9 PM Daily Brief – May 26th ,2020

9 PM for Main examination

GS-2

1. Analysis of the Kashmir policy
2. Post Covid-19 world order

GS-3

3. What does the government’s stimulus package have in store?
4. Analysis of liquidity push

9 PM for Preliminary examination

FACTLy

1.Analysis of the Kashmir policy

Source: The Hindu

Syllabus: GS 2-Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

Context: Jammu and Kashmir is suffering from twin lockdowns: rising violence and unilateral government actions.

Whether there is Biasness in new domicile rules notified on May 18, 2020?

• Replacing Jammu and Kashmir state subject law: These rules seek to replace them and are based on the Home Ministry’s order of March 31. The state rules are recognised under Article 35A of the Indian Constitution which entitled permanent residents of the State to free education along with reservation of government jobs and sole rights to land ownership.
• Entitled for: The new rules entitle anyone who has worked or lived in the State for 15 years or studied there for seven years to receive a domicile certificate and the benefits previously reserved for permanent residents.
• Entitle Union government officials: Those who have served in the State for 10 years to domicile along with their non-resident children and list the categories of those eligible: members of the IAS (including those working in statutory bodies), public sector units and banks, central universities and ‘recognised research institutes of the Central government’.

Problems in changes done to functioning of Jammu and Kashmir:

• Marginalised groups who were denied their rights:The argument in support is that the domicile rule notification were necessary since many marginalised groups were denied their rights under the State subject law such as refugees from west Pakistan. Then this should also be expanded to the permanent resident category to include these groups, without doing away with it altogether.
• Challenged in Supreme Court: Changes are said to be followed through by the President and Parliament of India but they ignore the fact that the presidential orders and Reorganisation Act of August 2019 are under constitutional challenge in the Supreme Court.
• Lack of trust building: After the announcement of reorganisation of Jammu and Kashmir, separate committees were set up to divide Jammu and Kashmir’s assets between the two new Union Territories. The State police was put under direct rule by the Union Home Ministry. The Upper House of the Assembly was abolished. Land was taken for sale to industry, national tourist conglomerates were invited to take over what was a flourishing local industry and mining rights were sold to non-Kashmiri contractors.
• Lack of political activities: The Jammu and Kashmir Legislature remains dissolved and many of its political leaders remain under detention. Their concerns are not incorporated.

Whether it is the last stroke on the state’s internal autonomy?

• Article 35A and the State subject law:Many see them as the last remaining bastion of the State’s internal autonomy guaranteed under the instrument of accession signed by Maharaja Hari Singh.
• Linked to identity: These two grew to be closely tied to Kashmiri identity and Kashmiri empowerment through education and employment.
• Fear of Demography change: As armed insurgency rose in the 1990s, many Kashmiri political leaders raised fears of an Indian intention to alter the demography of the Muslim-majority Valley and several Jammu districts.
• Rise in armed encounters: With the fall of these laws, disaffection has exponentially multiplied in Jammu and Kashmir. Armed encounters are on the rise and the security situation is extremely fragile.

Way Forward

The government needs to reduce mounting security threats by following Atal Bihari Vajpayee’s policy of ‘Insaniyat, Jamhuriyat, Kashmiriyat’ for peace in the valley.

2.Post Covid-19 world order

Source: The Hindu

Syllabus: GS 2-Indian Constitution—historical underpinnings, evolution, features, amendments, significant provisions and basic structure.

Context: Certain issues like those relating to the convergence of technologies such as biotechnology, genetic engineering and information technology will have a long-term impact on geopolitics.

Importance of Data and Technology during Pandemic: National governments, policymakers and healthcare researchers are using technology and data to plan and improve economic activities, social development, and treat deadly diseases more effectively than ever before.

How the pandemic has changed the idea of privacy?

• Technology and data are inherently geopolitical: Proper data related to the COVID-19 outbreak were not shared in time and that is why there is so much anger towards the WHO and China.
• Dependence of government: The nature of technology and data has placed tech giants such as Google, Facebook and Amazon in a commanding position. The government are depending on them for useful data.
• Change in perception on the Issue like privacy: The current pandemic is a great example of how people across the globe have accepted the idea of their live locations being traced and shared with governments. In India, more than 90 million people have downloaded Aarogya Setu without showing any concern regarding the right to privacy.
• Influence of tech giants: Tech giants are taking a leading role in geopolitics and at times playing on their own and sometimes as proxies of nation states to influence policymaking and national regulations. For example the U.S.-China trade war, the position of governments on Huawei 5G technology etc.
• For welfare of society: The data need to be used towards the welfare of society but the sharing of data presents many challenges to human rights. COVID-19 is a good example of this.

Restrictions on the flow of data:

• Across the world, data protection laws, requirements of data localisation, laws related to weakening of encryption keys and data retention requirements such as the General Data Protection Regulation of the EU are increasing from last few years.
• Focus on protection of personal data: Too much focus on it and privacy give little thought to the broader impact of data on mobility and social aspects.
• Issue of data sharing: Data protection frameworks such as the CLOUD Act of the U.S. is aimed at putting users in control of their data. But they have issues relating to data localisation and cross-border flow of information.

Use of Data in the post-COVID world:

• Digital equity will require frameworks relating to governance of technology and data that look beyond geopolitical considerations.
• We need to distinguish individual data from large global data sets.
• We cannot decide the current human rights framework to human rights in the digital and biological domain.
• The current concept of privacy and cross-border flow of information may require significant change.
• There is a dire need to impose obligations for data flow on countries and tech giants in the larger interest of mankind.
• We need to establish a baseline of global norms of data governance that go beyond privacy and geopolitical considerations.

Way Forward

In the post-COVID world, countries and tech giants should be obligated to share data in the larger interest of mankind

3.What does the government’s stimulus package have in store?

Source: The Hindu

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

Context: The government has announced special economic and comprehensive package of Rs 20 lakh crores – equivalent to 10% of India’s GDP- under the Atmanirbhar Bharat Mission.

Five tranches of the package:

1. The first tranche primary focus to alleviate the distress in the Micro, Small and Medium Enterprises sector.
2. The second tranche dealt with measures for the distressed migrant workers.
3. The third tranche included 11 measures for the agriculture sector.
4. The fourth tranche included measures for commercial coal mining; coal gasification projects; privatization of airports, optimization of Indian airspace etc.
5. The fifth tranche included allocation of additional Rs 40,000 crore for MNREGA, Technology Driven Online Education Systems, decriminalization of Companies Act and health related initiatives.

Measures to boost Demand Side in the Economy:

• 1.73 lakh crore allocated for improving the incomes and welfare of the most vulnerable, including the 20 crore female Jan Dhan account holders;
• 50,000 crore additional incomes to  those whose TDS and TCS were reduced by 25%;
• 40,000 crore additional allocation for MNREGA
• 30,000 crore for construction workers;
• 17,800 crores transferred to 12 crore farmers;
• 13,000 crores transferred to States to finance the costs of running quarantine homes and shelters for migrant workers.

Measures to boost Supply Side in the Economy

1. Ensuring Food Security: The government declared agriculture and all related activities as essential services amid Covid-19 pandemic lockdown. This ensured harvesting and efficient procurement of the critical Rabi crop.
2. Prevention of Insolvency and Bankruptcy: The government had announced moratorium for all businesses for their debt servicing obligations to commercial banks. Further, MSMEs were provided an additional credit line of Rs.3 trillion without any fresh collateral.
3. Measures to improve ecosystem for private producers and investors:

• • Agriculture: The government decided to amend Essential Commodities Act, 1955 to help provide the farmers with a better price share. Also, traders and exporters of agro-products can maintain necessary stocks to meet export obligation
  • Defense:Government made further liberalization in the defense production sector

4. Street vendors:street vendors across India have been given a credit of Rs.10,000 each for re-stocking.

Conclusion: The economic stimulus package is expected to be a great boost and help in revival of the Indian economy. It has the capabilities to boost demand and ensure the survival of existing production capacities

4.Analysis of liquidity push

Source – The Hindu

Syllabus – GS 3 – Mobilization of resources

Context – Government’s attempt to increase liquidity under Atma Nirbhar Package

Atma Nirbhar Mission – A relief package of Rs 20 lac crores aimed to achieve self-reliance in various sectors of economy. Package comprises of two modes: Liquidity push and Fiscal spending to give stimulus to economy.

Liquidity push – Liquidity refers to ease of access to cash — a liquid asset is one that can be easily sold for or replaced with cash. The main intermediaries being enlisted for the task of transmitting liquidity are the banks and NBFCs. Steps taken for liquidity push-

• The ‘targeted’ long term repo operations (TLTROs) – TRO is a tool that lets banks borrow one to three-year funds from the central bank at the repo rate, by providing government securities with similar or higher tenure as collateral.

It is called ‘Targeted’ LTRO  as in this case, the central bank wants banks opting for funds   under this option to be specifically invested in investment-grade corporate debt.

• NBFC’s – Small Industries Development Bank of India, the National Bank for Agriculture and Rural Development, and the National Housing Bank – These refinancing agencies provide loans to different segments of economy which promote stimulus and demand. The government offered them partial or full credit guarantees in case their clients defaulted.
• Temporary increase in the disposable income – Advance access to savings like provident fund contributions, lower tax deduction at source, reduced provident fund contributions and moratoriums on debt service payments promotes disposable income with citizens.

Criticism of liquidity push 

1. No demand in market – Due to COVID associated lockdown, there has been loss of 122 million jobs which also lead to loss of income. In such scenario, there is absence of demand which in turn suppresses the investment by industries and thus their reluctance to borrow or increase liquidity.
2. Loss to businesses – Small as well as big businesses have suffered huge losses which compounded to slowdown in economy in 2019 has add to their woes. This makes them fearful for any new investments and new borrowings.
3. Weaker transmission of repo rate policy – RBI has slashed its repo rate for past 1 year to boost liquidity in system. However, banks have been reluctant to pass on these benefits to its borrowers due to issues like Non-performing assets.

Suggested Solution – Increased share of fiscal spending – Fiscal spending by government, although will increase fiscal deficit, but has the potential to increase liquidity in short-term which will revive the economy at faster rate than the liquidity push measures(long-term steps). This involves :

• New and additional transfers to people in cash and kind
• Wage subsidies
• Equity support
• spending on employment programmes

Way Forward – Liquidity push and structural reforms introduced in the mission are much needed long-term measure for reviving economy. To boost growth in FY21, Government need to opt for fiscal stimulus which in turn promote immediate demand in economy and lead to investment by firms.

9 PM for Preliminary examination

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