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Front Page / NATIONAL [The Hindu]
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India needs lower taxes, higher compliance
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Agni-V test-fired again from mobile-launcher
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Rajasthan sets up panel on Gujjar quota issue
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Remission power lies with State: SC
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Editorial/OPINION [The Hindu]
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Time to repeal the FCRA
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Fire in the sky
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The mother of all disruptions
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Assessed, approved but scant attention to compliance
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Foreign policy, Act III
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ECONOMY [The Hindu]
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Indian Express [The Hindu]
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Live Mint
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Addressing India’s water dispute problem
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Karnataka’s dangerous new reservation policy
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What awaits us in 2017?
Click here to Download 9 PM Daily PDF (27th Dec. 2016)
Front Page / NATIONAL [The Hindu]
[1] India needs lower taxes, higher compliance
Context
Finance minister has said that India needs lower taxes to compete globally and that voluntary tax compliance by citizens should be encouraged by a friendly administration.
Finance minister’s views
- Extraordinarily high taxation rates in the past” had encouraged people to evade taxes. “What you need is lower level of taxation, to provide services more competitive in nature.”
- Need for a tax-friendly administration to increase voluntary compliance.
[2] Agni-V test-fired again from mobile-launcher
Context
The test-firing of India’s most formidable ballistic missile, Agni-V was an unalloyed success, signaling that India’s nuclear deterrence capability has come of age.
News has been covered in the Editorial section.
Give this article a go-through once
[3] Rajasthan sets up panel on Gujjar quota issue
Context
High level committee appointed by Rajasthan government to resolve Gujjar reservation issue
What has happened?
• High-Level Committee: To resolve the Gujjar reservation issue, the government in Rajasthan has appointed a high-level committee headed by a retired High Court judge to review the report of the State OBC Commission, on the basis of which quota in jobs and education was given to five communities last year
• The panel will work with the State OBC Commission and submit a report to the government
• Chairperson:Justice Sunil Kumar Garg
• Other members: The committee will have academician Yogesh Atal and Rajasthan University’s associate professor Rajiv Saxena as its members
Backdrop
The committee was appointed in the light of the December 9 judgment of the Rajasthan High Court striking down a 2015 law which had provided five per cent reservation to Special Backward Classes, including Gujjars
Demand of Gujjars
• 5 per cent Quota: Gujjars, who have led violent agitations on the issue since 2007, have demanded five per cent sub-quota within the OBC reservation in order to ensure that it does not cross the 50 per cent cap, because of which the High Court had struck down the 2015 Act.
[4] Remission power lies with State: SC
The Hindu
Context
The judgment is in sync with the review petition on the question of who has the actual authority — the Centre or the State — in granting remission for life convicts.
What has happened?
SC has refrained itself from allowing any reprieve to four convicts who have served 25 years of their life sentence for the murder of an elderly couple in Kolkata in 1991
- A Bench of Justices A.K. Sikri and A.M. Sapre acknowledged, in its recent judgment, that the convicts have suffered incarceration for more than 25 years and, therefore, there should be a chance for remission of further prison sentence
- But the court declined to intervene, simply observing that “this is a power which can be exercised by the State.
Editorial/OPINION [The Hindu]
[1] Time to repeal the FCRA
Context
The Foreign Contribution (Regulation) Act, 2010, is nothing more than a tool to keep ‘errant’ civil society organisations on a tight leash. An autonomous, self-regulatory agency for NGOs is the need of the hour.
Author sets up the article by citing instances wherein FCRA has been used to reject license renewal applications of Non-governmental Organisations (NGOs) in the past by the government.
• In early November 2016, the Union Ministry of Home Affairs rejected the licence renewal applications, under the Foreign Contribution (Regulation) Act, 2010 (FCRA), of 25 non-governmental organisations (NGO). That means these NGOs can no longer receive funds from foreign donors.
Government’s claim: The organisations had violated FCRA norms by engaging in activities detrimental to public interest.
• In 2015, the Home Ministry had cancelled the FCRA licences of 10,000 organisations.
Origins of FCRA
The original Foreign Contribution (Regulation) Act was enacted in 1976 by the Indira Gandhi-led government during the Emergency.
• Tool to curb dissent: It prohibits electoral candidates, political parties, judges, MPs and even cartoonists from accepting foreign contributions. As the inclusion of ‘cartoonists’ under its ambit suggests, the intent was to clamp down on political dissent
• Actual reason given for passing FCRA: The justification given at that time was to curb foreign interference in domestic politics
• Cold war era: This was the Cold War era, when both the Soviets and the Americans meddled in the internal affairs of post-colonial nations to secure their strategic interests. The FCRA was aimed at preventing political parties from accepting contributions from foreign sources
Gradual opening up
As time passed on, India opened up to foreign funding after LPG reforms of 1991 as it accepted donations from World Bank and IMF
• Indian businesses also resorted to Foreign funding as did the political parties
Delhi HC’s directive
In 2014, both BJP and Congress were pulled up by Delhi HC for violating the FCRA by accepting contributions from the Indian subsidiaries of the London-based multinational, Vedanta
• HC’s directive: It ordered the government and the Election Commission to take action against both the parties but no action was taken
• You can read more about HC’s directive here
FCRA amended
In March 2016, government quietly introduced a clause in the Finance Bill that amended the relevant section of the FCRA, 2010, so that what was hitherto a “foreign company” now became an Indian company.
• This amendment has also opened the doors for all political parties to accept funding from foreign companies, so long as it is channelled through an Indian subsidiary
• You can read more about the amendment here
Difference between FCRA 1976 and FCRA 2010
3 changes that render the new law a more stringent nature are,
• License for 5 years: FCRA registration under the earlier law was permanent, but under the new one, it expired after five years, and had to be renewed afresh. Through this measure state can teach a lesson to any NGO which acts against its interests
• Directing the usage of administrative expenses: The new law put a restriction (50 per cent) on the proportion of foreign funds that could be used for administrative expenses, thereby allowing the government to control how a civil society organisation (CSO) spends its money
• Organisations of political nature: While the 1976 law was primarily aimed at political parties, the new law set the stage for shifting the focus to “organisations of a political nature”. The FCRA 2011 rules clearly enumerates the organisations of political nature making it easier for successive governments to target inconvenient NGOs. This list contains trade unions, students’ unions, workers’ unions, youth forums, women’s wing of a political party, farmers’ organisations, youth organisations based on caste, community, religion, language etc.
Legal analysis of FCRA
In April 2015, the UN Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association undertook a legal analysis of the FCRA, 2010. He clearly stated that,
• The FCRA provisions and rules “are not in conformity with international law, principles and standards”
His argument
• Freedom of association:Access to resources, particularly foreign funding, is a part of the right to freedom of association.The right to freedom of association is incorporated under the International Covenant on Civil and Political Rights, to which India is a party. This right is further a part of Universal Declaration of Human rights (Article 20), meaning a violation of this right constitutes a human rights violation.
Vague restrictions: While this is not an absolute right and is subject to restrictions, those have to be precise, and defined in a way that “would enable a CSO to know in advance whether its activities could reasonably be construed to be in violation of the Act. The report says that restrictions in the name of “public interest” and “economic interest” as listed under the FCRA rules fail the test of “legitimate restrictions”. The terms are too vague and give the state excessive discretionary powers to apply the provision in an arbitrary manner
So, how, then the foreign funding of NGOs should be regulated?
One cannot deny that corrupt NGOs exist, or that unscrupulous NGOs that receive foreign funds may serve as conduits for money laundering but FCRA is simply a rehashed version of “Inspector Raj” for the NGO sector. A better way is,
• Create an autonomous, self-regulatory agency for CSOs
• National Accreditation Council of India (NACI): In fact, a seven-member task force was set up way back in 2009 to create a national-level self-regulatory agency, the National Accreditation Council of India (NACI), that would monitor and accredit CSOs. It was to be an independent, statutory body along the lines of the Bar Council. The task force submitted its report to the Planning Commission in September 2010. It was never heard of again. Instead, what we got in September 2010 was a more aggressive FCRA
Read More: Universal Declaration of Human Rights, International Covenant on Civil and Political Rights, UN Special Rapporteur on the Rights to Freedom of Peaceful Assembly and of Association.
[2] Fire in the sky
Context
The successful test-firing of the long-range ballistic missile Agni-V for the fourth time is a significant step towards building a credible nuclear deterrence.
What has happened?
Agni-V was test-fired successfully from Abdul Kalam Island off the Odisha coast
- It was 4th time that the missile was test-fired successfully
Credible nuclear deterrence
With Agni-V and the recent commissioning of the indigenously built nuclear submarine INS Arihant, India is inching towards creating a robust and world-class second-strike capability
- As India follows the “no first use” doctrine, a credible second-strike capability is a necessity i.e. the country should have the ability to withstand an enemy nuclear strike on its key locations and launch a successful second strike.
What is second strike capability?
In nuclear strategy, a second-strike capability is a country’s assured ability to respond to a nuclear attack with powerful nuclear retaliation against the attacker.
Long way from a competent Nuclear Triad
Issues which India should resolve before India achieve a nuclear triad,
- Modernisation of Military: A credible second-strike capability should also be complemented by a modern, powerful military. The Indian military is in dire need of modernisation across its three arms.
- The Air Force has a huge shortage of fighters; the Navy’s submarine arm is far from meeting multiple challenges; and the Army needs an array of new platforms
- Failure of Nirbhay: On Dec 21st, the Nirbhay land attack cruise missile meant to carry nuclear warheads failed for the fourth time during a test. Such technological gaps need to be filled up quickly
- A display of responsibility: India also needs to consistently showcase itself as a responsible nuclear power, and not just through a no-first-strike policy. It needs stay away from indulging in issuing nuclear threats based on fake news. With India’s Defence minister talking about rethinking of India’s no-first use policy, care should be taken that government dissociates itself from such personal views.
What is a nuclear triad?
A nuclear triad is the capability to launch nuclear weapons by aircraft, land based ballistic missiles and submarine launched missiles ie land, air and sea.
- With the induction of INS Arihant, India joined United States, Russia, and China, the only officially confirmed nuclear triads in the world
Read More: IDSA’s article on India’s nuclear triad
[3] The mother of all disruptions
Context
The tremendous power of the software industry in India may help explain why the disruptive effects of demonetisation are being taken lightly.
Article provides a new insight into disruption angle of demonetization.
Give it a go-through once.
[4] Assessed, approved but scant attention to compliance
Context
September 2016 marked a decade of the Environmental Impact Assessment (EIA) notification, a short, ‘subordinate’ legislation whose powers far outweigh its text.
Issue: 10 years of EIA notification
Environment Impact Assessment (EIA)
EIA was promulgated in 1994 under Environment Protection Act and then amended in 2006.
- The law provides for an informed process for site selection and grant of approval for an industry or project in any area
- It involves the drafting of an EIA report with a statement of how impacts could be mitigated or offset and under what conditions the project should be approved, if at all
Public Hearing
The public hearing process was made a part of the 1994 EIA notification only in 1997.
- Public hearings have been successful in drawing attention to the large-scale impacts that projects have on communities and the environment
Compliance gap
After approval is granted,
What should happen?
- An approval is granted with a host of conditions that need to be followed to avoid or mitigate environmental impact
What actually happens?
- In actuality, the regulatory regimes for project approval pay scant attention to the compliance of these conditions
The problem:
- No 3rd party oversight: Environmental compliance has been left to the government and the project developer. With no third party to oversee the process or the results of compliance, it remains a superficial, bureaucratic exercise
- Data on non-compliance: There are only a few independent studies by researchers and the Comptroller and Auditor General’s office to show the poor levels of compliance.
- Inaccessible data:Environmental institutions collect some data on a regular basis through their monitoring mechanism but these data are not accessible to citizens in any meaningful way
- No incentive:There is no incentive on the part of the environmental organizations to pay attention to compliance of projects once approved
Way ahead
Authors suggest,
- Engaging communities: Ensuring compliance will be possible only if the communities residing near the projects are allowed to engage with the environmental regulators. The knowledge of the fact that a project is flouting the environmental norms or not is best available to the local residents residing near the project area. Instead of depending solely on the report submissions of the project which might be fabricated, involving local people can help strengthen the compliance mechanism.
- Compliance database: Systematic data collection and developing of public archives on the compliance of projects over time, sectors and regions can go a long way in reframing the knowledge and regulatory structures for environmental governance.
[5] Foreign policy, Act III
The Hindu
Context
The Prime Minister’s entry on the world stage was dramatic and full of surprises.
Author compares the present state of foreign policy of our PM to the third act of the Shakespearean play
Give it a go-through once.
ECONOMY [The Hindu]
[1] India’s cast iron exports under EU scanner
The Hindu
Context
India’s exports of certain iron items to the European Union (EU) and shipments of ferro alloys to South Korea have come under the scanner of local authorities in those jurisdictions
Ferro alloys
Ferroalloy refers to various alloys of iron with a high proportion of one or more other elements such as manganese, aluminum, or silicon.
- They are used in the production of steels and alloys
- Iron & steel and their related articles have been among India’s main exports to Europe
Investigation by European Commission (EC)
EC has initiated an investigation into certain items of grey iron and ductile cast iron from India
- Allegation: It has been alleged that India is dumping (being sold below the price charged in the home market or below production cost these items) into the EU region, resulting in an adverse impact on local industry as these articles are used to cover and, or give access to ground or sub-surface systems.
Who has lodged the complaint?
7 EU producers of the item including Saint-Gobain, together representing over a quarter of the total EU production of certain cast iron items, lodged a complaint with the EC on October 31, 2016 that imports of such articles from India and China are being dumped causing material injury to them.
- Evidence submitted: The complainants also provided ‘evidence’ of increase in imports (to the EU) of these items in absolute terms and in terms of their market share in the EU.
What if allegations are found to be true?
If the allegations are indeed found to be true, the investigation will examine whether the imposition of anti-dumping measures would not be against the EU’s interest
South Korean probe
South Korean authorities have decided to initiate investigation into dumping of ferro-silico-managese (used in the steel industry) from India, Vietnam and Ukraine into South Korea thereby allegedly causing injury to their domestic industry
- This was based on an application by local producers on November 18, 2016
Indian Express
[1] Anthem: Play, rewind
Indian Express
Context
The order compelling citizens to stand up defies both the letter and the spirit of this invocation to sovereignty
Article gives us historical perspective on the national anthem.
Give it a go-through once.
Live Mint
[1] Addressing India’s water dispute problem
Context
The proposed permanent tribunal is a promising step—but it will face many hurdles.
Issue: Proposed water tribunal. This issue has already been covered in 20th December 2016
The present system
At present, a new tribunal is formed every time a state government approaches the Union government with a request and is able to convince the latter that such a tribunal is needed since all negotiations have failed. Eight such tribunals exist. After they have heard the matter and awarded their decisions, the tribunals are allowed to collapse.
- A struggling system: This system has had its fair share of success with tribunals set up soon after independence—to adjudicate on the Krishna, Narmada and Godavari rivers. But in general, it has struggled to bring warring parties on the same page and offer equitable solutions
Main problems
There are 3 main problems with the present system,
- Protracted proceedings and extreme delays in dispute resolution
- Opacity in the institutional framework and guidelines that define these proceedings
- Ensuring compliance: Water is a state subject but the “regulation and development of inter-state rivers and river valleys… in the public interest” is on the Union list. However, the Centre has generally taken a back seat, allowing states to dominate. And even when it has intervened, it has not always been successful. The courts have also often been ignored, including the Supreme Court, which importantly only has very limited jurisdiction over the tribunals, as per the Inter-State River Water Disputes Act of 1956.
Author’s contention
Author states that the permanent tribunal is being pushed as a solution to the first problem but unless it is designed to tackle the inter-linked second and third problems, progress will be limited
Why delays happen?
The delays happen for a variety of reasons at every stage of the process.
- Delay in constituting a tribunal: Sometimes, the Centre takes years to decide whether a matter needs to be heard by a tribunal in the first place—for example, the Godavari and Krishna disputes started around 1956 but the matter was referred to a tribunal only in 1969. After the tribunal has been formed, it again takes many years to pronounce its award—it took nine years from reference in the case of the Narmada tribunal
- The absence of authoritative water data that is acceptable to all parties currently makes it difficult to even set up a baseline for adjudication
- Another reason for delay is the requirement that the Centre notify the order of the tribunal to bring it into effect; this took three years for the Krishna award
- Complex procedural system
Streamlining the process
- Author states that Centre’s proposal to set up, alongside the tribunal, an agency that will collect and process data on river waters has potential
- Now, the Centre has proposed that the awards will be notified automatically by the tribunal.
[2] Karnataka’s dangerous new reservation policy
Context
It is inept on multiple levels, and proven to be economically counterproductive.
Author states that implementation of GST will create a common free market which will further lead to free movement of factors of production including labor.
Note: Factors of production are: land, labor, capital and entrepreneurship
Against the flow
- Reservation to Kannadigas: Despite knowing the above fact, Karnataka government has released draft amendments to the Karnataka Industrial Employment (Standing Orders) Rules of 1961 that would implement 100% reservation for Kannadigas for blue-collar jobs in the private sector.
- Exceptions: This would extend to all companies receiving government concessions, except those in the infotech and biotech sectors
- Penal provisions: Those that don’t comply will be penalized by being denied the concessions
Performance situation
By every major metric, the state is performing considerably better than the Indian average.
- Labor force participation: Karnataka’s labour force participation rate is 57.8% compared to a national average of 55.6%
- Unemployment rate: The unemployment rate combined across urban and rural populations is 1.7%, exactly half the national rate of 3.4%
Labor mobility is beneficial
A large number of studies have provided evidence of the economic benefits of labour mobility, both to the workers’ regions of origin and the region where they find employment,
- It keeps the labour market competitive
- Improving production efficiency
- Higher education levels for the next generation via remittances, enabling them to move up the employment value chain
Adverse impact of draft amendment
- Blow to industry confidence: Imposition of such unreasonable restrictions, makes operating in the state economically unviable and raises concerns about State government’s future role
- The exemption for the infotech and biotech sectors is a mere sop (a concession given to appease someone). It is slated to last for only five years, with no certainty of what the scenario could be beyond that
The end result of industry loss of confidence and business moving elsewhere would, of course, be a decline in the economic well-being of the Kannadiga blue-collar workers the policy is supposed to protect.
Legal challenge
Author states that the policy won’t withstand legal challenge as Supreme Court has capped the employment reservation at 50%—and only in the public sector at that
- Uttar Pradesh government’s reservation initiative launched in 2007 was declared unconstitutional by Allahabad HC court in 2011. It was further upheld by SC
Way ahead
This policy will only help the target audience in the short term. The sustainable method of doing so, conversely, is by enabling the native population on multiple fronts—education, health, social safety net.
[3] What awaits us in 2017?
Context
For 2017, China and Europe may become two big risks to the global economy and global markets, while the US under Donald Trump remains a wild card.
Give it a go-through once
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