9 PM Daily Brief – 22 April 2016

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

What is 9 PM brief


GS PAPER 2


[1] The problem of making peace

The Hindu

Issue

India-Pakistan peace process

Note:- The article is written by S. Akbar Zaidi who is a political economist based in Karachi. So, it should be read with ‘a pinch of salt’.

Why there is no peace between two countries?

  • Earlier, it was easy to identify why there is no peace  as on the Pakistani side, blame usually lay with the Pakistan ‘Establishment’, a pseudonym for the military and its many institutions.
  • And on the Indian side, arguments ranged from Pakistan’s interference in Indian affairs and the support for militancy in India, as understood and articulated by the Indian Foreign and Home Ministries.

Justification for Military rule in Pakistan

  • It claims that only it can defend Pakistan’s geographical and ideological foundations and borders.
  • The ‘threat from India’ to undermine Pakistan’s existence has been the main excuse which has given, in the past, the moral justification for the Pakistan Army to claim an over-extended role in the country’s domestic and foreign polity.

Pakistan Army settling for peace

  • For most of the past seven decades, with Pakistan’s military ruling and governing the country for most of this period, the anti-India position, and hence the absence of peace, from the Pakistani side at least, has revolved around apportioning blame on the army.
  • But this is not the case, as  many military leaders have played a surprising, and ambiguous, role in actually promoting peace with India as well. For instance,
  • General Zia-ul-Haq in 1987, at a time of high tension between India and Pakistan, visited Jaipur to see a Test match between the two countries.
  • General Musharraf talked about peace with India by the mid-2000s.

Long shadow of 26/11

  • After November 2008, India held Pakistan responsible for instigating and carrying out the Mumbai attacks, and for protecting many of those who are said to have masterminded the attacks.
  • All possibilities of any peace process came to an end after Mumbai, and if anything, there was real threat of retaliation by India and an all-out war against Pakistan.
  • From around May 2007, as General Musharraf’s position weakened in Pakistan, and as civilian and democratic forces gained greater confidence and strength, the relative position of the military in the political arena also weakened considerably.
  • But Pakistan’s military came back back in a dominating position domestically after the Peshawar school attacks of December 2014.

The recent trend

Even though the peace process between India and Pakistan seems to have come to a halt, and perhaps the usual suspects are to be blamed, one does get a sense that while there is no real peace between the two countries, the allegations at present are more gesture than substance, meant for domestic constituencies.

[2] India’s wilful blindness on Maldives

Livemint

Issue

India’s tolerance for human rights abuses in the Maldives

Why in news?

  • Last week, Maldivian President Abdulla Yameen visited India and reportedly concluded several bilateral agreements on issues ranging from taxation and tourism to defence and space research.
  • It reflects a more welcoming policy by India towards the Maldives, apparently in response to China’s increasing influence in the region.
  • But, this apparent shift seems to involve an increased reluctance on the part of Indian authorities to publicly engage with the ongoing human rights and rule of law crisis in the Maldives.

Human Rights abuses in Maldives

  • The arbitrary removal of two Supreme Court judges in 2014
  • The politicized and unfair trials and imprisonment of former president Mohamed Nasheed and former defence minister Mohamed Nazim in 2015
  • The arbitrary and unfair trials of political rivals under the anti-terrorism law
  • The general erosion of the freedoms of expression and media, of association and of peaceful assembly.
  • Such events  have seriously eroded human rights protections, judicial independence and the rule of law in the Maldives.

India being tolerant

  • Such violations have drawn international scrutiny from other states, international organizations and civil society. While India was vocal about the fair trial concerns with Nasheed’s trial and imprisonment in early 2015, it has grown gradually silent.
  • The discussions on the Maldives in the Commonwealth Ministerial Action Group (CMAG) earlier this year provide another example of India’s tolerance for human rights abuses in the Maldives.  In February, Yameen publicly thanked India for its support in avoiding action against the Maldives at the CMAG.
  • Similarly, on his recent visit to Delhi, Yameen expressed his appreciation for everything the Indian government had done to protect the Maldives during the CMAG deliberations, saying he would look for India’s support against any future “punitive action”.

What is CMAG?

The CMAG is an intergovernmental body responsible for monitoring Member States’ compliance with the rule of law, judicial independence and human rights, as contained in the Harare Declaration.

With Greater Power comes Greater Responsibility

  • It is important for India’s credibility as a principled player in the global arena that it sharpens its focus on human rights and the rule of law, and highlights these issues rather than obscures them.
  • Both India and the Maldives are bound by international human rights treaties like the International Covenant on Civil and Political Rights (ICCPR), which oblige them to respect human rights and the rule of law.

GS PAPER 3


[1] A misguided ban in Delhi

The Hindu

What happened?

The Delhi government has decided to ban surge pricing by taxi service aggregators.

What is surge pricing?

  • Surge pricing is  essentially an algorithm-based mechanism that determines fares based on supply and demand.
  • It comes into effect when the taxi demand is higher than drivers around you.It ensures that more taxis ply on the roads and helps meeting the increased demand.
  • The aggregator says the increased fare acts as an incentive for taxi drivers to stay on the roads and helps in balancing the demand with supply.
  • It  exists in slightly dissimilar forms in other areas, including that of transport.For instance, Airlines have the flexibility to raise fares depending on demand, subject to a cap. And the Railways sets aside some seats for those willing to pay more, based on the knowledge that demand generally outdoes supply when it comes to train tickets.

Why it has been imposed?

The surge pricing ban has flowed from the imposition of the odd-even licence plate rule, which has increased the demand for taxis.

Arbitrary ban

  • Arbitrary interventions in the demand-supply market are pointless in the absence of alternative solutions, as expected, after the ban, the number of taxis plying on Delhi’s roads has dropped.
  • Obtrusive regulation of these new players would work against the interests of both the commuter and the driver.

Road ahead

  • Governments can do more in the medium term to enhance options in terms of better modes of public transport, greater frequency of bus and metro services during rush hour and perhaps even adoption by mass transport of applications using similar algorithms to allow passengers to plan their commute better.
  • The only long-term solution for the Delhi government is to provide its residents with cheaper and better public transport.

[2] The underbelly of India’s silicon valley

The Hindu

Context

Workers of the garment factories in bangalore stopped working and took to streets and brought the traffic on a standstill in the recent news where govt wanted to change the provident fund law(which was later rolled back)

Why did they came to streets all of a sudden

  • Provident Fund(PF),for many is the means to save from the meagre amount they are earning
  • The news came as a shock that they cannot withdraw the contribution till they attain the age of 58

How things like these affect the economy

  • Bangalore is a place known as India’s silicon valley and is the showcase for a new India or ‘surging economy’, what the garment workers did was paralysed the city which is known all around the world for its IT business
  • Government is trying to boost “investor confidence” and “ease of doing business” for its India’s economic growth, but things like these challenge the government claims

 

Previous articles related to PF reforms

Govt rolls back PF withdrawal norms

Rollback of New PF withdrawal norms

[3] Driving home the Bill

Indian Express

Context

In light of recent accidents caused by rash driving the road safety bill needs to revamped to tackle the issue systematically and comprehensively

Why it needs to be revamped

  • 1,40,000 people die and more than 5,00,000 suffer serious injuries every year in road crashes
  • Between 2012-14, there were 60,000 cases of accidents caused by underage drivers
  • 10 per cent of the global deaths in road crashes happen in India

Existing legal provision under Motor Vehicle Act 1988

  • Fine of Rs. 1000
  • Or Imprisonment of 3 months or both
  • The law does not mention “minor” it says “unauthorised person”

 

What the draft bill the new Road Transport and Safety Bill, 2014 say

  • Enhances the fine to Rs 10,000, mentions a “minor” is an unauthorised person
  • The fine has been increased to Rs. 10,000
  • “Minor” will be considered as an unauthorised person
  • Vehicle will be impounded for 2 months if the offences has been repeated
  • Penalty points on repeat offenders will lose their license
  • Road contractors or companies will also incur penalties in not complying by road design standards, road construction and maintenance

Other norms of the bill

  • Unified Driver Licensing System- The bill proposed a simpler transparent, single window driver licensing system that is based on biometric to avoid duplication
  • Unified Vehicle Registration System- It proposes a Unified Vehicle Registration System integrating all stakeholders like manufacturer, owner, transport authority, insurer, enforcement agency all in one eco-system with private sector participation in establishing fitness certification centres to create more jobs. It will make transfer of vehicles across states easy using online system.
  • Road Safety & Traffic Management- Electronic enforcement in urban clusters using modern safety technologies with special emphasis for safety of vulnerable road users, creation of motor accident fund for immediate relief to accident victim special emphasis on safety of school children and security of women
  • National Road Transport & Multimodal Coordination Authority- Creation of National Road Transport & Multimodal Coordination Authority for improving quality of road transportation, focus on developing integrated transport systems & multi-modal hubs and feeder system and last mile connectivity for people friendly mobility.
  • Goods Transport & National Freight Policy- Simplified permits and single portal clearances, identification and development of freight networks, address bottlenecks concerning trucking industry and increase in logistics efficiency will reduce inflation and enable Indian manufacturing to become globally competitive.

[4] Innovation in Priority sector lending

Livemint

What is Priority Sector Lending

Priority Sector Lending(PSL) is an important role given by the Reserve Bank of India (RBI) to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections.. This is essentially meant for an all round development of the economy as opposed to focusing only on the financial sector.

The domestic banks and foreign banks with 20 and more branches have to disburse 40% of the Net Bank Credit (NBC) to Total Priority sector, out of which 18% should be total agricultural advances. The Foreign banks with less than 20 branches have been given a target of 32% of the Net Bank Credit to priority sector, however, there is no lower limit fixed for agriculture.

But the new norms suggest that foreign banks with less than 20 branches also have to achieve 40% PSL like all other banks and up in a phased manner till the year to March 2020.

 

Problem of PSL in India

Catering to different kind of customer requires different kind of skill. For example lending to bee farmers in Ludhiana needs a somewhat different skill set than lending to, say, airline entrepreneurs in Bengaluru.

But the current norm of PSL requires every bank to be versatile and cater to various kind of customer adequately.

 

To tackle this RBI has issued a notification on 7 April permitting the issue and trading of PSL certificates. This means that bank A which has a comparative advantage in, say, bee-farming loans and is required to lend, say, Rs.50 crore as per its PSL guidelines, can now lend Rs.100 crore to bee farmers. It can then sell the extra Rs.50 crore as PSL certificates to banks B and C that have to meet their quota of such loans but don’t have the skills to do so.

More importantly, banks B and C will not be responsible for a sudden downturn in honey demand in the country that will impact the recovery of these loans. That is entirely bank A’s responsibility. In effect, the larger social objective of loans to priority sectors and weaker sections of society will be met without burdening each bank with the specific responsibility of doing so

Thus in the PSL certificate market as conceived by RBI, the buyer of these certificates has almost no downside risk. The buyer does not carry the risk of the loan nor is its capital blocked for the loan amount.

Risks involved in it

  1. A bank for example, with its unique skill set for bee-farming loans, has a perverse incentive to dole out far greater such loans than is prudent, in order to maximize its fee income by selling these extra bee-farming loan certificates. Specifying position limits on individual banks to trade in PSL certificates can be one solution if this becomes an identified risk.
  2. RBI has also allowed “margin trading”—i.e., bank A can now sell bee-farming loan certificates to other banks even without actually making these loans. But this could be done upto a certain limit.

It is done to promote liquidity in the PSL certificate market and appropriate precautions have also been taken in terms of quarterly limits.

  1. Care should also be taken that banks should not excessively focus on fee income through PSL trading.

 It appears that RBI has not permitted secondary trading of these PSL certificates among banks, which is perhaps a good thing to begin with.

  1. RBI has also indicated a quarterly review of PSL compliance of banks vis-à-vis an annual review. This will certainly serve as early warning signals for any PSL certificate market malfunction.

Conclusion

RBI’s move on PSL certificates is an extremely innovative initiative, and one that was long pending—it was first mooted in the Raghuram Rajan committee report of 2008.

 It has the potential to usher in large efficiencies in Indian banking, without sacrificing on any of the larger inclusion and equity goals

[5] Waging a battle in the labour market

Livemint

Context

Labour market reforms

What is happening

  • Minimum wages and rigid labour law make companies hire contract labourers at lower rates
  • Executive decision by govt. has raised the minimum wage to Rs. 10,000 per month brings amendment to Rule 25 of the Contract Labour Central Rules

 

Economic survey says

  • Estimated wages of the formal sector by average are higher by 20 times than informal sector
  • Contract labour is growing rapidly in states with more rigid labour laws, despite it not being the preferred first option for most firms due to the contracting costs involved

New minimum wage has taken care of the informal sector partially

Why partially

  • According to an estimate only 16.6% of informal sector gets covered under the act, the rest of labourers have little or no financial help

See previous article for Minimum wages act 1948

Ministry plans Rs. 10,000 minimum monthly wage for contract workers

Labour reforms

  • Employee’s provident fund must be coupled with job creation to fix the issues of unemployment and underemployment and facilitate the ease of doing business.
  • A reformed labour market is also a prerequisite for the success of Make in India and improving the ease of doing business, and not a substitute to job creation.
  • Employment is in the concurrent list which makes states equal partner in easing out the problems attached with employment, determination of minimum wages for contract labour should be left with the states to decide. Rajasthan, Madhya Pradesh, Gujarat and Maharashtra have already begun labour market reforms.

[6] FDI in e-commerce: Who are we protecting?

Livemint

Context

100% FDI has brought the fears that small retailers will lose their work in front of big boys

How it will help offline retailers

The opening up of the sector to FDI has come with a pre-condition that bars marketplaces from offering discounts on their own. These can only be offered by the vendors selling on the platforms. Lawmakers have claimed that the policy seeks to end what has often been referred to as “predatory pricing” by online companies, and provide a level playing field.

 

Issues with the level playing field

  • Consumer will not get discounts offered because policymakers will tell businesses how to charge for a particular product even if it not life sasing commodity
  • Discounting is the choice of sellers, among other retailers, in their own strategic goal to achieve high sales, no one should tell them how to do sales
  • How a policy will control any entity who might be influencing prices, also it is hard to measure it in the first place

Refer the following articles

100% FDI in e-commerce

FDI in e-commerce: 50 shades of grey


1. The lead article of the day is covered under Editorial Today. Click here to read.

2. Science and Technology and Environment articles has been left out, they will be covered in weekly compilation for next week.

BY: ForumIAS Editorial Team 


Comments

One response to “9 PM Daily Brief – 22 April 2016”

  1. Dead_Man Avatar
    Dead_Man

    nice article sir

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