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Front Page / NATIONAL
1. SC: Accept dying declaration of person with 100% burn injuries
2. Expenditure by States on key sectors remains flat
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INTERNATIONAL
1. India to restore grounded aircraft in Afghanistan
- Editorial/OPINION
- Cuba after Fidel: The life of Fidel Castro
- The centralising instinct
- Demonetisation and its discontent
- The voice of the Third World
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Indian Express
1. Off the black mark
2. Who can become an Indian citizen?
3. Code of control
4. Going ahead: Challenge for government
5. Walking with history
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Live Mint
1. Why India needs to defend free trade
2. Mother nature versus climate change
3. The sickness in Indian manufacturing
Click here to Download 9 PM Daily Brief PDF (28th November 2016)
Front Page / NATIONAL
[1]. SC: Accept dying declaration of person with 100% burn injuries
Context
In a significant ruling in criminal law, the Supreme Court held that the dying declaration of a burn victim against her attackers should not be dismissed simply her burn injuries are extensive, even a 100 per cent.
The case
The Supreme Court was upholding the sentence of life imprisonment awarded to the husband and three in-laws on the basis of the last words of a woman who suffered 100 per cent burns after she was set on fire by them at Jhajjar district in Haryana in September 1999
- Prosecution evidence placed on record in court showed that the mother of two was tortured for dowry throughout the 20 years of her marriage. But the trial court had acquitted the convicts after the victim’s own brother turned hostile and said that she committed suicide
- The High Court, however, overturned their acquittal after giving full credence to the dying declaration of the victim, recorded in the presence of a local magistrate, indicting the four convicts. The Supreme Court confirmed the HC’s judgment
SC noted
Trial courts cannot brush aside the last words of a victim on the presumption that the burns are so grave that it would have affected the mind and consciousness
Backdrop
A dying declaration has great sanctity in criminal law as it is believed that a dying person will not lie. However, trial lawyers have highlighted the extent of burn injuries of the victim to claim benefit of doubt for their accused-clients.
SC judgement
- Percentage of burns alone would not determine the probability or otherwise of making a dying declaration. Physical state or injuries on the declarant do not by themselves become determinative of mental fitness of the declarant to make the statement
- Piece of evidence: Holding that dying declaration is an independent piece of evidence, neither extra strong nor extra weak judgement said that there is no hard and fast rule of universal application as to whether percentage of burns suffered is a determinative factor to affect credibility of dying declaration
[2]. Expenditure by States on key sectors remains flat
Context
Expenditure by the States on key social and economic sectors has not changed substantially following the implementation of the 14th Finance Commission recommendations in 2015-16, shows an analysis of the budgets of 17 States by PRS Legislative Research.
Recommendation of 14th Finance Commission
The share of Central taxes devolved to States, which they can spend as per their discretion (untied funds), was increased from 32 per cent to 42 per cent. The increase was compensated by a decrease in Central spending on schemes, most of which are tied in nature. This change was expected to increase the fiscal autonomy of the States, allowing them the flexibility of deciding the schemes they would wish to continue and allocating the additional funds accordingly.
Observations of “State of state finances” report
- Marginal growth: Between 2014-15 and 2016-17, expenditure on education, health and rural development is expected to grow marginally. Comparisons here are made between “actuals” (reflects actual expenditure) for 2014-15 and “budget estimates” (allocations only, not spending) for 2016-17.
- Increased spending: Spending as a percentage of total expenditure is expected to increase from 14.2 per cent to 14.6 per cent on education, from 3.9 per cent to 4 per cent on health and from 5.8 per cent to 6 per cent on rural development.
A lower gain
Various studies have suggested that there has been an increase in Central transfers and social sector expenditures in a number of States in 2015-16. However, the NIPFP working paper argues that the magnitude of gains from Central transfers at the State level is likely to be much lower than the extent documented in those studies.
INTERNATIONAL
[1]. India to restore grounded aircraft in Afghanistan
Context
After supplying four attack helicopters to Afghanistan, India is quietly moving to qualitatively scale up military assistance in terms of long-term spares and support.
Backdrop
Kabul had long been requesting India for offensive military hardware and has several times presented a wish list of urgent military hardware. A revised list was handed over to India in August during the visit of the Chief of Afghan National Army General Qadam Shah Shahim and was discussed at the highest level during Mr. Ghani’s visit in September.
- Priority items on the list include utility and attack helicopters, tanks, artillery, ammunition and spares, in addition to help in reviving some of the Soviet-era equipment and factories in Afghanistan
- India has supplied three Cheetal utility helicopters, and in a major policy shift, agreed to transfer four Mi-25 attack helicopters from its inventory last year. While India seems to be open to supplying lethal hardware, involving Moscow is inevitable as most of the equipment is manufactured in Russia
Trilateral framework
The trilateral mechanism between India, Afghanistan & Russia was put forward in 2014 in the backdrop of NATO withdrawal from Afghanistan.
- As of now India is moving to scale up military assistance in terms of long-term spares and support.
What has happened?
Two Indian Air Force technical teams visited Afghanistan last month to assess the requirements for spares and maintenance to restore the Soviet-era helicopters and transport aircraft lying there
It should be noted that Russia is the original manufacturer of spares for military supplies like Mi 25 helicopter so it cannot be left out of the framework.
Editorial/OPINION
[1]. Cuba after Fidel: The life of Fidel Castro
Context
Latin America’s last revolutionary leader and towering and charismatic anti-imperialist torch-bearer, came to signify the high point of Cold War ideological hostilities of the 20th century
News: Fidel Castro’s death
Article is a brief commentary on the trajectory of relations between US & Cuba.
Give it a light read.
[2]. The centralising instinct
Context
Narendra Modi’s 2014 victory challenged the idea that the States serve as the primary unit of political affiliation. Demonetisation presents an opportunity to refocus debates on Centre-State relations.
Issue tackled: Demonetization wrt Centre-state relations
What is co-operative federalism?
It is a concept of federalism in which national, state, and local governments interact cooperatively and collectively to solve common problems, rather than making policies separately but more or less equally
Unmediated by states
Author points out that the demonetization measure was not conveyed to states beforehand. So many of them are now expressing their frustration that they are powerless to address hardships faced by people unable to pay for treatment in private hospitals or of farmers unable to access loans from, or make repayments at, cooperative banks.
What states are saying?
States have said that the way in which this entire policy has been activated undermines the spirit of co-operative federalism
Issues with design
- Regional sensibilities challenged: The design of the new Rs.500 and Rs.2000 banknotes issued by the Reserve Bank of India include new national symbols that challenge regional sensibilities.
Numerals: New notes contain numerals written in Devnagari script thereby threatening to reignite old settled debates over linguistic issues
Symbols: Backside of new notes contain symbols of central government policy, Swachh Bharat. Author says that this has been done to refocus the political debate around national issues instead of regional ones.
Credit claim by Central government
Author points out that as the Indian economy and polity have become more decentralized, the states have become the basic units of political affiliation for people. People are not clear as to which policy measure has been taken by the centre and state government.
Example:In the post-poll National Election Study conducted by Lokniti, Centre for the Study of Developing Societies (CSDS) during the 2014 Lok Sabha election, 42 per cent of voters who had benefited from MGNREGA gave the credit for the programme to their State government and only 27 per cent to the Central government.
So, in the light of the above fact, programmes are now being carefully rebranded in an effort to better enable the Central government to claim credit for them and to limit the ability of the States to do so.
An inherent risk
Author says that in the light of central government’s policy to claim credit for various programmes, there is risk wherein state governments might stop cooperating with it to achieve national goals or implement centrally designed policies.
Why is this important?
The above matter is important because state governments remain crucial for policy implementation. It is even more significant after the enhanced fiscal devolution to States following the Fourteenth Finance Commission recommendations which gives States greater flexibility to decide priorities for government expenditure.
Way ahead
Author cites the example of GST council wherein the autonomy of the states and the authority of the centre have both been upheld.
Conclusion
Author concludes by stating that the spirit of federalism should be preserved by enhancing the incentives for States to cooperate with the Centre while preserving their autonomy.
[3]. Demonetisation and its discontents
Context
None can afford to be seen as directly opposing measures to clean up black money and weed out counterfeits. However, stories of cashless banks and shuttered ATMs seem to have given some life to opposition parties looking for an issue to pin the government down.
Article talks about the views expressed across political spectrum about the demonetization measure of the government.
Nothing important here.
Give it a light read.
[4]. The voice of the Third World
Context
Fidel Castro was the mirror of Africa, Asia and Latin America’s aspirations.
Article offers an interesting insight into Fidel Castro’s political and personal views.
Give it a go through once.
Indian Express
[1]. Off the black mark
Context
Demonetisation won’t hurt ‘kala dhan’ — it will only damage economic growth.
Global level
Author points out that demonetization as a policy measure has been taken at global level by weak economies and those suffering from hyperinflation
Examples:
- The Argentine government demonetized several times in the last century; it even changed its currency’s name from peso to austral, then back to the peso — each time, it further reduced confidence in the currency
- Myanmar, Ghana, the former Soviet Union, Nigeria and Zaire also demonetized, leading to devastating economic consequences
In all cases, often done by military dictatorships, demonetisation eroded confidence in the currency
What is hyperinflation?
Hyperinflation occurs when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of local money.
Collateral damage
Author states that the effect on economic growth due to demonetization could be as high as 1 per cent of GDP which will neutralize the one-time gain from it
- Poor are suffering: The poor are already suffering, especially those without easy access to banks, post offices, even information on what to do
- Damage to trade sector: More long-lasting damage could be to trade in sectors where much business is conducted in cash — especially the informal sector and rural areas comprising about 40 per cent of GDP
- NBFCs hit: The non-bank financial sector, on which many SMEs rely for short-term finance, has also been hit
Cash to GDP ratio
Cash available in the economy as a percentage of GDP is called cash to GDP ratio
Author points out that there is no weight in the argument that due to high cash to GDP ratio in India there is widespread corruption. He cites examples,
- China has a cash to GDP ratio of around 9.5 per cent of GDP, Germany at 8 per cent of GDP and the US at around 7.5 per cent of GDP – India has a higher Cash to GDP ratio as compared to these countries because they are at much higher levels of development, with much smaller, rural, un-banked populations
- Nigeria, widely regarded as one of the most corrupt countries, has a cash to GDP ratio of only 3 per cent of GDP as faith in the currency has eroded
What should have been done?
Author states that in order to weed out black money it would have been better to go after real estate transactions, the movie industry, gold, weddings, election financing and benami transactions
Conclusion
Without tackling the reasons for black wealth, just demonetizing won’t address corruption or eliminate the black economy. Government should focus on achieving genuine economic recovery and ensuring job creation.
[2]. Who can become an Indian citizen?
Context
Partition’s long shadow is evident on the Citizenship Amendment Bill, which seeks to introduce a religious distinction in the law. It must be debated.
The present article talks about the recent proposed amendment to Citizenship Bill. The proposed amendment and the implications has been discussed in detail in the brief dated 4th November 2016
Give it a go through once.
[3]. Code of control
Context
Social practice needs to be gender-just, but reform must respect religious freedom.
Article talks about issues of patriarchal and regressive societal set ups being challenged (triple Talaq) in Muslim community and by the government but author points out that only a selective targeting of specific community is not the way to go about it.
Moreover, the Uniform Civil Code (UCC) that is being proposed has no clear draft and terminologies to accommodate the wide ranging sensibilities of diverse religions in India.
Give it a go through once.
Conclusion
Author concludes by stating that a law should be framed keeping the freedom of religion intact. Imposing its own ideas would set a wrong precedent for the government while costing national integration.
[4]. Going ahead: Challenge for government
Context
To earn back trust, not brush warnings under black carpet.
Issue tackled: Effects of Demonetization
GDP is going to be hit
Author begins by stating that as per many economists and credit rating agenciesIndia’s GDP would take at least a two percentage point hit from the government’s decision to scrap high-value notes.
- Due to liquidity crunch private consumption is also going to take a hit.
Author points out that all this is going to happen when private investment and exports have witnessed a dip
Informal sector: worst hit
What is informal sector or informal economy?
The informal sector, informal economy, or grey economy is the part of an economy that is neither taxed, nor monitored by any form of government. Unlike the formal economy, activities of the informaleconomy are not included in the gross national product (GNP) and gross domestic product (GDP) of a country
Author states that this sector is going to be hit the maximum by demonetisation, as the firms in this case deal largely in cash which also helps keep their transactions outside the tax net
Options left
Now, with demonetization and GST, many of them might go out of business. There are two options for them,
- Going cashless: Firms in the informal sector will choose to function by going increasingly cashless and bringing most of their transactions on board. The potential benefits of such sweeping financial inclusion far outweigh the short-term pain
- Shutting it down: There will be those who will wind up and give up market share to organised players
Result: Author concludes that either way, the economy gains as the tax base expands.
Conclusion
Author concludes by stating that the way this whole policy of demonetization was given effect and the way announcements are being made on a daily basis shows a lack of homework on government’s part. The responsibility now rests on its shoulders to prove that the sacrifices made by the public are indeed worthwhile in the long run.
[5]. Walking with history
Fidel Castro represented both the highs and lows of twentieth century Left politics.
Article talks about Fidel Castro’s policies and his legacy.
Give it a light read.
Live Mint
[1]. Why India needs to defend free trade
Context
Author talks about globalizations’ beneficial impact on India & China and why both countries need to push for even greater openness and integration vis-à-vis trade with rest of the world
Backlash against globalization
Author begins by stating that at a global level there is a backlash against globalization. This is due to the fact that a growing numbers of voters there believe that free trade has harmed them, as jobs have moved to Asia.
Different situation
The situation in India and China is quite different. Millions have been pulled out of poverty because of the opportunities offered by globalization
Why India & China are pushing for globalization?
Author cites economist BrankoMilanovic who states that that the two groups that have seen the most rapid rise in incomes in the two decades after 1988 are the few in the top income percentile (the global elite) and the hundreds of millions around the median income (mainly people from India and China). Middle class of India & China has been one of the undisputed beneficiaries of globalization, and hence both these countries have expressed a strong interest in more economic integration with the rest of the world i.e. towards increased globalization.
More open economy means?
Author states that a more open economy entails,
- Lowering of import tariffs
- Improvement in trade/gross domestic product ratio – Author states that India can never reach the levels of openness of a country such as Singapore because of its size. Smaller countries tend to have a higher trade ratio because their domestic markets aren’t big enough.
Higher ratio indicates a more open economy
- Restrictions on foreign direct investment (FDI) – India has opened up its FDI sectors by reducing the restrictions. Higher FDI usually means higher international trade
- Capital account controls – The standard measure for capital account openness—the Chinn-Ito index—shows that India has far more controls on capital flows compared to its peers
Note: Chinn-Ito index has been discussed in the brief dated 21st November 2016
Way ahead
Author states that both India and China should therefore act as guardians of a liberal global economic order by playing a more active role in global institutions and pushing for domestic reform that furthers the cause of global integration
[2]. Mother nature versus climate change
Context
Governments will need to take action to conserve existing ecosystems—and restore and expand degraded ecosystems—in people-friendly ways.
Article states that while climate-change challenge is immense so, too, is the opportunity to accelerate sustainable development and ensure a better future for the planet.
Better resource management & restoration
Author points out that in addition to the commitments already made via INDCs, countries should make consider adopting policies to manage natural resources better.
- Governments will need to take action to conserve existing ecosystems—and restore and expand degraded ecosystems—in people-friendly ways. This is particularly true of wetlands, which include all land areas—such as lakes, floodplains, peatlands, mangroves, and coral reefs—that are covered with water, either seasonally or permanently
Conserving Peatlands
- Peatlands: Peatlands are particularly important. Though they cover only 3% of the world’s total surface area, they store twice as much carbon as all forests combined. Peatland soils are composed of carbon—in the form of decomposed plant material—that has accumulated for thousands of years; and when peatlands are drained or burnt, that carbon is released into the atmosphere. In fact, draining peatlands releases two times more carbon into the atmosphere than the aviation industry does.
- Conserving and restoring peatlands could significantly reduce global CO2 emissions, which is why, in 2015, the Nordic council of ministers announced a commitment to preserve the region’s peatlands. Almost half of Nordic countries’ peatlands have been lost, and this ecosystem degradation contributes 25% of their total carbon emissions
Mitigation of climate hazards wrt water
According to UN-Water, 90% of all natural hazards are water-related, and they will increase in frequency and intensity as climate change worsens
- Natural barriers: Wetlands act as sponges that reduce flooding and delay the onset of droughts; and mangroves, salt marshes and coral reefs all act as buffers that protect against storm surges
- Storehouse of resources: Wetlands, oceans and forests do far more than just absorb and store carbon; they also provide fresh water, and are a food source for nearly three billion people.
Ramsar convention
Author states that countries already have a platform in place i.e. Ramsar convention that they can use for their future wetland-conservation efforts
Conclusion
Authors conclude by stating that using natural resources and systems already in place would significantly increase the chances of success of the Paris agreement which seeks to keep global warming below 2 degrees Celsius through climate neutrality i.e. no net greenhouse-gas emissions—in the second half of this century
Read More: Ramsar convention
[3]. The sickness in Indian manufacturing
Context
To take advantage of the expenditure boom that looms large on the domestic market, local firms have to ensure their goods are globally competitive.
Author citing the global financial crisis of 2008 states that due to the recession a global slowdown of demand resulted in decrease in international trade
Global trade scenario
- Since 2012, global trade has grown only 3.1% annually
- Before 2008’s crisis, trade >gross domestic product (GDP) but afterwards it slowed down thereby presenting a big worry for export-dependent economies
- Global trade recovered, though not fully, in 2010 but India’s exports have witnessed a negative growth since 2014
Negative growth: India
India’s share in world merchandise exports fell in each of the past two years, while that of China, Vietnam and Bangladesh moved up
- China remains the undisputed leader with the highest—and still rising—share in global exports
- Vietnam is scoring well even on both counts: its share of goods exports in GDP reached about 85% in 2015
So, author questions,
What ails Indian exports?
Is the sharp decline in commodity prices, especially crude oil—India’s biggest export item with about 20% share, the real problem? Nope, because India’s non-oil exports have also fallen—by 4.4% and 8.7%, in 2014 and 2015, respectively
Bangladesh & Vietnam
Seven of the top 10 export categories of India declined in 2015, compared with three for Vietnam and two for Bangladesh. In segments such as electrical machinery, mechanical appliances, textiles and garments, Vietnam has run ahead of India, while in textiles and garments, Bangladesh has done better
Advantages
- Favorable market policies & lower labor cost: Both these countries enjoy the benefit of favorable market access policies and relatively lower labour cost compared with India. For ready-made garments, Bangladesh enjoys duty-free access to the European Union under the Generalized Scheme of Preferences. Due to this cost advantage, Bangladesh’s share in the EU’s imports almost doubled from 9% in 2009 to 17% in 2015
Problems in India: India suffers from constraints such as challenges associated with land acquisition, rigidity in labour laws, and poorly skilled manpower
- Increased focus on education: Vietnam’s adult literacy rate reached 94.5% in 2015 compared with India’s 72.2%. Continued focus on education will help attract foreign investment and also help the economy overcome the challenges of automation in the manufacturing sector
India: on the verge of expenditure boom
India has become the third-largest economy in purchasing power parity (PPP) terms, and is currently the fastest-growing large economy. Empirical evidence suggests when an economy is in the middle-income phase in purchasing power parity terms—which India recently entered—demand for manufactured goods accelerates with every unit increase in income (Towards More Balanced Growth Strategies In Developing Countries: Issues Related To Market Size, Trade Balances And Purchasing Power by Jörg Mayer; 2013). Thus, the Indian domestic market seems to be at the cusp of an expenditure boom.
Authors state that the potential of the domestic market can only be realized if there is an improvement in purchasing power i.e. domestic income
Growth in domestic income can be gained via
- Financial inclusion
- Education
- Fair property rights
- Price stability
Maintaining the goods competitiveness
Authors state that even if domestic income improves then also local firms have to ensure their goods are competitive at a global scale. Since India is open to international trade, any rise in domestic demand without commensurate rise in competitiveness and adaptability of domestic firms will lead to an unintended consequence: increasing import.
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