9 PM Daily Brief – 13 January 2016

A brief of newspaper articles for the day bearing
relevance
to Civil Services preparation

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National 


 

[1]. Defence postures/ Parrikar’s proposed defence procurement policy breaks new ground

The Indian Express | The Business Standard 

DPP Provisions are already discussed. Click Here 

Other info:-

Current DPP:-

The current procurement policy, DPP-2013, explicitly promotes manufacture in India. It gives top priority to the “Buy (Indian)” category; followed by “Buy and Make (Indian)” and “Make” categories, which mandate high levels of indigenisation.

Lower priority was given to “Buy (Global)” and “Buy and Make” categories, which allow a greater role to foreign production.

Strategic Partner in defence manufacturing:-

A crucial chapter, pertaining to selection of strategic partners in defence manufacturing, has not been finalised yet — the V.K. Aatre Committee, formed to recommend policy on this aspect, is expected to submit its report this week. This is critical for the business development plans of India’s top private defence manufacturers.

Black listing of defence suppliers:-

Issue the policy on blacklisting of defence suppliers and authorised defence agents along with the DPP but those still await the light of day. It is critical for creating a well-defined landscape for the operation of both Indian and foreign defence manufacturers.

Measuring Indigeneity:-

DPP-2013 clearly defined how India’s manufacturing content would be measured. Now DPP-2016 must specify how it would be gauged whether a product is of indigenous design.

Today a system could be designed in several countries; how would you calculate India’s share? If this is not clarified, it could open up a Pandora’s Box of misuse.

Dedicated Project Management:-

For the first time, the army, navy and air force will each have dedicated “Project Management Units”, headed by two-star general rank officers. They will drive all Make projects relating to their respective services.

Overcoming single vendor situations:-

DPP-2015 also seeks to overcome that defence procurement bugbear – “single vendor situations” – which often stall acquisition programmes because the vendor is perceived as enjoying too much leverage in the absence of competition.

Now the defence ministry has said that Single vendor cases… will be processed, with due justification.

Conclusion:-

The test of the new DPP will be in its early finalisation and notification — and eventually, its execution.

 


ECONOMIC DIGEST


[1]. Social sector asks Jaitley to review subsidy alternatives

The Hindu

Context:-            

Finance Minister met 20 different groups—representing various facets of the social sector including education, healthcare, water and sanitation and minority empowerment—each of whom made presentations of about 3-4 minutes on their recommendations.

Some of the recommendations:-

DBT Alternatives:-

According to the recommendations several instances of in-kind transfers have been successfully implemented in various parts of the country so they want to review the implementation of alternative subsidy systems before going ahead with Direct Benefit Transfer (DBT).

The demand comes at a time when the government is keen to expand the ambit of its Direct Benefit Transfer (DBT) scheme for subsidies.

Pegged to Inflation:-

The government must also look into pegging the funds for mid-day meals in schools to inflation as examples of how schools across the country have not been serving dal for the past few months. Another recommendation was for the MGNREGA budget to also be inflation-indexed, and measured as a per cent of GDP rather than in absolute terms.

Increase spending on Public health:-

India is a chronic low spender on public health by international standards.

Around 2.5-3 per cent of GDP should be on healthcare. We are currently at around one per cent.

Within the country, some states like Mizoram, Sikkim, Goa, and Puducherry do quite well but overall the situation is one of low funds

Shortage of doctors and nurses:-

The paucity of doctors and nurses in the public health system was pointed out.

While India has enough doctors, the problem is attracting them to public sector jobs. One of the recommendations made was for a system similar to that in Thailand where doctors have to compulsorily work for the public sector for a few years before they can get a license to practice privately.

Clear cut spending Plan:-

With the 0.5 per cent Swachh Bharat cess and the $1.5 billion commitment by the World Bank for the Swachh Bharat Abhiyan, the government has a lot of funds and need a clear-cut spending plan for the same.

 Fixing the sticking points of last budget:-

The unanimous appeal from all the bodies was for additional funds for the social sector. The previous budget’s plan that laid the responsibility of social sector spending on the states was not working.

They also said there were some states that depend almost entirely on Central funds for social sector spending.

[2]. Start Up India schemes to finally take off

The Hindu

Context:-

The government can finally start deploying funds from the Self-Employment and Talent Utilisation (SETU) scheme and the Atal Innovation Mission (AIM) announced in the Union Budget for 2015-16 to promote startups and scientific research.

Objectives of the schemes:-

AIM would focus on inviting aspiring entrepreneurs to solve India’s contemporary socio-economic problems via ‘grand challenges’ that offer substantial awards to incubate and scale up winning ideas.

SETU scheme’s resources would be devoted to strengthening incubators and setting up ‘tinkering labs’ where ideas can be shaped into prototypes before they are ripe for funding.

Supervisory Body:-

An overarching supervisory body with about ten members is being formed to oversee the allocation of funds under the schemes to line ministries.

To think beyond e commerce and mobile apps:-

The idea of posing social problems as a ‘grand challenge’ for aspiring startups under the AIM, is to engage young graduates eyeing the startup space into thinking beyond the internet, e-commerce and mobile applications space.

[3]. Monetary policy stance needs review

The Business Standard

Observations:-

Last year a relatively benign retail inflation rate and healthy growth in industrial output had given rise to expectations of a gradual revival in the economy.

Industrial output fell by over three per cent – the first output decline in more than a year, and the steepest fall since October 2011.

The retail inflation rate, based on the consumer price index, inched up to 5.61 per cent for December, compared to 4.28 per cent recorded in the same month of 2014.

The gradual rise in the consumer price index may be on expected lines and it continues to stay below the inflation range outlined by the Reserve Bank of India.

Corrective measures:-

The latest numbers are bound to cause a rethink not only on the likely trajectory of industrial output and retail inflation in subsequent months, but also on the policy response needed to tackle the new situation.

Reducing retail inflation:-

India’s retail inflation continues to be driven by food products. Supply-side measures along with steps to encourage more efficient distribution channels should go a long way in tackling it.

Increasing exports:-

The three per cent contraction in industrial output is an even bigger cause for worry which is mainly due to the decline in exports in each of the last 11 months.

The government must recognise the importance of giving exports a big push with a fine-tuned trade policy that allows domestic manufacturers to have better access to world markets that are increasingly getting fragmented into trading blocs.


 

Opinions & Editorials 


 

[1]. Leaving no poor person behind

The Hindu

Context:-

The article discusses the issues involved in targeting beneficiaries for the National Food Security Schemes.

Problem of inclusion and exclusion:-

Including the relatively well off people in villages costs public money but weeding them out is a major headache in the course of implementing the National Food Security Act (NFSA).

Excluding them creates a small but powerful group of disgruntled people who may be tempted to sabotage the PDS in one way or another. When they are included, there is greater pressure on the system to work.

Identifying the eligible:-

The biggest challenge, responsible for the delayed rollout of NFSA in many States, is to identify eligible households. Even with near-universal coverage (86 per cent in rural Jharkhand and 82 per cent in rural Odisha), this is a daunting task.

The new list for the NFSA is based on the Socio Economic and Caste Census 2011 (SECC), and is not only more inclusive than the BPL list, it is also more reliable.

It will take skilful revision of the NFSA list to resolve the exclusion and inclusion problems. But at least the NFSA has created a relatively sound framework within which this can be done.

Exclusion errors in the list:-

Jharkhand government prepared an initial list of ration cards from SECC data (by removing better-off households), and later revised based on people’s complaints.

The main problem with this approach is exclusion errors: there are gaps and mistakes in the SECC data, not always corrected by the complaints process.

Inclusion errors in the list:-

Odisha followed a different approach, based on self-declaration: ration card applicants had to certify that they met the eligibility criteria, and local functionaries were asked to verify their declarations.

The main problem here seems to be inclusion errors: well-off households often get away with claiming that they meet the criteria. The self-declaration approach also requires reliable administrative machinery.

Not just PDS:-

Finally, it is important to remember that the NFSA is not restricted to the PDS.

Other critical components include maternity entitlements which are ignored by the Central government.

The PDS itself need not be confined to NFSA entitlements: in several States, some households are now eligible for subsidised pulses and edible oil as well. Perhaps for the first time, there are real possibilities of ensuring a small amount of nutritional support and economic security to all vulnerable households.

[2]. The warning lustre of the budget

The Hindu

Context:-

The article discusses how the annual Budget no longer has the attention it used to have earlier.

Reasons:-

An analysis of this development reveals several interesting facts.

Focus on long term fiscal policy:-

India seems to be slowly focussing more on a long-term fiscal policy rather than on the annual Budget. Such an approach will not only impart economic stability but also ensures continuity and sustainable growth.

Not a young economy:-

When the economy is young, many decisions have to be made in a dynamic manner.

Now that there is a flood of information on a daily basis, waiting for one complete year [for the Budget] does not make any sense. Also, in a country that is on an ascending curve, mid-year adjustments should be allowed to be made.

Continuous Policy change:-

The recent big-bang mid-year announcements, such as the government’s decision to limit the LPG subsidy to those earning Rs.10 lakh or less per year, or the direct transfer of kerosene subsidy indicate that we seem to have firmly set ourselves on the path of continuous policy change divorced from the fanfare that the annual Budget entails.

Lower rates:-

Earlier, the import policy could make or break industries. And the power of the Budget used to be in the taxation rates and quantitative restrictions.

But over a period, the rates have come down and so has the room for manoeuvrability

Fiscal mission and Fiscal vision:- 

It is imperative to have both a fiscal vision and a fiscal mission. For instance, bills such as the GST would fall under the fiscal vision category. These take many years from conceptualisation to implementation given our vibrant multi-party system.

But once the vision is drawn, we have to go into mission mode with two- to five-year horizons.

Diluting the budget to quarterly statements:-

The author feels that as the Parliament sits often, the annual budget-making could easily be diluted and quarterly statement of accounts can be presented.

This will solve the problem of slowing down or stalling of projects by February which resume only after the monsoon

An Independent Central bank?

For every person who supports an independent Central Bank, there seems to be a naysayer who questions the moral authority of the institution.

Critics caution against what they see as a “camel’s nose in the tent” phenomenon. They feel that in a democracy the final authority should rest only with the elected representatives.

“camel’s nose in the tent” phenomenon is a metaphor for a situation where permitting some small undesirable situation will allow gradual and unavoidable worsening

However, with elected representatives often finding themselves short of public trust, there is also a growing need for leaving specialist jobs to professionals who do not have any constituency to satisfy.

Institutions reflecting Individuals:-

It is fascinating to see how the character of an institution often ends up mirroring the character of individuals who steer it or who could influence it. From Jawaharlal Nehru to Narendra Modi, it’s an interesting study.

Low financial literacy:-

The recent Ratings Services Global Financial Literacy Survey conducted by Standard & Poor’s shows that India scored a low 24 per cent among the BRICS countries (Brazil, Russia, India, China and South Africa) against the average of 28 per cent and the highest of 42 per cent (South Africa).

The study attempted to capture the percentage of ‘financially literate’ adults based on four concepts: risk diversification, inflation, interest calculation, and compounding.

[3]. The People’s Museum 

The Indian Express 

Context:-

The article laments at the state of Indian museums and steps that need to be taken to revive them.

It also highlights how heritage site attracts the attention of extremists for carrying out their propaganda and spreading panic

To revive:-

Attention is drawn to three critical areas of concern: The role of museums, integrating urban development and archaeology, and changing those laws that may have been relevant once but are now counterproductive.

Challenges:-

Neglected by Development:-

Museums and historical sites, classical literature and the arts, libraries and archives are  more vulnerable as they are neglected in the face of development.

With greater urbanisation and industry, land use raises competing claims with little regard to what lies beneath, and almost no assessment of the intangible losses that lie above ground.

Increasing globalisation and urbanisation lead to a fear of homogenisation — cultural and archaeological contexts are disturbed forever.

Example:-

The absence of any reported antiquities during the construction of the Delhi Metro is a prime example of such silencing and apathy. Whereas all other major historic cities like Paris, Rome and London have used the opportunity of their Metro development to create museums filled with pottery, coins and artefacts found during the excavation.

Increase accountability:-

The obvious answer is to increase accountability and make the public expect more from the keepers and disseminators of their cultural heritage.

Need for Holistic laws:-

The current laws have been framed from the perspective of archaeologists. But an archaeologist is not the only person who is in charge of interpreting what counts as heritage or civilisational memory.

Litterateurs and scientists, artists and art historians, historians and anthropologists also investigate issues of civilisational memory and cultural mores. However, these disciplines are not consulted when laws on heritage are framed.

Participatory initiatives:-

Museums are meant to be participatory, fostering interconnectivity with the people, responding to their need for a balanced view of their complex histories.

Public financing apart, museums need community financing to protect them. But the public in India is alienated from its role in building and contributing to our museums.

The state cannot monitor all the antiquities in the country given the pace of development and change. There is little choice but to widen the support base by increasing the stakeholders in the preservation of heritage — and who better to do that than the people themselves, whose legacy it is.

Outdated Laws:-

The law governing the regulation of sale, purchase, ownership and all related matters concerning material objects of history, though relevant once, has become so notoriously cumbersome and difficult to follow for bona fide collectors, institutional or individual, that it simply attracts violation. It acts as a disincentive for Indians to build collections of antiquities.

Public participation and trust-building requires institutional autonomy, to be able to be answerable to a diversity of stakeholders.

Rising extremism:-

The atrocity of the demolitions in Afghanistan inspired the extraordinary story of the salvaging and protection of their cultural heritage when Afghans secreted away the treasures of the Kabul museum years later. with rising censorship and extremism in our own we need to learn to counter such dangers.

China shows the way:-

The world’s largest auction houses and art dealers have started selling their collections of Fareastern art in China ever since this was incentivised by its government about 10 years ago.

China has also opened over 100 departments of art history in its universities so that there will be a higher degree of professionalism in the field in coming years

Conclusion:-

The safe collection of things is dependent on a legitimate domestic market, of course, but that, too, needs a knowledge base that will allow proper assessment, protection and preservation of heritage.

[4]. A boon for small players 

The Indian Express 

Context:-

The article analyses the pros of Mudra scheme over the previous schemes with the same objective.

Aim:-

Mudra is a redesign of policy in order to re-target the audience, restructure processes and, most importantly, rejuvenate the mission of lending to the small, poor budding entrepreneur.

The programme was launched to give access to cheap credit to poor and small fledgling businesspersons. Even after 67 years of independence, a large section of the unorganised sector had no access to formal credit and used to have to rely on money lenders, who charge exorbitant rates of interest.

Overcoming the obstacles:-

Schemes for this class did exist before as well — but poor design and a lack of awareness ensured that the target audience did not receive the intended benefits. There was no nationwide initiative, and lending was left to the discretion of individual banks. Even loans of less than Rs 10 lakh were not readily available or forthcoming.

Doing away with collateral:-

For starters, the government has made sure that the poor are not subjected to the requirements of collateral and guarantor to get credit. This has made the entire process for getting a loan easier, so that the poor don’t have to face as many roadblocks.

Catering to all sections differently:-

The government has classified loans into three groups — Shishu, Tarun and Kishor — to cater to the different needs of different sections of entrepreneurs.

Issuing Debit cards:-

There have been other qualitative improvements as well: Mudra debit cards are issued to borrowers. Using these, they can withdraw the loan from any ATM in India, as and when they need the money. Debtors can also now repay the loan at any time and at any ATM in India. Provisions have been made to make possible daily withdrawals or repayments.

Interest rates:-

The interest on Mudra loans is calculated on a daily basis. When all this is taken into account, it becomes clear that the programme is a boon for small business persons.

Awareness campaigns:-

The massive awareness and huge demand for Mudra loans is a result of the government’s efforts. While certain similar schemes have been announced before, there was no awareness around them.

[5]. Insuring agriculture works

The Financial Express 

Context:-

The government’s ambitious crop insurance scheme will be a big move in curing India’s agriculture of its biggest problem which is the policy-induced distortion that favours cultivation of wheat and rice above other crops.

Preference for wheat and rice:-

Farmers grow wheat and rice in preference to other crops not because these are the most lucrative or the most suitable to the agro-climatic conditions—indeed, overuse of water to grow wheat and rice has rendered large tracts of land in Punjab and Haryana unsuitable for cultivation

It’s because the overall risk is the least.

In 4-5 states, where the Food Corporation of India (FCI) or state agencies procure grain, there is no price uncertainty for farmers.

In the case of other crops where there is no government procurement he farmer faces both a crop risk as well as a price risk.

Removing the crop failure risk:-

Crop insurance takes crop-failure risk out of the farmers’ equation which makes it that much easier to move to other crops.

Low premium:-

The government has worked with insurance companies to dramatically lower the premium that needs to be paid.

A lower premium will encourage greater crop insurance—ideally, most of this should be paid by the central and state governments and, in any case, insuring 70% of India’s total farm area will cost around Rs 20,000 crore a year which is not large in comparison to the annual subsidy expenditure.

Paying the insurance claims:-

The real test will be the speed at which the insurance claims are paid out is critical. If the government uses weather stations—covering the entire country will cost a mere Rs 350 crore—or drones, this can quickly give data on rainfall to the insurance company.

Claims will no longer be based on assessment of damage to crop, but on quickly verifiable non-subjective rainfall data, can then be sent directly to the Jan Dhan bank accounts of farmers within 2-3 days of the rain failure.

Reducing the FCI Purchases:-

Combining crop insurance with lowering FCI purchases—consumers could be given direct cash transfers instead of physical wheat/rice—and use the money saved to give farmers cash transfers based on the size of their holdings.

Once FCI purchases of wheat/rice are reduced dramatically, the price-risk becomes equal across all crops—that means farmers will react to market signals.

Challenges:-

It is not clear whether the government has the guts to reduce FCI purchases since rich—and politically strong—farmers will protest, especially in states like Punjab which will go to polls soon. But crop insurance is a good first step towards the next green revolution.

[6]. Delivering on good governance

The Business Standard 

Context:-

Prime Minister has mandated that several groups of secretaries come up with breakthrough ideas in different key policy areas to ensure substantive results, whether it is on inclusive growth or promoting his Clean India campaign.

The article explains how this initiative can be institutionalised to deliver good governance.

Institutions are important:-

The temptation to bypass institutions needs to be strongly resisted. There may be emergencies where ad hoc responses may be necessary .However; these must be resorted to only rarely and for valid reasons.

Institutions are important because they function according to well-laid rules and regulations. The element of discretion is reduced and this is particularly important in a democracy which functions according to the rule of law.

Adapt to changes:-

Institutions and the processes through which they operate need to be constantly adapted to changing circumstances.

It is better to upgrade existing institutions and adjust their processes rather than favouring ad hoc arrangements or by setting up entirely new institutions which compete with existing ones. Institutions enable learning experience for the future. This is critical to good governance.

Utilising Data:-

Our policymaking suffers because it is not based on adequate and accurate data, despite such data collection and analysis having become much easier and more affordable in our digital age.

Data collection and analysis alerts the policymaker about what works and what does not. It reduces trial and error.

In the corporate sector, Big Data is leading to new, more efficient business strategies. Data analyses yields insights which become the bedrock of strategy. Good governance needs a similar approach.

SBA Case study:-

Analysis shows that most toilets built under SBA are dysfunctional or lying unused. It may have taken more time, but it’s better to first analyse what steps may be necessary to ensure the proper maintenance of these toilets, whether water supply was available in areas where they were being constructed, and whether communities had been educated on how to maintain them.

There are cultural issues that need to be addressed too.
Bureaucracy as the driver of change:-

Bureaucracy can be a major driver of change provided the right environment is created for its functioning. The Indian bureaucracy constitutes an unmatched pool of talent and experience.

Defensive rather than innovative:-

Unfortunately, the current incentives and disincentives for the bureaucracy generate risk-awareness and defensive behaviour rather than an innovative spirit.

Open competition for post service posts:-

Furthermore, the current tendency to offer post-retirement sinecures to retired senior civil servants inhibits independent functioning and advice to political masters.

The appointment to various commissions and statutory bodies should be through open competition, in which a retired bureaucrat, if qualified, could offer his services.

Recruiting young talent:-

It is necessary to go back to the policy of recruiting relatively younger people into the bureaucracy. The earlier age limit of 24 was appropriate. If, as is the case currently, there are recruits over 30, it would be difficult to mould them through training into agents of change.

[7]. Is there a coherent science policy?

The Business Standard 

Context:-

The article suggests that Innovation should be given impetus to achieve great heights in science.

Emphasis on Innovation:-

The different disciplines of science, technology engineering and innovation need to unite for common purpose of leaving behind a better planet for future generations.

The difference between the four is important because all four fields need different policies to promote them and especially the last leg of “innovation” is critical for mankind to benefit from science.

India needs a policy to promote innovation that should do much more than funding incubators, giving tax breaks and protecting intellectual property rights.

America and Innovation:-

Historically, the British excelled in invention, the Americans in innovation. The Japanese at one stage sought to challenge this, but with the smartphone and the internet the Americans have regained their advantage.

The US lead in innovation is ultimately the result of certain cultural values – questioning received wisdom (learning by memorising is abhorrent), making a habit of thinking out of the box, tolerating failure and freely exchanging ideas over coffee (as happens in Silicon Valley) without worrying much about them being pinched.


By: ForumIAS Editorial Team


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Comments

8 responses to “9 PM Daily Brief – 13 January 2016”

  1. vamkarthik Avatar
    vamkarthik

    Thanks

  2. Nikhil Mandlik Avatar
    Nikhil Mandlik

    Thanks

  3. Can someone please explain the offset considerations in DPP.

  4. thanks

  5. hey team, ur doing a wonderful job on 9PM Brief, any plans of consolidating them ?

  6. anil singh Avatar
    anil singh

    🙂

  7. dark matter Avatar
    dark matter

    thankyou very much forumias for this 9 pm brief

  8. Parle -G Avatar
    Parle -G

    Thank You 🙂
    Some one asked me what is the best example of punctuality
    I said “9 PM brief by ForumIAS”

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