fertiliser firm Maaden is interested in investing in phosphate fertiliser sector in India and has signed a pact in this regard
- Defence Minister Nirmala Sitharaman during her visit to France discuss for a bilateral tri-service military exercise and to operationalise the logistics agreement between two countries.
- Bilateral tri-service military exercise between two countries will be India’s third such joint exercise.
- The first joint tri-service exercise was held with Russia in October last year and has finalised one with the U.S. to be held next year.
- India and France currently hold bilateral exercises between individual services — Shakti, Varuna and Garuda respectively for the Army, Navy and Air Force.
- India and France signed a logistics pact in March this year which gives access to their militaries to each other’s bases for logistics support.
- The agreement gives India access to French military bases all over the world on a “reciprocal basis,”
- This gives India access to the three French bases in the Indian Ocean — Reunion Island, Djibouti and Abu Dhabi.
- These three bases would give the Indian Navy and the Air Force operational turnaround to the far end of the Indian Ocean, improving its monitoring and surveillance of the region, in the backdrop of increased Chinese presence in the Indian Ocean Region (IOR).
- During her visit defence minister discussed “how to operationalise it and make it happen.” With her counterpart.
- Non-banking financial companies are stuck in a liquidity crises which has now reached to the tumbling stock prices.
- About the crises:
- It started with defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS), which has been classified as core investment company by RBI.
- This infrastructure lender (IL&FS), has a total consolidated debt close to Rs 1 lakh crore and it started to miss its debt obligations beginning from August 27, 2018.
- It has also defaulted on Rs 450 crore worth of inter-corporate deposits to Small and Development of India (SIDBI) .
- Following the defaults, rating agencies like ICRA, CARE etc abruptly downgraded IL&FS and its subsidiary from high investment grade (AAplus and AI plus) to junk status, indicating actual or imminent default.
- So many banks, mutual funds, corporates who have stakes in IL&FS debt instruments are fearing liquidity crunch as they funds are locked in debt instruments of IL&FS.
- Steps taken to revert the crises:
- Recently Government of India took complete control of the company to arrest the spread of the IL&FS crises to financial markets.
- A new board for IL&FS was constituted and appointed six new directors to look into the matter and resolve the crises after directed by the National Company Law Tribunal.
- The Reserve Bank of India, the National Housing Bank and the State Bank of India also decided to increase the supply of liquidity in the market to keep interest rates under control.
- The RBI has also urged NBFCs to make use of equity rather than debt to finance their operations.
- While offering easy money may be a welcome measure in the midst of the ongoing liquidity crisis, the prolonged supply of low-cost funds to the NBFC sector also creates the risk of building an unsustainable bubble in various sectors of the economy.
- Defaults associated with any such bubbles will eventually only affect the loan books of lenders.
- State bailouts could also fuel the problem of moral hazard as other financial institutions may expect a similar lifeline in the future.
- Way forward:
- Policymakers should thus try to focus on taking steps to address structural problems that contributed to the crisis.
- This includes steps necessary to widen the borrower base of NBFCs which have been banned from accepting deposits.
- This would allow NBFCs to tap into more reliable sources of funding and avoid similar liquidity crises in the future.
- The article discusses about the concept of ‘Charter Cities” and its implications.
- About Charter Cities
- These are characterised as “startup cities” that experiment with reforms by breaking out of the existing state system and build new cities with distinct rules that foster innovation and economic growth.
- Since the nation-state is too big a unit to try out new rules, these are built-from-scratch cities where an ideal site is selected at which new rules and institutions are introduced to attract investors and residents.
- The concept of ‘Charter Cities’ was introduced by Paul M. Romer who has been awarded Nobel Prize in Economics this year jointly with William D. Nordhaus.
- Nordhaus is credited for his pioneering work on “endogenous growth theory” that highlights how knowledge and ideas drive economic growth.
- Building Charter cities:
- Charter Cities are created by setting apart tracts of uninhabited land for civic experiment.
- The host country is required to enact a founding legislation or a charter that lays down the framework of rules that will operate in the new city.
- A developing country can host the “Charter City” in its territory by “delegating” some of the responsibilities of administration to a developed country.
- Concerns regarding Charter cities:
- Charter cities are being criticised as thinly disguised version of neo-colonialism.
- Its calls poor nations to relinquish their sovereignty over certain territories in exchange for economic growth.
- The people in Charter Cities do not have the right to vote to decide how the city is run. Hence, “Charter Cities” go against the basic principles of democracy and citizenship.
- Justification to build Charter City:
- Unlike colonialism, which was coercive, “Charter Cities” offer choice:. i.e. people have the freedom to decide to move into it. Based on their preferences, individuals can “vote with their feet”.
- Romer remarked that British colonial rule in Hong Kong “did more to reduce world poverty than all the aid programs that we’ve undertaken in the last century”.
- Earlier attempts to build Charter Cities:
- Madagascar: Romer’s first attempt to introduce “Charter Cities” in Madagascar in 2008 collapsed when the President who favoured the idea was greeted by violent protests and finally removed in a coup.
- Honduras: The next attempt, in the Honduras, also failed as the Supreme Court there, in 2012, declared the creation of “Charter Cities” to be unconstitutional.
- South Korea: The Songdo International Business District in South Korea which is eco-friendly “smart city” with the best of hi-tech amenities is threatening to be an underpopulated, lifeless ghost town.
- India’s Case:
- India being a colonial nation once with a poor track record may find the idea of Charter Cities unattractive.
- India’s experience in creating new cities with parallel rules and governance systems has also been fraught with conflicts.
- Examples: Lavasa, a city near Pune which was developed by a private company, has been caught up in environmental disputes for many years.
- The Dholera Special Investment Region and Gujarat International Finance Tec-City, the various investment regions housed within the Delhi-Mumbai Industrial Corridor have also made slow progress.
- The initial idea of creating 100 new cities as “smart cities” has been reformulated as a programme for redeveloping merely a small portion of existing cities.
- Way forward:
- Initiatives such as “Charter Cities” seek to supersede the politico-economic institutions with guiding logic is that creating built-from-scratch cities with parallel rules and institutions can drive economic growth.
- It is not possible to create sanitised technocratic cities uncontaminated by politics as social and political claims over these cities cannot be ignored
- Despite the failure of many such new cities and private governance regimes, the allure for Charter Cities refuses to die down.
- Such initiatives need to be challenged for both their ignorant and implausible premise as well as their iniquitous normative framework.