- Long Term Demand: Ladakh as a region had been demanding for such a separate administrative setup. Around a year back the Ladakh Autonomous Hill Development Council (LAHDC) of both Leh and Kargil had unanimously passed a resolution, demanding "complete autonomy from Kashmir's administrative setup
- Dominance: Dominance of Kashmir Valley-based political parties in State politics has resulted in discrimination against Ladakh.
- Discrimination: Leh has always received less funds than required and has not seen development in years. People complained that Kashmir would take 90% of the funds and leave us with just 10%. Now that won’t happen.
- Special Provisions: The Consitution makes special provisions for the administration of tribal-dominated areas in four States: Assam, Meghalaya, Tripura and Mizoram. Locals are confident the Central government will fulfil Ladakh’s dream.
- Distinct cultural identity: Leh has predominantly been Buddhist population.
Saturday, August 31
5 Reasons Why Ladakh is Happy With UT Status
5 Reasons Why RBI Transferring Rs 1.76 Lakh Crore Surplus to GoI is OK
- Sovereign Guarantee: The central bank is a unique institution; it is backed by the faith reposed on it by the the Central government, and therefore, a huge amount of reserves with the central bank is in the nature of idle cash which could have been utilised more productively in the economy.
- RBI most capitalized central bank in world: The Economic Survey of 2016-17 found that the RBI is one of the most capitalised central banks in the world and noted, “There is no particular reason why this extra capital should be kept with the RBI”. Later, the former Chief Economic Adviser, Arvind Subramanian in his book Of Counsel: The Challenges of the Modi-Jaitley Economy (2018) has caricatured the syndrome of treating the government’s capital at the RBI by RBI officials as “prudence or paranoia”.
- Based on Jalan Committee Reco: Jalan committee does not seem to have compromised on arriving at the economic capital framework of the RBI and has calculated the extent of excess capital of the RBI under a set of fairly standard and conservative assumptions.
- Helpful for Recapitalisation: When the spectre of a slowdown is looming large and when channels of credit disbursements are choked because of a lack of capital with the commercial banks — a transfer of such additional money to the government could enable the government to go in for bank recapitalisation in a big way and would be good for the economy.
- Help maintain budget discipline: The transfer of the additional surplus from the RBI could enable the government to pursue efforts towards stimulating the economy while maintaining budget discipline. Remember, in pursuing the fiscal stimulus of 2007-08, fiscal deficit went up from 2.5% to 6%.
5 Concerns Around PSB Mergers
- Are mergers driven by synergies — in products, costs, business, geographies or technology and the most important, cost synergies?
- Public sector banks are over-staffed. Will they realise cost synergies through branch and staff rationalisation?
- Narasimham Committee in the late 1990s recommended shutting down weaker banks. Is that ever going to happen, or we just going to saddle strong banks with weaker banks?
- Will there be adequate reforms in governance and management of these banks? Key reforms to be made are at the board level, including in appointments, especially of government nominees.
- Will the government be able to manage the fallout of unleashing four mergers simultaneously which is bound to cause upheaval in the industry?
5 Reasons Why India's Growth Collapsed
- Manufacturing Slowdown: There is a dramatic slowdown in the manufacturing sector. The data show that the manufacturing sector grew at an anaemic two-year low of 0.6% in the first quarter of 2019-20, down from 12.1% in the same quarter of the previous year.
- Exogenous factors: The impact comes, especially, from global headwinds due to the deceleration in developed economies, the Sino-American trade conflict, etc.
- Farm crisis: The agriculture sector also saw a dramatic slowdown in growth to 2% from 5.1% over the same period.
- Real estate in dumps: The plight of the real estate sector was also highlighted by the slowdown in its growth rate to 5.7% in the first quarter of this financial year, compared with 9.6% in the same quarter of 2018-19.
- Demand collapse: The growth slowdown was led by private final consumption expenditure, which grew 3.1% only (18 quarter low). Investment demand also remained lacklustre and fixed capital formation grew 4%.
5 Reasons why PSBs have been merged
- These bank mergers, and the ones already carried out, will lead to the creation of big banks with an enhanced capacity to give credit.
- These big banks would also be able to compete globally.
- Merged banks will increase their operational efficiency by reducing their cost of lending.
- The banks that are being merged with each other run the same or very similar platforms, and so there will be no disruption in their activities.
- The merger also has the potential to lead to large cost reductions due to network overlaps.
Friday, August 30
5 Benefits of 100% FDI in Coal Mining
- This step will also lead to energy security of the country as 70 per cent of India’s electricity is generated from thermal power plants. This will help provide power to all 24x7.
- Influx of international players will create an efficient and competitive coal market in India.
- It is expected to bring state of the art coal mining technology to the country & will help in environmentally sustainable mining.
- This decision will also create direct and indirect employment in coal bearing areas and will have a positive impact in the economic development of these regions.
- Reform is likely to help the coal bearing states get more revenue.
5 Characteristics of New India: PM Modi
- Prime Minister Narendra Modi has said that the New India is about participative democracy, a citizen-centric government and proactive citizenry.
- Thousands of talented youngsters are creating fantastic platforms, showcasing their spirit of enterprise. India is now excelling in new arenas where we hardly present earlier.
- We will be a nation free of corruption and we make good governance a mass movement.
- New India is not about the voice of a selected a few, it is about each and every Indian.
- Our vision for New India includes not only caring for those living in the nation but also outside. Our diaspora is our pride, contributes to India's economic growth.
Saturday, August 17
5 Steps taken to Ameliorate NBFC Crisis
- Government nudges PSBs: The government has nudged public-sector banks to give a helping hand to the NBFCs in a bid to ease the liquidity crunch.
- Partial Credit Gaurantee by GoI: Finance Minister Nirmala Sitharaman’s plan is that the government will provide one-time six months partial credit guarantee to public sector banks for purchase of assets of financially sound NBFCs, amounting to a total of Rs1 lakh crore, during the current financial year. This is for first loss of up to 10 per cent. As per the scheme, the guarantee will be valid for 24 months from the date of purchase. The assets will need to have a minimum AA credit rating, the eligible NBFCs should have made a profit in at least one of the past two years and their NPAs should not be more than 6 per cent.
- Additional Liquidity: The RBI has announced additional liquidity facility to banks for purchase of assets from and on-lending to NBFCs and HFCs, which would help banks avail an additional liquidity of Rs1.34 lakh crore.
- Relaxation in ECB Norms: RBI also relaxed end-use restrictions on external commercial borrowings (ECB). Eligible borrowers will now be able to raise ECB with a minimum average maturity period of 10 years for working capital purposes and general corporate purposes, and ECB with a minimum average maturity of seven years for repayment of rupee loans availed domestically for capital expenditure.
- Continuous Monitoring: RBI Governor Shaktikanta Das said NBFCs were being monitored intensively on a regular basis to ensure that a situation of an institution collapsing would not arise.
5 Reasons Why NBFC Sector is Important
- One-fifth credit share in economy: Credit rating agency Fitch estimates that NBFCs now account for 20 per cent of credit to India’s economy, compared with 15 per cent five years ago.
- Critical lenders for housing and auto: They accounted for 30 per cent of auto loans in 2018, and, along with housing financing companies, for 44 per cent of home loans. The automobile and residential real estate segments have been hit by the crisis in the NBFC sector.
- Important for jobs: Most vehicle makers have cut down production, and ancillary units have fired many employees owing to the slow demand. The liquidity crisis is the major factor preventing completion of more than 5.6 lakh stalled housing units across top seven cities
- Key for FMCG Growth: Many fast moving consumer goods makers have seen their growth slowing down over the last few quarters. NBFCs play an important role in driving consumption pattern and fund important sectors that drive Indian economy.
- Important for $5T target: Any slowdown in lending to these crucial sectors will adversely hamper our country’s plan to become a $5 trillion economy.
5 Causes of NBFC Crisis in India
- Asset-Liability Mismatch: Many non-banking financial companies (NBFCs) relied on raising short-term funds by issuing commercial papers to provide long-term loans. When the commercial papers matured, they would simply raise fresh short-term debt. Thus the cycle continued, but then the IL&FS crisis happened. The NBFCs’ over-reliance on short-term funds seems to have led to a huge asset-liability mismatch.
- Small Debt Market: As India does not have a big debt market, banks and mutual funds are the major sources of funds for the NBFCs.
- Banks Cautious: Banks, which are fighting their own battle of reining in non-performing assets, reduced the funding to NBFCs
- Mutual Funds Shy Away: Debt mutual funds, which were hit by their exposure to IL&FS and a few other troubled entities, also started cutting their exposure to the NBFC sector.
- Drop in Management Standards: Availability of easy money from banks, drop in lending standards, ineffective risk management, lack of appropriate checks and balances, improper regulatory norms, and non-transparent and complex business procedures.
Saturday, August 10
5 Challenges in Afghan Peace Process
- Rise of IS: Despite the Afghan government’s claims of cracking down on militants, threats from the IS and Taliban have only grown both of which have a goal to destabilize the state that and throw the country into further chaos.
- Failure of USA’s strategy: USA has failed to evolve a cohesive strategy regarding military aid to Pakistan, troop presence in Afghanistan, indiscriminate use of airpower or infrastructure building in the country.
- Role of Pakistan: Pakistan has direct links with the Taliban and its allies in the Haqqani network and provides safe havens to terrorist groups within it territory. Pakistan would hamper the democratic process in Afghanistan, as it loses strategic depth to India due to that.
- Legitimacy of the National Unity Government (NUG) seems eroded due to conflict between Chief Executive Abdullah Abdullah and President Ashraf Ghani, corruption, lack of implementation of Electoral reforms and refusal of Taliban to talk to Afghan government which it thinks as artificial, foreign imposed and not representative of Afghan people.
- Conflicts between different stakeholders: There seems to be a ‘Great Game’ for influence in Afghanistan. U.S.-Russia tensions are creating space for proxies for both on Afghan soil. China is trying to build a rival military base in Afghanistan. All these factors have contributed to regrouping and strengthening of Taliban which controls more than half of territory in the country.
5 Significance of Afghan Peace Process for India
- Peace in the region- is needed so that trade and prosperity could be ushered among the countries.
- Strategic Depth- India has invested heavily in capacity building of the Afghan forces, administration among other domains. If a settlement is achieved, India will have a strategic partner in Afghanistan, which can be used as a tool against Pakistan.
- Economic Markets- for Indian agricultural products, electrical machinery, rubber products, pharmaceuticals among others. During April-December 2016-17, the bilateral trade was to the tune of $590.1 million with India’s exports to Afghanistan being $377.2 million and imports from Afghanistan worth $212.9 million.
- Connectivity- to Iran and Central Asia through highways.
- Spread of terror- If the terror groups operating from and around Afghanistan-Pakistan border are not neutralized now and US withdrawal takes place in haste, it could have dangerous effects for Indian security.
5 Points on India's Stand on Afghan Peace Process
- Legitimately elected government in Afghanistan should be a part of any peace initiative. In the past, the Afghan government was often sidelined by international interlocutors when they engaged with the Taliban.
- All initiatives and processes must include all sections of the Afghan society. There is acceptability in India about talking to the Taliban, since they represent a “section of the Afghan society”.
- The achievement of establishing democratic processes and human rights, including women’s rights, should be respected.
- Any process should not lead to any ungoverned spaces where terrorists and their proxies can relocate.
- Also, the Pakistan-based terrorist groups like the Lashkar-e-Taiba, Jamaat-ud-Dawa, and Jaish-e-Mohammed must not be allowed to relocate.
Friday, August 9
5 Solutions for India's RCEP Apprehensions
- Protect & Promote domestic industry: Given the costs and benefits in RCEP, it is important for India to strike a balance between domestic and external interests to minimise the adverse effects of RCEP on its domestic engineering industry. If domestic industry has to thrive, it needs protection as also the enabling conditions created by factor and product market reforms.
- Use of skilled labour: India has been insisting on capitalising on its pool of 'skilled' labour force to gain from improved access to employment opportunities in these economies. This has been expected to come about by increasing the ease of movement of professionals through the liberalisation of what is called Mode 4 in services trade.
- Protect tariff structure: India should continue to maintain its position of proposed dual tariff structure in the RCEP as it will help India to protect its tariff lines which are more vulnerable to cheap Chinese imports. It must emphasise on a special and differential treatment based on stages of economic development.
- Restrict Rules of Origin (RoO): It can be used as a strong instrument in RCEP to curb the free flow of Chinese goods into the domestic market. India should restrict RoO to high value-addition to prevent the imports of cheap Chinese goods, which may come to India through our existing FTA partners. Strict RoO in RCEP will provide a safety wall to domestic producers against cheap Chinese goods.
- Placing suitable safeguards: Within the FTA, provision should be made for safeguard measures like antidumping etc which should be invoked if a volume or price trigger for the concerned products is reached.
5 Benefits of India Enterprise Architecture Framework
- Provide a ONE Government Experience to the citizens and businesses, by offering integrated services through multiple channels, in a contactless, frictionless manner.
- Enhance the efficiency of delivery of services, by defining and enforcing service levels of
a very high order.
- Improve the effectiveness of implementation of the developmental and welfare schemes through a
holistic performance management.
- Enhance the productivity of employees and agencies through easy access to
information.
- Provide integrated and cross cutting services through seamless interoperability across the
Whole-of-Government.
5 Principles of India Enterprise Architecture Framework
- SDG Linkage: Performance
Mangement Systems are aligned to Sustainable Development Goals prioritized by
the Government
- Integrated Services: That cut across agency-silos are identified, designed and delivered to realize
the vision of ONE Government.
- Sharing and Resuability: All coomonly required applications are abstracted to be built once and
deployed across the whole of government through reuse and sharing.
- Data sharing
across the government, subject to rights and priviliges, so as to prevent
deployment and use of duplicative sets of data by different agencies.
- Mobile Channels are Mandatory: For delivery of all services, among all delivery channels
10 Points of Shillong Declaration
- Improve the citizen’s experience with Government services by promoting timely implementation of India Enterprise Architecture (IndEA) and implementing a single sign-on for interoperability and integration among e-Government applications throughout the country
- Consolidate the plethora of successful State level e-Governance
projects and domain-based projects
with a focus to replicate them as a common application software with
configurable features
- Ensure improvement in ease of living and ease of doing business by making a big shift in the role of government from Service Provider to Service Enabler, thus moving from development of applications to making available public digital platforms where multiple competitive applications can be developed
- Take steps to further improve connectivity in North Eastern States by addressing the issues and challenges of telecommunications connectivity at grassroot level and formulate and implement a comprehensive telecom development plan
- Take steps to enhance the activities of Electronics Sector Skill Council in North Eastern States and explore the possibility for opening an electronics skill center in Shillong
- Promote use of e-Office and move towards less paper State Secretariats in the North-Eastern States and in the District level offices
- Improve the quality of delivery of e-Services in the North East to fulfil the vision of improved citizen experience
- Develop India as a global cloud hub and facilitate development of Government applications and databases on Cloud by default
- Adopt emerging technologies for finding e-Governance solutions
- Promote the Digital India Projects with focus on Smart Cities and Smart Villages through Startups and Smart Entrepreneurship
Tuesday, August 6
5 Apprehensions of India Regarding RCEP
- Trade deficit: India’s trade deficits have always widened with nations after signing free-trade-agreements (FTAs) with them. India’s merchandise trade deficit with the RCEP grouping hit $105 billion in FY19 (60% of its total deficit).
- Threat to domestic market: RCEP members, particularly China, are demanding zero tariffs over 90 per cent tariff lines which is a major concern for India as low cost Chinese manufacturing goods will swamp its domestic market by dumping cheaper goods. A large number of Indian industry including iron and steel, dairy, marine products, electronic products, chemicals and pharmaceuticals and textiles have expressed concerns that proposed tariff elimination under RCEP would render them uncompetitive
- Low labour productivity: Despite low relative labour cost, labour productivity in India in manufacturing is still one of the lowest in the world, and spatially fragmented labour laws escalate costs of transaction. Under such circumstances, the Indian industry is hardly in a position to compete in a level playing ground in a freetrade region.
- Strict IPR policy: The “stringent IP provisions” have been stumbling blocks for a while, with India arguing for these to be taken out of the agreement. The provisions, if adopted, would lead to domestic pharma companies not being able to launch or export affordable life-saving drugs across the world. While in the agriculture sector, farmers would lose the right to save or sell seeds or the harvested produce from plant varieties that have been granted intellectual property.
- Competition from China: It is evident that the size and scale of Chinese manufacturing industry backed with extensive financial and non-financial support provide a clear edge to Chinese manufacturing producers.
5 Benefits of RCEP to India
- Market Access: Owing to its size, it is expected to provide market access for India’s goods and services exports and encourage greater investments and technology into India.
- Alternative to APEC: RCEP offers alternative to Asia-Pacific Economic Co-operation (APEC) on economic front in which India has been attempting to join APEC since 1993, but still has not got the membership.
- FDI gains: The arrangement is expected to harmonise the trade-related rules, investment and competition regimes of India with those of other countries in the group. There would be a boost to inward and outward foreign direct investment, particularly export-oriented FDI.
- Aligned with India’s initiative: India wants its ‘Make in India’ to become a global success, it must participate positively to become a part of the Asian value and supply chain which either begins or ends in India. It also aligns with Act East Policy which make both economic and strategic sense for India to be the part of the agreement.
- Growth of supply chains: Signing the RCEP treaty will enable India to enter the global supply chain as it will be helped by frictionless movement between 16 members.
Monday, August 5
5 Implications of Scrapping of A.370
- Article 356 under which the President’s Rule can be imposed in any state, will also be applicable to the UT of Jammu and Kashmir.
- The central quota laws in school-college admissions and state government jobs will apply.
- People from other states may be able to acquire property and residency rights.
- RTI would be made applicable.
- Certain provisions of the J&K Constitution which denied property rights to native women who marry a person from outside the State may stand invalidated.
5 Constitutional Problems in Scrapping Article 370
- Legality of the Presidential order: Article 370 itself cannot be amended by a Presidential Order. Even though the Order amends Article 367, the content of those amendments, however, do amend Article 370. And as the Supreme Court has held on multiple occasions, you cannot do indirectly what you cannot do directly. Therefore, legality of the order – insofar as it amends Article 370 – is questionable.
- Misusing the President Rule and Making Governor as a substitute for the elected assembly: The governor is the representative of the Union Government in the State. In effect, the Union Government has consulted itself.
- Decision of Permanent Character taken by Governor: Also, President’s Rule is temporary and is meant to be a stand-in until the elected government is restored. Consequently, decisions of a permanent character – such as changing the entire status of a state- taken without the elected legislative assembly, but by the Governor, are inherently problematic.
- Equating state assembly with constituent assembly: The difference is that the one has to exercise its powers as per the constitution, while the other develops the constitution. This distinction that is at the heart of India’s basic structure doctrine that prevents certain constitutional amendments on the ground that Parliament, which exercises representative authority, is limited and cannot create a new constitution and thereby exercise sovereign authority.
- Going
against the Jammu and Kashmir’s Constitutional position:
Presidential order has assumed that legislative assembly has power to scrap
Article 370. But Article 147 of the Jammu and Kashmir Constitution prohibits
such a move. The Article makes it clear that any changes to the Jammu and Kashmir
Constitution needs the approval of two-thirds of the members of the legislative
assembly.
Sunday, August 4
5 Alternatives to Local Job Reservation
- Tackle Core Issues of Unemployment by more job creation and industrialisation rather than such moves. Government should provide incentives to industries for more investments and create an enabling environment for it.
- Government should focus on making the youth of a state employable with proper investments in education, health and skill development.
- Need to promote labour intensive industries, sunrise sectors (hi-tech companies) to absorb all kinds of job seekers.
- Promote Self-employment: So that people create opportunities for themselves. E.g.: MUDRA; STAND UP INDIA
- Promote services sectors such as tourism with high positive spillover on other sectors.
Saturday, August 3
5 Difficulties in Implementing Local Job Reservation
- May not pass legal scrutiny: Article 16 does not empower the state government to provide for such reservation, rather the Parliament is empowered to do so.
- Politically Motivated Move: Rather than addressing the core concerns like structural reforms, infrastructure development and so on, states are using reservation as a tool to capture votes in the short term.
- Dangerous for unity of the country: Such moves could lead to opening of a Pandora’s Box where other states start implementing such policies, which result in fractures in unity of India.
- Concerns of the industry: Factories may be employing labour migrating in from different states. It may be difficult/expensive to find locals for the jobs and consequently their ease of doing business will be hampered.
- Polarisation and Communal Strife: Such a move may disturb social harmony as many workers and their families may get uprooted because of disruption of their income source.
5 Reasons Why Local Job Reservation is Demanded
- Agrarian Distress:
Agrarian sector is under tremendous stress across the country, and young people
are desperate to move out of the sector.
- Lack of jobs:
There is a serious dearth of jobs (private and government). Mot only are the
jobs too few, they are precarious and do not pay well.
- Displacement of Landowners: Since most of the land requirement is met by acquiring private
agricultural lands, the landowners are being displaced and deprived of their
occupation and thereby loss of income.
- Discrimination:
Several reports like the State of Working India 2018 released by the Centre for
Sustainable Employment of the Azim Premji University have shown that
discrimination is one of the reasons for under representations of Dalits and
Muslims in the corporate sector.
- Sentiment against workers migrating from distressed regions and ‘stealing’ limited local opportunities have created pressure upon regional politicians to take some steps.
Friday, August 2
5 Views on State Funding of Elections
- Indrajit Gupta Committee (1998) endorsed state funding of elections, seeing “full justification constitutional, legal as well as on ground of public interest” in order to establish a fair playing field for parties with less money. The Committee recommended two limitations to state funding. Firstly, that state funds should be given only to national and state parties allotted a symbol and not to independent candidates. Secondly, that in the short-term state funding should only be given in kind, in the form of certain facilities to the recognised political parties and their candidates. The Committee noted that at the time of the report the economic situation of the country only suited partial and not full state funding of elections.
- 1999 Law Commission of India report concluded that total state funding of elections is “desirable” so long as political parties are prohibited from taking funds from other sources. The Commission concurred with the Indrajit Gupta Committee that only partial state funding was possible given the economic conditions of the country at that time. Additionally, it strongly recommended that the appropriate regulatory framework be put in place with regard to political parties (provisions ensuring internal democracy, internal structures and maintenance of accounts, their auditing and submission to Election Commission) before state funding of elections is attempted.
- “Ethics in Governance”, a report of the Second Administrative Reforms Commission (2008) also recommended partial state funding of elections for the purpose of reducing “illegitimate and unnecessary funding” of elections expenses.
- National Commission to Review the Working of the Constitution, 2001, did not endorse state funding of elections but concurred with the 1999 Law Commission report that the appropriate framework for regulation of political parties would need to be implemented before state funding is considered.
- View of Election Commission: The Election Commission has told a parliamentary committee that it does not support state funding of elections but instead seeks radical reforms in the way funds are spent by political parties.
Thursday, August 1
5 Arguments Against State Funding of Elections
- State funding increases the distance between political leaders and ordinary citizens as they do not depend on citizens for mobilization of party funds.
- If all or substantial amount of the party income comes directly from the State rather than from voluntary sources, political parties risk losing their independence and become organs of the State, thereby losing their ties to the civil society.
- State funding would encourage non-serious candidates to enter into political arena merely to avail of state funds.
- Many experts believe that state funding of election will not stop parties from lobbying and getting undisclosed additional funds.
- State funding of elections will increase burden on the exchequer with no guarantee that black money will stop playing a role in the electoral process.
5 Arguments in Favour of State Funding of Elections
- It creates a level playing field for parties and candidates with fewer resources.
- It helps to reduce the dependency on corporate or private money.
- By providing floor level fund” to everyone, state fund scheme can be very helpful for smaller and newer political entrants.
- Candidates who are elected through a fair electoral process would be transparent and accountable in providing governance.
- Through state funding the demand for internal democracy in party, women representations, representations of weaker section can be encouraged.
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