9 PM Daily Brief – 17 May 2016

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

What is 9 PM brief?

• GS PAPER 2
  1. Infant mortality down in Kerala’s tribal belt {Social Issues – Paper II}
  2. India, U.S. hold first maritime security dialogue {Foreign Policy – Paper II}
  3. Imposing an inequality {Polity – Paper II}
  4. The fee for NSG membership {Foreign Policy – Paper II}
  5. India’s IPR regime not regressive: Sitharaman {IPR – Paper II}
  6. The pros and cons of subsidies through direct benefit transfer { Governance – Paper II}
• GS PAPER 3
  1. An IP policy with no innovation {IPR – Paper III}
  2. WPI increases on higher food prices {Economy – Paper III}
  3. With patient capital to fix basic problems, India too can think big {Economy}
     

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GS PAPER 2

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[1] Infant mortality down in Kerala’s tribal belt

The Hindu

News:

• Official figures confirm that infant mortality and neonatal deaths are coming down in Kerala’s Attapaddy tribal belt.

Reason for death:

• Although half-a-dozen infant deaths have been reported since January this year, only two have been confirmed as the result of malnutrition and poor health of the mother.
• The area witnessed 58 malnutrition-related deaths in 2013.
• The figure came down to 30 in 2014 and further to 14 in 2015.

The community kitchen scheme:

• Aimed at providing nutritious food to pregnant and lactating mothers, children, and the elderly, had helped the cause.
• The average weight of newborn babies rose from 1.5 kg to 2.5 kg in these years.
• Apart from short-term measures like community kitchen and free ration, initiatives aimed at restoring alienated tribal land and helping them in farming are on.

[2] India, U.S. hold first maritime security dialogue

The Hindu

News

• India and the U.S. held the first round of discussions under the recently-constituted maritime security dialogue.

Issues discussed

• Among the issues discussed were Asia-Pacific maritime challenges, naval cooperation, and multilateral engagement,” the U.S. Embassy said in a statement on Monday.

Exploring opportunities

• Both sides agreed to launch a bilateral Maritime Security Dialogue, co-chaired by officials at the Joint Secretary/Assistant Secretary-level of the Indian Ministries of Defence and External Affairs and the U.S. Departments of Defence and State.
• The other initiatives agreed include the conclusion of a “white shipping” technical arrangement to improve data sharing on commercial shipping traffic and Navy-to-Navy discussions on submarine safety and anti-submarine warfare.

[3] Imposing an inequality

The Hindu

Context

• Recently in a case,the Supreme Court has directed parties to an ongoing civil litigation to each pay a fixed sum of money to enable them to have their cases heard, and potentially disposed of, at an early date.  

Problem with such an order

• It reinforces a scheme of classism that ought to have no place in any court of law, let alone the apex court of the land and seems like a capitalistic approach.
• On the face of it, it is aimed at preventing  corporates from approaching the court for the settlement of mundane issues of little public consequence.
• This direction  places a gargantuan burden on those common litigants for whom the price to be paid for an early hearing would simply be out of reach.
• Were this order to put in motion a convention of imposing deposits, it could quite conceivably lead to a situation where those parties with the deepest pockets alone would have their cases heard on priority.
• It was held in (Kesavananda Bharati case) that the Constitution is not intended to be the arena of legal quibbling for men with long purses.

The court’s neo-liberal turn

• The crystallisation of such a rule would transform the image of Supreme court as a court of all  Indians , into a court of only a few Indians i.e a court of big clients.
• This not only tarnishes the image of the apex judiciary but also sends across a message that speedy justice can only be achieved by those having big pockets and a common poor man in India will still wait for years to get justice.

Constitution and Practicality

• Article 14 of the Constitution guarantees to all persons a right to equality before the law and the equal protection of the laws.
• This notion of equality, expressed in its abstract, is undeniably a contested concept; it requires an exercise in interpretation to understand its full purport and meaning.
• But it is also just as patent that under any process of construal the idea of providing equal access to justice inheres both in Article 14 and in any reasonable notion of the rule of law.
• To achieve a perfect model of equal access would require every person to be possessed of an equal ability to defend his or her rights.
• This is therefore a concept that is easy to theoretically defend, but in practice, in a society that is intrinsically unequal, far harder to achieve.
• It was to this end, with a view to expanding the right to legal access, that the Supreme Court in the 1980s loosened its rules of standing, allowing claimants, whose rights were not directly affected by actions of the state, to approach the court on behalf of the larger public by filing a public interest litigation (PIL).
• PIL  which elevated the Supreme Court into a more egalitarian institution, was unfortunately too short-lived.
• PIL presently serves a role distinctly opposed to the rationale behind its fashioning.
• In the process, the idea of securing greater access to justice, to those for whom the mere act of approaching a court is often an insurmountable barrier, has suffered a grave dent.

The case for equal access

• Ensuring equal access to justice, requires much more than improving an individual’s access to courts and the guarantee of proper legal representation.
• It compels a definition of access to justice that partakes a necessity for just and equitable legal and judicial outcomes.
• While achieving such an end might be a utopian endeavour, it serves little purpose to dilute the right to equal access by imposing newer and further obstacles to justice.

An imposition of an inequality

• Today, the court appears to be treading a path where the ability to pay costs, in the form of pre-deposits, might virtually come to represent an indispensable condition for securing quick justice.
• This practice, if not immediately disavowed, to borrow an illuminating phrase used by the U.S. Supreme Court, would tantamount to “an imposition of an inequality”, thereby making illusory some of the Constitution’s most cherished promises entrenched in the Preamble, of justice, social, economic and political, and of equality of status and of opportunity.

[4] The fee for NSG membership

The Hindu

News:

• China’s announcement that it intends to oppose India’s membership of the Nuclear Suppliers Group unless it agrees to sign the Non-Proliferation Treaty (NPT).
• For the past year, India had made admission to the 48-member NSG a focus of its international outreach, though membership has been a goal since the India-U.S. civil nuclear agreement was signed in 2008.
• Several major countries including the U.S., Russia, Germany, the U.K. and Australia have openly backed the bid, despite the fact that India is not a signatory to the NPT, widely considered to be a key criterion for NSG membership.
• In 2015, India reached out to many other NSG members, including those such as Ireland and Sweden that are members of the pro-disarmament group, the New Agenda Coalition, and have traditionally been opposed to its admission.
• Clearly, China’s stand is a combination of its fraught relations with India as well as its desire that its “all-weather friend” Pakistan not be disadvantaged in the process.
• However, this is not the end of the road for India’s NSG ambitions.
• For this, the government must begin an internal debate to appraise its own position on the NSG membership, and to figure out how far it is willing to go to secure it.
• It will?
  • 1. Have to reckon with the possibility that NSG members could object to an “India-specific” ruling, and that other non-NPT countries, including Pakistan and Israel, may also benefit from any flexibility that is shown in India’s case.
  • 2. There is a possibility that India could receive a “second class” membership, and not be considered a “nuclear weapons state” by the NSG.
  • 3. Membership of the NSG, a body set up specifically in response to India’s nuclear test in 1974, will eventually require India to curtail its nuclear weapons programme.

U.S. President Barack Obama’s comments, made after the Nuclear Security Summit, that:

• The nuclear arsenals of India and Pakistan are taking them in the “wrong direction”, underscore this.
• If India aims to be part of the elite NSG club, it must have a realistic idea of what the fee for full membership is, added to the diplomatic outreach required to win support from China. A full and transparent cost-benefit analysis is crucial.

Additional information: NSG

 [5] India’s IPR regime not regressive: Sitharaman

The Hindu

News

• Commerce & Industry Minister Nirmala Sitharaman have said that the National Intellectual Property Rights (IPR) Policy will send a clear message to Washington that India’s IPR regime is not regressive.

Stand of the Indian Government

• India does not recognise “unilateral measures” such as the U.S. Special 301 Report that tries to create pressure on countries to enhance IPR protection beyond the World Trade Organisation’s Agreement on Trade-Related Aspects of IPRs (TRIPS).
• India will not undertake commitments beyond TRIPS.
• IPR Policy will ensure that no changes are made in Section  3(d) of (Indian) Patents Act (which prevents ever-greening of drug patents) as well as the patent-disabling Compulsory Licensing (CL).
• Compulsory licensing and norms similar to Section 3(d) are among the flexibilities available in international treaties and TRIPS Agreement to ensure availability of essential and life-saving drugs at affordable prices.

What is special 301 report?

• Under Section 301 of US Trade Act, the office of US Trade representative (USTR) prepares a list of countries whose Intellectual property right regime (IPR) has negative impact on American products. Among such countries, special attention given to two groups:

Priority watch list countries	Priority foreign countries
USA uses “carrot” policy to incentivize IPR reforms e.g. funding, training, capacity building, bilateral exchanges and conferences.	“sticks” policy to force IPR reforms e.g. putting trade sanctions, approaching WTO dispute resolution.

Additional Points

• IPR Policy will promote India’s indigenous knowledge on water conservation measures.
• The Policy will also promote ayurveda, yoga, naturopathy, unani, siddha and homoeopathy.
• Government  will work with states for better protection and enforcement of copyrights and it will hold roadshows to promote the IPR policy.

[6] The pros and cons of subsidies through direct benefit transfer

Livemint

PAHAL—the direct benefit transfer scheme for liquefied petroleum gas (LPG).

• There were many scheme which were implemented by DBT by different governments. But PAHAL is the first actual roll-out of a scheme using the DBT approach for providing subsidies.

What is the difference between subsidy and benefit transfer?

• When a government meets a part of the cost of providing a good or service to a beneficiary, this is a subsidy.
• When a government provides income support to a beneficiary, this is a pure transfer payment unrelated to the cost of providing any good or service.

PAHAL is the first major programme in India that provides subsidies through DBT.

• With nearly 150 million registered beneficiaries, it is probably the world’s largest DBT programme ever.
• Yet, it accounts for only about 3.5% of the total annual flow of government subsidies.
• DBT under PAHAL is just a beginning in using DBT as the medium for providing subsidies. There is still a long way to go.

This article has drawn on the analyses provided in the Economic Survey for 2015-16 and the report on DBTL (direct benefit transfer of LPG) Performance Evaluation published last month by the Council for Energy, Environment and Water (CEEW).

Benefits of Direct benefit transfer:

• The goal of the government in subsidy reform is not doing away with subsidies, but targeting them effectively so that they flow only to the intended beneficiaries.
  • Such targeting of subsidies is extremely problematic when the subsidy is embedded in the physical delivery of a product at a price that is below the open market price.
  • This price gap distorts the market, providing opportunities for arbitrage, diversion of supplies and profiteering in the black market.
  • An elaborate administrative apparatus has to be maintained at huge cost to manage the rationing of subsidized commodities.
  • Despite this, problems of product adulteration, leakages, ghost ration cards and harassment of beneficiaries by the rationing bureaucracy remain endemic.

• DBT approach is that it is potentially a much better alternative compared to the PDS. DBT can cut clean from all the abuses of PDS.

Problems associated with DBT:

• DBT generates a new, and problematic, dependence on the banking system as discussed below.
  • This new approach faces several challenges.
  • Some of these are specific to LPG delivery.
  • But the most important challenge is generic for the DBT approach. It relates to the banking network, which is the backbone of the DBT system.
  • In this system, subsidies are transferred to beneficiaries directly through their bank accounts.
  • Hence, the system cannot work if the beneficiary does not have a bank account.
  • Unfortunately, the Jan Dhan Yojana programme notwithstanding, banking penetration among the target beneficiaries is still quite limited, especially in rural areas.
  • Though it is not viable to have a commercial bank branch in every village, all villages can be served through the new payments banks and banking correspondents.
  • However, it is widely reported that bank staff are reluctant to cooperate in opening accounts, especially unprofitable ‘zero balance’ accounts, for poor customers.
  • These customers are quite unfamiliar with opening and operating bank accounts and they are often seen as supplicants rather than clients.
  • Standard excuses are used such as spellings of names not matching, signatures not matching, address inaccuracy, etc., to avoid opening an account or making a payment.
    • An important step in cracking this problem is the linking of Jan Dhan Yojana with Aadhaar, the unique biometric identification system.
    • Aadhaar is now backed by an Act of Parliament and is reported to have covered virtually the entire population.
    • Linking of the two systems is also being actively pursued.
    • However, this is a work in progress and there is still a long way to go.

• One key issue is the importance of a consumer-friendly delivery system. Urban LPG consumers take for granted the home delivery of LPG cylinders. In rural areas, consumers have to fetch the LPG cylinders for long distances, often from delivery outlets located in other villages. This remains a major disincentive for adopting LPG as the cooking fuel of choice.
• The initial outlay required for getting an LPG connection, by way of deposit, cost of a burner, regulator, etc., is another disincentive for low-income households.

Some solutions for the problems associated with DBT:

• To scale up the DBT approach to all target beneficiaries, not just for LPG but eventually for kerosene, food grains, sugar, etc., it is necessary to overcome the roadblock that currently exists in the banking system, especially in rural areas.
• In addition to integration of the Jan Dhan Yojana database with the Aadhaar database, DBT will require an aggressive awareness campaign. Such a campaign is urgent not just for beneficiaries but even more so for front-line commercial bank staff.
• They need to be made aware that the humble act of opening an account for poor beneficiaries is, in fact, a critical link in what could become best practice for the largest welfare delivery system in the world.
• An awareness campaign is also necessary about the subsidy scheme in place for low-income households, and how the DBT system works.
• Ujjwala Yojana scheme has been initiated to provide free or subsidized connections to some 50 million poor households over the next four years at a total cost of about Rs.8,000 crore.
• Switching from 15kg cylinders to 5kg cylinders in rural areas will also help ease the cash-flow constraint for these households by reducing the outlay required for each refill.
• A final, disappointing lesson is the failure of exhortations to induce rich households to voluntarily surrender their subsidy claims. However, despite the much hyped ‘Give It Up’ campaign, only 3.6% of consumers actually gave up their subsidy claim. In other words, only 14% of the rich consumers actually ‘gave it up’. This is a sad commentary on the attitude of the rich, and implies that their exclusion from subsidy has to be enforced, not voluntary. That is a pity.

Conclusion:

• Despite all this, LPG will remain an uncompetitive fuel alternative for about 50% of such households who continue to depend on firewood, cow-dung patties and other biomass that are essentially free. Thus, the adverse health and ecological consequences of traditional fuels notwithstanding, LPG penetration among this consumer group will remain a challenge.

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GS PAPER 3

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[1] An IP policy with no innovation

The Hindu

Issue

• Critical analysis of the recently released National Intellectual Property Rights (IPR) Policy.
• For background, refer earlier article New IPR policy retains access to cheap drugs

Routine statements given related to IPR

• That it is meant to foster innovation and creativity.
• That it must be balanced against public interest and public health.
• And that the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPS is the benchmark and that India is compliant with relevant international norms.

Flawed foundation

• The policy fails to situate IP within the larger context of the innovation ecosystem, refusing to acknowledge that while IP could accelerate innovation in certain technology sectors, it impedes innovation in others.
• The entire edifice of the present IP policy is built on this flawed foundation equating more IP with more innovation.
• The policy sounds almost militant when it proposes that despite our ancient “laudable” heritage where knowledge was freely and extensively shared, we must now make amends and convert each piece of our knowledge into an IP asset.
• This flawed frame results in a number of problematic assertions in the text of the policy.

The other way around

• We must encourage a plurality of approaches when it comes to IP and innovation; our scientists should be free to take this call on whether or not they wish to register IP.
• Doing so for the mere sake of it is stupid, quite apart from the fact that on an empirical cost-benefit analysis, most U.S. universities lose more money on IP registrations than they make through IP royalties.

Attention given to Rural Economy

• The policy needs to be commended for taking note of our “informal” (rural) economy and the need to encourage the prolific creativity found within.
• Unfortunately, far from understanding the drivers of creativity and the modes of appropriation/sharing in this “shadow” economy, the policy leans towards the superimposition of a formal IP framework on this marginalised sector.

Attention given to Movies

• The policy recommends that the unauthorised copying of movies be criminalised.
• No doubt Bollywood requires some protection from pirates, but criminalising what is essentially a civil wrong (much like defamation) is tantamount to killing an ant with an elephant gun, not to mention the potential for abuse at the hands of our police.

A short-sighted policy

• The policy advocates that IP be taught in schools and colleges. But why?
• What we need in schools and colleges are courses on creativity, not on IP.
• Even if we lack resources to impart specific courses on creativity, let’s at least ensure that we don’t stand in the way of a natural flowering of creativity in our children.
• Unfortunately, notwithstanding some of its praiseworthy proposals, such as expedited examination, an IP exchange and the proposal to encourage Corporate Social Responsibility funds into open innovation, this much-awaited IP policy is terribly short-sighted.

[2] WPI increases on higher food prices

The Hindu

News:

• Wholesale prices moved out of deflationary territory after 17 months in April, rising by 0.3 per cent compared to a contraction of 0.8 per cent in March—driven largely by rising food prices.
• With retail inflation at 5.4% in April, RBI may not cut rates further
• On the food side, there were some alarming signals as pulses saw an increase of close to 4 per cent from the previous month showing that supply constraints in certain pockets can lead to flaring up of food inflation.
• The food articles category, among primary articles, saw inflation accelerating to 4.2 per cent in April, compared to 3.7 per cent in March.
• Manufactured food inflation surged to 8 per cent from 4.5 per cent over the same period.
• Inflation in manufactured products moved into positive territory after 13 months, rising to 0.7 per cent in April from a contraction of 0.13 per cent in the previous month.
• The situation in the fuel and power segment eased somewhat in April with inflation in the sector contracting 4.8 per cent compared to a contraction of 8.3 per cent in March.
• If the outlook on the monsoons turns negative, the prices of food products may go up further with traders trying to hedge their positions now to gain in the future
• The fuel and power prices are still in the negative territory.
• However, the base effect on these is expected to wither out soon and we could see inflationary trends by July 2016.
• If the outlook on the monsoons turns negative, the prices of food products may go up further

What is WPI?

• The Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods.
• It is used to measure Inflation.
• Some countries ( like the Philippines) use WPI changes as a central measure of inflation.
• But now India has adopted new CPI to measure inflation.

WPI vs CPI

• Click here

[3] With patient capital to fix basic problems, India too can think big

Livemint

Issue

• India needs multibillion-dollar impact funds to help build infrastructure that addresses the country’s most fundamental problems.

A contrast

• India’s most fundamental problems and challenges faced by its entrepreneurs don’t even register as fleeting thoughts in the minds of those in more developed markets.
• Following aspects are taken for granted in developed world, whereas in our country these are yet to become a reality and poses challenges to entrepreneurs:-

 

1. Uniformity in palletized containers and cold chains,
2. A common language
3. An existing high quality offering of existing service provider
4. 24 hour power
5. A predilection toward customer service
6. Enforceable legal consequences for non-compliance and malfeasance.

• In India, you can’t take these pieces for granted, and in order to ensure a seamless customer experience—whether it’s healthcare, small business loans, or delivering vegetables—you largely have to build the stack and its component parts yourself.
• Having these “bare necessities”  allows developed economies to think big by dreaming up models that are built on platforms and marketplaces.

It takes a certain deep immersion into the Indian condition to be able to articulate these problems:

• India has 800 languages, but the entire backbone of the Internet is built in English.
• Indian government spends less than 1% of GDP (gross domestic product) on healthcare.
• How does one increase access to markets for a small Indian farmer, given the fact that a small farm in the US is 500 acres and in India, it’s often a single acre or less?
• With 250 million students in grade school, India will soon confront its much-touted “demographic dividend”. A manufacturing-led economy that absorbs them seems unlikely given China’s dominance. Realistically speaking, where will opportunities of this magnitude come from?
• The digital and frictionless nature of commerce definitely aids in the growth of a consumer-driven economy in the developing world. Contrast that with India where 95% of all transactions are cash and less than a quarter of Indians even have a credit score. Barriers Indians face include not having a bank account, a credit score and a mode of digital payment, besides others.

Conclusion

• India needs multibillion-dollar impact funds to help build infrastructure that addresses the country’s most fundamental problems.
• Sometimes, we fear that even that might not be enough to achieve any meaningful scale because it’s not just the quantum of capital that is important, but also the timescale of investment.
• These problems will not be solved by venture funds with limited lives of 7-10 years seeking exponential returns in sectors where the exits are obvious.
• Solving these problems requires patient capital that will help build these companies over decades.
• When you help build the third largest economy and the largest democracy in the world, the societal returns are manifold and the financial returns are but inevitable. And that is a big idea.