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9 PM Daily NEWS Brief

9 PM Daily Brief – 2nd January 2017



  • Front Page / NATIONAL [The Hindu]
  1. Pak. endorses China’s block on Masood Azhar
  • Editorial/OPINION [The Hindu]
  1. Playing the angles, with Russia
  2. Not just about a quota
  • ECONOMY [The Hindu]
  1. Hoarded black money to be converted into cheaper loans’
  2. ‘Demonetisation alters economy’s recovery path’
  3. Packing food, drugs at a blistering pace
  • Indian Express
  1. The Middle Ground On Water
  2. India’s interests tilt eastwards, it walks a new tightrope
  3. Expand partnership with US, limit rifts with China
  • Live Mint
  1. GST: anti-profiteering measures necessary?
  2. Demonetisation’s hydra-headed critics

Click here to Download 9 PM Daily Brief PDF (2nd Jan. 2017)

Front Page / NATIONAL [The Hindu]


[1] Pak. endorses China’s block on Masood Azhar


 The Hindu

Context

Pakistan has endorsed the block that China has imposed on India’s campaign at the United Nations Security Council to blacklist a Pakistan-based terror group chief.

Pakistan’s view

The Ministry of Foreign Affairs (MoFA) of Pakistan termed “politically motivated” India’s campaign to impose a ban on Masood Azhar of Jaish-e-Mohammed and said the Indian proposal at the 1267 counter-terror committee of the U.N. Security Council had “no merit”

Significance of Pakistan’s statement

The strongly worded statement is significant as it came on the eve of the first anniversary of the Pathankot attack of January 2, 2016. It was in the aftermath of the attack that India intensified its global campaign targeting Azhar. 


Editorial/OPINION [The Hindu]


[1] Playing the angles, with Russia


The Hindu

Context

If Donald Trump succeeds in what Barack Obama failed to do, which is resetting ties with an aggressive Russia, it could trigger a cascade of geostrategic realignments across the world.

Article is a commentary on the US-Russia bilateral dynamics.

Give it a go-through once.


[2] Not just about a quota


 The Hindu

Context

We need to educate children in schools about caste, ethnic, gender and regional diversities and have public policy interventions to make society more equal and fair.

Survey by SARI

A new survey called SARI, Social Attitudes Research for India, investigated what people in cities, towns, and villages think about reservations.

  • Methodology: SARI uses a sampling frame based on mobile phone subscriptions, random digit dialing, within-household sample selection, and statistical weights to build representative samples of adults 18-65 years old

Survey results

  • The lowest opposition to reservation is among respondents from the Scheduled Castes (SC) and Other Backward Classes (OBC), while the highest opposition is found among general caste respondents
  • No need for reservation: A majority of the most educated and historically well-to-do communities in Delhi do not feel that people from marginalised groups should get government support for representation in social and public spheres

Top 3 reasons for Delhiites’ opposition to reservation

  • Merit: When people say that jobs and seats in schools should be allocated on the basis of “merit,” they are referring to the fact that people from reserved categories are often given a concession of a few points on exams and in interviews
  • This view overlooks the important disadvantages that people from reserved categories face in going to school or getting a job
  • We cannot expect groups who have been historically deprived of education, skills, and access to other means of economic mobility to suddenly start competing with those from groups who have had access to these means for centuries
  • Equality: Some of the respondents in the survey said that they opposed reservation because they believe in equality. However, reservation is a policy tool that promotes equality rather than undermines it. The primary reason why reservation was written into India’s Constitution was to ensure representation of all social groups in positions of power. When people from all social groups are represented in government, higher education, and in business, it is less likely that traditionally marginalised groups will continue to be denied fundamental rights and access to their fair share of society’s resources
  • Income-based reservation: Some people say that they oppose today’s reservations because they believe reservation should be made on the basis of income rather than social background. However, reservation is intended not to be an anti-poverty programme. The government has many programmes which are, in principle, accessible to all poor people. Reservation exists because, in addition to being more likely to be poor than general castes, Dalits, backward Muslims, and Adivasis face social discrimination and exclusion that poor people from general caste backgrounds do not face.

Purpose of reservation

Reservation is a policy tool that is used not only in India.

  • A tool to overcome human prejudice: In many countries, reservation or other types of affirmative action are used to try to overcome human prejudice based on race, gender, ethnicity, religion, caste or any other group identity
  • To encourage representation of and participation by groups traditionally excluded and discriminated against

Steps to make idea of reservation more acceptable

  • Creating awareness through education: One way to make these measures more acceptable and help people better understand the historic, social and cultural background behind reservation would be to educate children in schools about caste, ethnic, gender and regional diversities and the need for public policy interventions to make society more equal and fair. 

ECONOMY [The Hindu]


[1] Hoarded black money to be converted into cheaper loans’


The Hindu

Context

Regarding policy after demonetization

Channeling the wealth

Government has expressed that its future agenda is,

To channel the wealth that was previously being hoarded as black money into cheaper capital for affordable housing, women’s health, the agriculture sector, and medium and small enterprises.


[2] ‘Demonetisation alters economy’s recovery path’


The Hindu

Context

Article presents us with different views regarding aftereffects of demonetization

 What economists are saying?

  1. Hurt private consumption: The Centre’s demonetisation move has hurt private consumption and impacted sectors such as real estate, automobiles and FMCG, which in turn has altered the economy’s recovery path in the short-term
  2. Some benefits: But it could yield some benefits in the medium- to long-term, provided follow-up measures are taken and there’s no return to an era of inspectors and tax terrorism. Demonetisation will have medium-to-long term benefits for the economy as an increasing share of economic activity gets formalised, not to mention the message such a policy move will send against corruption and black-money hoarders.
  3. Spending by farm community hit: Spending by the farming community, which was expected to pick up due to the higher kharif output and the stronger monsoon, has been squeezed due to despair sales taking place because of the unavailability of cash and the fact that all mandi transactions are carried out in cash
  4. Demand hit:The sector-specific immediate effects of demonetisation have been mostly negative. Demand has taken a hit, whether it is in automobiles, motorcycles, real estate, or construction except the airlines which have shown improvement
  5. Lost momentum:In the run-up to the demonetisation announcement on November 8, private sector investment was on the cusp of a recovery on the back of recovering household demand, easing inflation, and the boost to agriculture due to the stronger monsoon. This momentum has since been lost, and will likely begin to return only in the next financial year.

[3] Packing food, drugs at a blistering pace


 The Hindu

Context

About 80 per cent of cold-form blister packaging is currently imported and the aim is to bring that figure down to zero.

What’s happening?

The more than $25 billion Indian packaging industry, growing at a rate of about 10 per cent, is initiating major steps to develop innovative packaging for all segments, but mainly for pharmaceutical and food products, even as the country bids to radically boost its exports.

Need for such steps

  • Reducing the import of packaging material: These efforts are aimed at reducing the import of packaging materials and to produce those materials in India so that the country becomes self-reliant and emerges as a key supplier base for the world
  • Present situation:Currently, India imports large volumes of packaging material. India imports packaging materials of more than Rs. 360 crore per year for packaging of pharmaceutical products alone.

 Need for cold-form blister packaging

Developed countries use, and demand, advanced packaging for pharmaceuticals to keep products safe. These are done through cold-form blister packaging which is used extensively around the world.

  • Situation in India: Currently, 80 per cent of cold-form blister packaging is imported

Tsutsumi

Author states that in packaging, India has traditionally looked to post-World War II Japan for inspiration. While the industry there derived from western packaging methods, they were integrated with the traditional Japanese concept of packaging called Tsutsumi – which is described as the concept of gentle concealment, which in turn, is a part of the traditional Japanese sense of beauty.

Modified atmosphere packaging

Since India is one of the largest producers of agriculture products, mainly fruits and vegetables, maximum emphasis is now given to increase the shelf life of these products and to reduce wastage through innovative packaging.

  • As per rough calculations, up to 40 per cent of such produce gets wasted at farms due to lack of appropriate logistics and a cold chain
  • To deal with this problem, the packaging industry has developed modified atmosphere packaging which is based on the respiratory rate of the items
  • Gold Medal: The Flexible Packaging Association (FPA) of America, regarded as tops in the field of packaging, awarded India a gold medal, its highest recognition for modified atmosphere packaging because it has extended the shelf life of fruits and flowers being exported from India

 Benefits to economy

A higher standard for packaging has advantages for businesses organisations but more importantly, it has potential to bring significant benefits to the country’s economy.

  • More than just the basic price: Every day huge amount of raw meat is exported to the Middle Eastern countries and we just get the basic price as value addition is done there. It is the same old story. Cotton was grown in India and sent to England for processing so value addition went there. The hard work was done here. So why can’t we do the value-addition here by processing, packaging and supplying
  • The industry also has scope for providing large scale employment

Higher Certification standards in India soon

India has its own packaging standard in the form of BIS certification which is voluntary in nature but a far higher standard, at par with the developed world is in the works and would be made mandatory for packaging of products for the export markets

  • Committee formed: The Union Commerce Ministry has constituted an expert committee comprising importers, players from the packaging industry and other experts to review existing standards and formulate new standards which will be implemented within a couple of years.

Capturing a part of global market

Worldwide, packaging is a $975 billion industry and is expected to reach close to $1000 billion this year.

  • The Indian packaging industry is estimated at $25 billion and is set to grow to $30 billion by 2020. The ultimate target is to capture a significant portion of the abovementioned global market.

Make in India

Developing indigenous packaging standards coupled with home-grown innovation in this field underlines the vision of “Make-in India”

Export potential

Indian Institute of Packaging, the apex body for packaging, said the government had identified a few products that have export potential. “There we need a packaging standard,” Dr. Saha said. India has an old packaging standard for tea which is being upgraded. It is also updating packaging standards for spices. These sectors have significant export potential”

Read More: Cold-form blister packaging. 


Indian Express


[1] The Middle Ground On Water


Indian Express

Context

Permanent Water Tribunal needs supplementary institutions.

Issue: Inter-state water disputes (Setting up of a permanent tribunal)

Present situation

Under the existing arrangement, the Interstate (River) Water Disputes Act 1956 (IWRDA) provides for constituting temporary and exclusive tribunals for each dispute

 Situation after Permanent tribunal is set

It will subsume and replace all the existing tribunals and provide a permanent avenue for resolving inter-state water disputes

Why set up a permanent tribunal?
To address the frequent recurrence and escalation of the disputes, and extended litigations causing long delays in their resolution

This article tries to answer the following question,

Can the PT address these problems for better resolution of the disputes?

Proposals

Author points out at different proposals given to resolve the problem of ever increasing inter-state water disputes and the entire institutional set up that is in place to deal with them. Following two proposals have been suggested,

  • Repeal the IWRDA so that the onus of the disputes adjudication, by default, would fall on the Supreme Court (SC). If done, this will be against Article 262 which bars Supreme Court’s jurisdiction over water disputes
  • Status-Quo: Other proposal is to continue with the present arrangement while amending IWRDA to improve its effectiveness. The IWRDA has gone through several amendments. Evidently, these have not helped 

Permanent tribunal: A middle ground

Author states that a permanent tribunal is a middle ground to the abovementioned proposals. It offers a permanent avenue for dispute adjudication and does not contravene constitutional provisions

Features of permanent tribunal

  • Set up via IWRDA: It will apparently be set up through an amendment to the IWRDA.
  • Exclusive benches:Reports suggest that the disputes will be dealt with by exclusive benches
  • Dispute Resolution Committee: There will also be a Dispute Redressal Committee (DRC) to mediate a resolution before disputes are referred to benches for adjudication

Author, now, asks the following question,

 How will a permanent tribunal fare when the states have not only challenged tribunal decisions, but also defied SC orders in some instances?

 Issue

The SC has recently ruled that Special Leave Petitions (SLPs) over inter-state water disputes are maintainable in the Cauvery dispute.

  • Likely Outcome: This is likely to encourage states approaching the SC against tribunal decisions, leading to extended litigation and delays

 Unique nature of inter-state water disputes

Author points out at the nature of inter-state water disputes,

  1. They are transboundary conflicts& sites of permanent contestation
  2. Nexus between water politics and democratic politics: Inter-state water disputes are often an outcome of the nexus between water politics and democratic politics

Supplemental measures: DRC is a right step

Author states that water disputes are a site of permanent and frequent escalation. So there needs to be a mechanism which can address such matters on a regular basis so that things do not go beyond control. This cannot be provided by legal adjudication alone, and has to be supplemented by institutional responses both before and after legal adjudication. Hence, the DRC is a right step as an ex-ante measure (step based on forecast rather than actual data) to avoid legal adjudication.

Ex-post measures

Author states that measures taken after legal adjudication should be proactive and underline the innovative institutional practices and processes but this is where the huge gap lies.

  1. Lack of institutional models: We do not have robust and replicable institutional models for inter-state cooperation
  2. The River Boards Act 1956, which is supposed to facilitate inter-state collaboration over water resource development remained a “dead letter” since its enactment

Thus, reforming inter-state water disputes resolution requires a larger ecosystem of policies and institutions.


[2] India’s interests tilt eastwards, it walks a new tightrope


Indian Express

Context

India’s economic and strategic interests are hugely tied to the Indian Ocean, the 21st century’s theatre of huge rivalries. If Trump translates his rhetoric into reality, a harried China will be a nightmare there.

How the changing dynamics of US-China relationship will affect India’s foreign policy, is the question this article tries to answer.

Give it a go-through once.


[3] Expand partnership with US, limit rifts with China


 Indian Express

Context

India has a trade surplus with America, which has ended its pro-Pakistan tilt and supports India’s membership of the UNSC and NSG. Washington says it wants to see India emerge as a great power; China seems to block India’s rise.

The article is commentary on the foreign policy considerations, specifically the issue of whether to side with China or US, that India must take into account in the rapidly shifting global geopolitical scenario.

Give it a go-through once. 


Live Mint


[1] GST: anti-profiteering measures necessary?


Live Mint

Context
Competition and an open market place is the best tool for keeping prices in check

Authority to monitor price

Author states that there is a provision in the revised model GST law which enables

Central government to constitute an authority to monitor the prices businesses charge for goods and services in the lead-up to, and following the introduction of, GST

  • Purpose: The authority will examine whether any reduction in a business’ cost base, or in the tax rate on goods and services as a result of the introduction of GST, is passed on to consumers in the form of appropriately reduced prices

Note: The above provision is basically an anti-profiteering provision. Such provisions are enacted to protect consumers and ensure that businesses don’t take undue advantage of the levy to charge more and make excessive profits

The main question posed by this article is,

Why it is necessary to add an additional compliance burden on Indian businesses already struggling to keep pace with the preparation for the introduction of a GST?

 Significant lead-in time

Author states that overseas experience indicates that anti-profiteering provisions are only effective if there is a significant lead-in time (time between the initiation and the execution of a process) to allow the relevant authority to educate consumers and businesses as to their respective rights and obligations. It is this education process that has the greatest impact on consumer confidence and business behaviour.

  • With such a short “lead-in” time before the GST commences, the authorities have little or no time to exert any such influence
  • Australian example: Australia was the first country to enact similar provisions when it replaced a series of inefficient taxes with a GST in July 2000. The Australian Competition and Consumer Commission (ACCC) was charged with the responsibility of monitoring prices 12 months before the commencement of GST

 How ACCC did it?

  • Educating consumers and businesses: ACCC’s focus was on educating consumers and businesses. This included the publication of pricing guidelines, communication strategies for different market segments and “hot lines” for consumers and businesses to get advice
  • Monitoring of prices:Education was supported by extensive and sophisticated monitoring of prices leading up to the introduction of GST and in the months immediately following
  • Enforcement, the last resort:The fall back was enforcement where there was blatant exploitation and profiteering (only 11 businesses were prosecuted in total)

Difficulties faced by Malaysia

Malaysia also introduced an anti-profiteering provision, along with the introduction of GST in April 2015. However, it led to widespread litigation and was found to be administratively difficult to implement

Challenges before government

Author states that there are several challenges which the government must face in order to implement such a provision in India,

  • The government will need to come up with detailed guidelines on the mechanism for computation of benefit and administration.

For example, whether the profit has to be computed at the product level or the entity level. Do we do this analysis for each of the costs or only the major costs? Also, what if businesses increase the prices before the implementation of GST, in anticipation of the benefit that would accrue?

Author suggests

  • Free market, the best tool: Author points out that from a business perspective, exploiting customers is not a viable business strategy. Being caught out exploiting customers is fatal. Ultimately, it is competition and an open marketplace that is the best tool for keeping prices in check.
  • Enforcement:From an administrative perspective, the short GST implementation time frame means that enforcement is likely to be the only viable approach to administering these provisions.

Read More: Anti-profiteering provision in GST.


[2] Demonetisation’s hydra-headed critics


Live Mint

Context

If it turns out that notes extant on 8 November were somehow under-counted, it would mean that RBI had greater liabilities than its books showed

Demonetization has been covered in ample detail in previous briefs.

Give it a go-through once.


 

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