9 PM Daily Brief -25 June 2016

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

What is 9 PM brief?

• GS PAPER 2
  1. NSG meet ends without any decision on India {Foreign Policy}
  2. Amendments to Specific Relief Act being examined {Polity}
  3. Can Britain opt for the Norway model? {International Relation}
  4. Britain casts a dark shadow over Europe {International Relation}
  5. Stepping into the unknown {International Relation}
• GS PAPER 3
  1. U.K. vote to exit EU will have near-term ramifications for the Indian economy {Economy}
  2. Free trade talks with EU to be ‘modified’ {Economy}

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GS PAPER 2

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[1]NSG meet ends without any decision on India    + China no barrier to India’s NSG entry, says academic

The Hindu                                                                                                                  The Hindu

Issue

• The annual plenary session of the Nuclear Suppliers Group ended on Friday without taking any decision on India’s application for membership.

Why India is not inducted?

• Several countries expressed concerns over the entry of members who are not signatories to the Non-Proliferation Treaty (NPT), that India has refused to sign.
• Though China  attempted to block any discussion, countries like Brazil and Turkey calling for a “criteria-based” process to be put in place first, and others like Austria, Ireland, New Zealand and Switzerland raising the NPT question.
• 32 countries had made positive interventions on India’s behalf, but the NSG’s actions are governed by consensus and not by majority.
• NSG joint statement said they spoke of “Technical, Legal and Political Aspects of the Participation of non-NPT States in the NSG” and decided to continue its discussion”.

Way Forward

• A leading Chinese academic has proposed that New Delhi should first tap the United Nations Security Council (UNSC) for support in order to advance its goal of joining the 48-nation club. The real problem is not from China but the consensus of P5 of the UNSC.

[2]Amendments to Specific Relief Act being examined 

The Hindu

Issue

• The Centre is contemplating amendments to the Specific Relief Act, 1963, to limit the compensation and relief that courts can grant in cases relating to execution of infrastructure and development projects.

What is the proposed changes

• It seeks to lay down guidelines for reducing the discretion granted to courts and tribunals while granting performance and injunctive relief.

Why this is being done

• This move is among a series of actions contemplated by the Centre to enhance “ease of doing business.”
• In the government’s assessment, some provisions in the existing law are an impediment for investors, as they fear a long-drawn litigation process.

Committee Report

• In the last week of January 2016, the government constituted a five-member expert committee to review the Act and suggest changes needed to remove bottlenecks in execution of contract-based infrastructure development, public private partnerships and other public projects.
• In its report to Union Law and Justice Minister D.V. Sadananda Gowda earlier in the week, the committee recommended changes in the law to limit the powers of courts to award relief.
• Responding to the report, Nationalist Congress Party (NCP) MP Shantaram Naik suggested an amendment to Article 226 to limit the powers of review of courts. In a letter to Mr. Gowda the MP contended that Article 226 should be amended to restrict the powers of High Courts and improve ease of doing business rather than effect a change in the 1963 Act.
• Mr. Naik said in his letter that unless the government builds consensus for a constitution amendment bill to limit powers of the High Courts, the objective of restoring the power of parliament to legislate on all matters may not be realised.

[3]Can Britain opt for the Norway model?

The Hindu

Issue

• After Brexit can UK opt for Norway model i.e. Norway is member of the European Economic Area, part of the single market but out of the EU.

What is the process of exit from EU?

• Under the Lisbon treaty, a member state wishing to leave the EU should first notify the European Council its decision, triggering Article 50.
• This would set in motion a process by which the member and the EU leadership will negotiate the terms of the departure and reach an agreement in two years.
• This means even if the British government invokes the Article 50 now, the earliest exit of Britain will take place after two years.
• Constitutionally, the decision to invoke the article is the Prime Minister’s alone.
• Even if the new British Prime Minister triggers the Article 50, Britain need not necessarily leave the EU after two years. If there’s no agreement by the end of the two-year period, the EU could unanimously extend the talks.

Suggestion by some economist?

• Some economists have already suggested that one of the options Britain could follow in the wake of a Brexit vote is the Norway model.
• Norway, along with Liechtenstein and Iceland are members of the European Economic Area (EEC). They have access to the single market while staying out of the EU. They also make contributions to the EU budget. There is separate secretariat in Brussels to manage the relationship between the EU and EEA countries.

[4]Britain casts a dark shadow over Europe 

The Hindu

What happened?

• The United Kingdom opted for  leaving the European Union in a closely-fought referendum.

Key points:-

• The referendum saw a turnout of 72 per cent, the highest in any election since 1992.
• Prime Minister David Cameron, the architect of the referendum and a passionate supporter of Britain within the European Union, has announced that he would be stepping down as Prime Minister in October.
• This is the second referendum on Britain’s relationship with the European project.
• In 1975, in a referendum on whether the U.K. should stay or leave the European Community (Common Market) Area, the country voted for staying in with a resounding 67.2 per cent vote.
• The markets have predictably reacted sharply to the referendum result with the pound falling to its lowest since 1985.

[5]Stepping into the unknown         +

The tyranny of popular will: Why Brexit is a cautionary tale for us all

The Hindu                                                                                             Indian Express

Issue

• Critical analysis of the Referendum.

Why did Britons choose the unknown future despite stark warnings from their own government, world leaders and economists that a Brexit would be extremely risky?

• Euroscepticism has been a strong sentiment among Britons.
• But over the past few years, nationalist sentiment has grown stronger in the U.K. A number of factors may have contributed to this shift.
• One is the public anger in Britain towards the status quo.
• Ordinary Britons, hit hard by the economic crisis, feel betrayed by their political leadership.
• The Conservative government’s austerity policies have further alienated these sections.
• The main opposition Labour Party, organisationally divided and ideologically distraught, has been too weak to tap this resentment.
• It’s the far-right, ultra-nationalist sections that stepped into this space and gave free play to fear-mongering on immigration.
• But in reality, attitudes to immigration were  being fanned by the failure of successive governments to tackle the country’s real problems: Housing, the poor educational performance of the white working class and the financing of public services.

Problem with referendum as a principle

• It  reduces democracy to the tyranny of the majority.
• It  reduces complex questions to simple yes-no answers.

Conclusion

• A simple yes-or no is not always a right solution.
• There is always a scope for middle path where discussions and deliberations can be held.
• And a rational merit based decision can be taken which satisfies majority of the stakeholders.
• In the coming days, London will have to manage the panic in the financial markets, the anxiety in Scotland and Northern Ireland, and the question of the international ramifications of the British isles moving away from the continent.

 

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GS PAPER 3

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[1]U.K. vote to exit EU will have near-term ramifications for the Indian economy  +

Weaker pound to benefit Indian tourists, students

The Hindu                                                                                                                   The Hindu

• Brexit effect on Indian economy.

Possible effect

• Brexit is expected to cause a slowing of growth, economic prospects remain relatively optimistic due to the impact of local factors like a strong monsoon, the impact of pay hikes and higher public capex(capital expenditure).
• If at the end of that process, the U.K. exits the single market, EU countries will start imposing tariffs on British products, making it far less attractive for Indian businesses – like Tata Motors – to have a manufacturing base in the U.K.
• In response to the referendum in favour of Brexit, oil prices immediately declined by 5 per cent though, this is expected to be a short-lived phenomenon as core oil fundamentals remain unchanged.

Good news for Indian tourists and students

• After the Brexit, the British pound collapsed to a 31-year low against the dollar, crashing about 10 per cent during the day  against the rupee.
• The British currency ended the day about Rs. 7 lower at Rs. 93.5 per pound.
• The drop in the pound is also likely to result in an increase in Indian students choosing the UK as a destination for higher education as this will make studying there significantly cheaper.
• Brexit has resulted in a big drop in the value of the pound and if this trend remains then we could see a surge in leisure tourism to Britain, as it will become significantly cheaper.

[2] Free trade talks with EU to be ‘modified’

The Hindu

Issue

• Impact of Brexit on from the European Union on India’s trade and investment with the U.K. and the EU.

Key points

• Britain’s exit from the European Union will not have any immediate impact on India’s trade and investment with the U.K. and the EU.
• But there will be some modifications and moderations in the  proposed India-EU Free Trade Agreement (FTA).
• The government does not see any immediate impact of Brexit on ties with the U.K. and the EU as trade and investment with the two are currently happening not on the basis of an FTA but on a bilateral basis.
• Britain’s exit from the EU will certainly affect India’s interests on those tariff lines where concessions were being considered on account of Britain. India will undertake a study of those Britain-related tariff lines that are part of India-EU FTA talks.
• The implications of Brexit will happen only after 2018 when the terms and conditions regarding Britain’s exit from the EU are likely to be finalised.
• As of now, India has denied  a possibility of India considering a separate FTA with the U.K.

Short term impact

• That there will be some impact on trade in the short-term due to the currency volatility.
• The government is closely monitoring the situation to assess the short, medium and long-term impact on India’s trade and investment with the U.K. and the EU.