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- Front Page / NATIONAL (The Hindu)
- Editorial/OPINION (The Hindu)
- International (The Hindu)
- Economy (The Hindu)
- Indian Express
- Live Mint
Page / NATIONAL(The Hindu)
[1] Council fixes 4-level GST rate structure
Context
Overcoming opposition from some States, the GST Council finalised on 3rd September, a multiple-slab rate structure, including the cess, for the new indirect tax. The quantum of cess on each of these will depend on the current incidence of tax.
Tax structure
- Multiple rates: The Goods and Services Tax (GST) will be levied at multiple rates ranging from 0 per cent to 28 per cent.
- Cess on ultra-luxury, sin and demerit goods: Ultra-luxuries, demerit and sin goods, will attract a cess for a period of five years on top of the 28 per cent GST
- On nearly half of the consumer inflation basket, including food grains, the GST will be at 0 per cent
- Lowest slab: The lowest slab of 5 per cent will be for items of common consumption
- Standard rates for bulk of foods and services: There would be two standard rates of 12 per cent and 18 per cent, which would fall on the bulk of the goods and services. This includes fast-moving consumer goods
- Services to become costly: Most services are expected to become costlier as the ones being taxed currently at the rate of 15 per cent are likely to be put in the 18-per cent slab
- Highest slab: The highest slab of 28 per cent will include white goods and all those items on which the current rate of incidence varies from 30-31 per cent
[2] Voter has right to know candidate’s qualification: SC
Context
Every voter has a fundamental right to know the educational qualification of a candidate, who has a duty not to lie about his or her academic past, the Supreme Court has held.
Backdrop
- The verdict came on appeals filed by MairembamPrithviraj alias Prithviraj Singh and Pukhrem Sharatchandra Singh against each other challenging the judgment of the Manipur High Court
- The HC had declared as “void” the election of Mr. Prithviraj in the 2012 polls on an NCP ticket against Congress nominee Mr. Sharatchandra from the Moirang Assembly seat in Manipur. It was alleged that Mr. Prithviraj, in his nomination papers, had said he was an MBA, which was found to be incorrect.
SC’s judgement
The bench said that the apex court was not “in dispute that the Appellant did not study MBA in Mysore University” and the plea that it was a “clerical error” could not be accepted.
- “Since 2008, the Appellant was making the statement that he has an MBA degree. The information provided by him in the affidavit filed in Form 26 would amount to a false declaration. The said false declaration cannot be said to be a defect which is not substantial
SC’s view
- Every voter has a fundamental right to know about the educational qualification of a candidate.
- It is a duty enshrined upon the candidates to give correct information about their educational qualifications
[3]11,000 NGOs to not get foreign funds
Context
The NGOs could no longer receive foreign funds now.
Backdrop
Two years after the NDA government had cancelled the Foreign Contribution Regulation Act (FCRA) licences of 10,000 NGOs, the licences of another 11,000 NGOs expired as they did not apply for renewal in time.
- The fate of another 1,700 NGOs hangs in balance as the Home Ministry has put them under “closed” category for submitting incomplete documents
As per ministry,
“Expiry” technically meant cancellation and the NGOs could no longer receive foreign funds now
Significant cancellations
Among the most significant cancellations were — Adani Foundation promoted by business tycoon Gautam Adani, Oxfam Trust, the Indian arm of the British human rights organisation and Salam Balak Trust, which works for children’s rights.
NGOSs say
Despite many NGOs submitting completed documents, they have been put under the closed category
What is FCRA?
It regulates the foreign contribution (money donation) and foreign hospitality (e.g. free airplane tickets and hotel lodging during foreign trips) given to various NGOs, institutes, judges, journalists, public servants etc.
Need for FCRA
- To check that foreigners are not affecting India’s electoral politics, public servants, judges, journalists, NGOs etc. for wrong purposes.
- If someone violates the FCRA act, he can be sent to jail for up to 5 years.
Note: For a detailed treatment of FCRA please visit this link
Editorial / OPINION (The Hindu)
[1] Citizenship on a divisive agenda
Context
Author tries to bring forth the real politics behind the recent citizenship amendment bill
Backdrop
Union Home Minister Rajnath Singh introduced the Citizenship (Amendment) Bill, 2016, in the Lok Sabha during the monsoon session of 2016 to amend the Citizenship Act, 1955.
- The Bill, since sent to a 30-member joint House panel on August 11 for a “thorough examination”, contains proposals for bringing in changes to sections 2 and 7, and the Third Schedule of the principal Act
Naturalization
Naturalization is the legal act or process by which a non-citizenin a country may acquire citizenship or nationality of that country.
- It may be done by a statute, without any effort on the part of the individual, or it may involve an application and approval by legal authorities
Underlying Issue
Increasing Muslim population in Assam is the major argument which the current government is alluding to while bringing in the citizenship amendment bill.
It should be noted that,
- The 2011 Census identified 9 districts as areas with Muslim majority, up from 6 in 2001
So, government wants to grant citizenship to Hindus, Sikhs, Buddhists, Jains, Sikhs and Parsis facing persecution in Pakistan and Bangladesh and entering India without any valid document.
Note: – Citizenship is a Union subject
What does the bill intends to do?
The Bill states that persons belonging to the minority communities in Pakistan, Afghanistan and Bangladesh who entered India with or without valid documents would now onwards cease to be treated as “illegal migrants” and be eligible to apply for Indian citizenship under the provision of naturalization.
Author states that though the bill is designed for entire India, its impact would be prominent in Assam.
Protest: Assam nationalists have protested the bill as they see the proposed legislation as a design of the Central government not only to dilute the Assam Accord of 1985 but also put the ‘indigenous language and culture’ in danger.
Assam accord of 1985
The Assam Accord (1985) was a Memorandum of Settlement (MoS) signed between representatives of the Government of India and the leaders of the AssamMovement in New Delhi on 15 August 1985.
Section 6A
- Before 1st Jan 1966: As per section 6A of Citizenship Act, 1955, all persons of Indian origin who came before the 1st day of January, 1966 to Assam from the specified territory (including such of those whose names were included in the electoral rolls used for the purposes of the General Election to the House of the people held in 1967) and who have been ordinarily resident in Assam since the dates of their entry into Assam shall be deemed to be citizens of India as from the 1st day of January, 1966.
- On or after 1st Jan 1966 but before 25th March 1971: It further provides that every person of Indian origin who came to Assam on or after the 1st day of January, 1966 but before the 25th day of March, 1971 from the specified territory and has been ordinarily resident in Assam and has been detected to be a foreigner shall register with the Registering Authority.
- Deletion of names:If his/her name is included in electoral roll for any Assembly/Parliamentary Constituency in force on the date of such detection, his name shall be deleted therefrom.
Hence, due to the insertion of Section 6A in the Citizenship Act, 1955, the cut-off date for citizenship in Assam is March 25, 1971.
- Proposed change: The proposed piece of new legislation seeks to extend this to December 31, 2014, rendering Section 6A fruitless
Political underpinnings
Call for agitation: A significant section of Assamese intellectuals, regional vernacular press and various outfits is clearly annoyed at the Centre’s manipulation of the sensitive issue of foreigners. In fact, the call for reprising an ‘80s-like-agitation’ is in the air.
- The All Assam Students’ Union has already declared a State-wide agitation programme against the Bill from October 18
Why, the present government, is bringing these changes?
Author says that central government has clearly two reasons,
- Hindu State: It is simply catering to the Sangh Parivar’s agenda of making India a ‘Hindu state’, and treating this country as the ‘natural home’ to Hindus all over the world is a part of that agenda
- Religious divide: The central government is trying to further consolidate its Hindu constituency by wedging the religious divide in a very subtle way in the diverse demography of Assam.
Legal standing
Noted constitutional experts such as Subhash C. Kashyap have raised serious questions over the legal tenability (capable of being held) of the Bill in its present form
- Violate Article 14: Apart from the fact that the proposed amendments in the Citizenship Act, 1955, are likely to go against Section 6A, they violate Article 14 of the Constitution guaranteeing equality before the law
- This Bill does not actually give citizenship to anybody. It only proposes to enable the post-1971 flow of non-Muslim migrants to apply for Indian citizenship via the route of naturalization; they are proposed to be decriminalized by lifting the prefix ‘illegal’ before ‘migrants’.
- The Bill, even if enacted, shall remain just an enabling piece of legislation. Future governments may very well resort toSection 14 of the Citizenship Act to refuse what the present government is seemingly granting — the much-coveted citizenship.
International (The Hindu)
[1] India, Bangladesh joint exercise from tomorrow
Context
Bangladesh and India will hold a 14-day joint military exercise, code-named “Sampriti-7” to practice counter-terrorism and disaster-management operations.
7th edition
The bilateral defence cooperation effort, hosted alternately by both countries, is into its seventh edition.
- The first exercise in this series was held at Jorhat in Assam in 2010
- The exercise will be held at Shaheed Salauddin Cantonment in Bangladesh’s Ghatail, Tangail, when the two neighbours will engage each other in counter-insurgency and counter-terrorism operations
Working under UN Charter
The joint exercise will simulate a scenario where both nations are working together in a counter-insurgency and counter-terrorism environment under the U.N. Charter.
- Personnel from both countries would be “familiarised” with each other’s organisational structure and tactical drills
UN Charter
The Charter of the United Nations was signed on 26 June 1945, in San Francisco, at the conclusion of the United Nations Conference on International Organization, and came into force on 24 October 1945.
- Charter contains UN’s principles mentioned under various articles, its main bodies, its membership details etc.
ECONOMY (The Hindu)
[1] ‘Global situation not to blame for fall in exports’
Context
India cannot put the entire blame on the global environment for its poor export performance, according to a Crisil study. Domestic market is on the cusp of an expenditure boom.
Backdrop
India’s merchandise exports had shrunk in 20 of the last 21 months.
Rising exports
While India’s share in global exports is declining, those of Bangladesh, Vietnam and China are still rising despite the adverse environment, according to the report.
Steps that India needs to take
- India needs to remove bottlenecks like, rigidity in labour laws, challenges associated with land acquisition, inadequate physical infrastructure (roads, ports and electricity), and poorly skilled manpower.
- Capture the space vacated by China: China has been moving up the value chain, exiting the low value-added manufacturing space (textiles, apparel, footwear, toys).This, along with rising wages in China and the Centre’s strategy to focus on domestic demand, means more export opportunities will become available to other competing economies and India must strive to capture the space.
Stats: India has failed to capture that space. For instance, India’s share in world exports has remained more or less similar between 2001 and 2015 in textiles and apparel, while it has increased manifold for Bangladesh and Vietnam.
- Integrate faster with the world: India must move fast to renew its stalled trade negotiations with the EU and the ongoing dialogue in the Regional Comprehensive Economic Partnership(RECP, a proposed free trade pact between 16 Asia-Pacific nations including India).
- Improve international competitiveness of its key exports
India must walk two roads to script a success story out of its Make-in India programme
Dual path
- Striking a balance: Innovating policies that strike a balance between export-led and domestic demand-led growth strategies of focusing on exports as well as domestic market
- Export potential: India needs to nurture its export potential to make its goods competitive, yet lean on fast-expanding domestic demand to promote its manufacturing sector
Revealed Comparative Advantage
As per CRISIL, revealed comparative advantage (RCA), a measure of international competitiveness, for some of India’s key export items, has declined in the past decade.
- The revealed comparative advantage is an index used in international economics for calculating the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. It is based on the Ricardian comparative advantage concept.
- RCA is used to help assess a country’s export potential.
- The RCA indicates whether a country is in the process of extending the products in which it has a trade potential, as opposed to situations in which the number of products that can be competitively exported is static.
- It can also provide useful information about potential trade prospects with new partners. Countries with similar RCA profiles are unlikely to have high bilateral trade intensities unless intra-industry trade is involved.
CRISIL
CRISIL, formerly known as Credit Rating Information Services of India Limited, is a global analytical company driven by its mission of making markets function better.
- It is India’s foremost provider of ratings, data and research, analytics and solutions, with a strong track record of growth and innovation
- CRISIL also works with governments and policy-makers in India and other emerging markets in the infrastructure domain
[2] Industry voices concern over GST rate complexity, cess uncertainty
Context
Industry bodies and business leaders have expressed their concerns about the complexity of the final rate structure of the Goods and Services Tax as announced by Finance Minister ArunJaitley.
Issues of concern
- Multiple rates: Complexity brought on by the multiple rates of 5 per cent, 12 per cent, 18 per cent, and 28 per cent
- Additional cess: The uncertainty about the additional cess that will be levied on luxury goods and tobacco products
- Rates on services: While the goods will have a multiple rate structure, no clarity is provided on rates applicable to services
- Multiple registrations: requirement for multiple registrations in each state for the supply of goods and services. “This has the potential to result in huge burden of complexity as companies operate in many different states
Industry’s view
- On cess: The cess needs to be levied only at the final product and total tax including cess on demerit goods should be kept within the present overall indirect tax incidence
- On compliance time: Industry hopes that sufficient time is given to companies to comply with the tax after the rules are finalised and made public and that the levy of cess would not lead to inflationary pressures
- Industry leaders stated the importance of the bulk of goods and services falling within the standard rate of 18 per cent. The higher rate of 28 per cent must be an exception
- Classification of goods: Industry leaders hoped that as rates have been finalised the government now must move quickly to classify which goods fall under which rate.
[3]. Oil firms up in arms over service tax demand
Context
The Central Board of Excise and Customs said that it would levy a service tax from this financial year on the royalties paid by the producers to the Centre for the use of natural resources.
Tax to be paid
The total service tax amount—to be paid by companies like ONGC, Cairn India, and RIL—could be as much as Rs.1,900 crore, based on the total royalty of Rs.12,817 crore paid to the Centre and the states in 2015-16.
Companies’ stance
- “In principle we believe service tax is not applicable on royalty,” a Cairn India statement said
- “We along with other industry players and through industry bodies have represented to the government seeking clarification in this regard.”
Indian Express
[1] The quality of justice
Context
Author, a former Chief Justice of Delhi and Madras High Courts & former chairperson of Law commission of India, talks about the possibility of recruiting judges through All-India Judicial Service (AIJS)
Present situation
State public service commissions, under the guidance of the high courts, recruit civil judges and magistrates for the lower courts
Author says that the debate around judges is centered mainly on the pending vacancies in the judiciary but the real question that we should be asking is this,
Q1: whether the judiciary is in a position to recruit the best talent required for fulfilling the role that is demanded of a judge?
Author implores that judiciary must introspect on some issues,
Q2: Why are there always 20 per cent vacancies in the courts?
Q3: Vacancies are never filled in time. Why do these positions remain empty?
Author then goes on to answer the question himself
His answer: Because the judiciary is unable to attract talent
Why the quality of subordinate judiciary is average?
Unattractive employment: The subordinate judiciary depends entirely on state recruitment. But the brighter law students do not join the state judicial services because they are not attractive. With no career progression, no one with a respectable Bar practice wants to become an additional district judge, and deal with the hassles of transfers and postings.
Conclusion: As at least one-third of high court judges are elevated from the subordinate judiciary, author points out that they are also mostly average. As a result, the litigants are left to suffer.
Attracting good talent
Just as dentistry is a specialization in medicine, judging is a specialization in law
French Model: In the French model, students pick the judiciary as a stream early in their legal studies itself
Author’s initiative: Author while serving as the Chief Justice of Delhi HC introduced one-year diploma on “judging” in law schools, with the eventual idea to have a full-fledged course for judges, but it did not take off.
Constitutional position
When our Constitution was drafted, the AIJS discussion got sidelined.
Article 235: Under Article 235, the entire judicial machinery at the subordinate level was under the control of the high courts.
Article 312: The Constitution drafting committees also discussed Article 312, conferring power on the Parliament to create All India Services. At that time, it was doubtful whether the judicial services could be organised on a national scale under Article 312.
Swaran Singh Committee’s recommendations: After the Swaran Singh Committee’s recommendations in 1976, Article 312 was modified to include the judicial services, but it excluded anyone below the rank of district judge. Therefore, the trial courts are completely eliminated
Law commission reports
The 1st Law Commission of India (LCI) came out with its comprehensive, 14th Report on Reforms on the Judicial Administration, which recommended an AIJS in the interests of efficiency of the judiciary. However, the proposal was opposed as being impractical, and was shelved.
- In its 77th Report, dealing with “Delay and arrears in trial courts”, the LCI once again said the AIJS needed serious consideration
- LCI’s 116th Report was titled the “Formation of an All India Judicial Service”. It dealt witht issue in detail.
Recommendations of 116th Report:
- Direct recruitment of judges from the entry level onwards would be handled by an independent and impartial agency.
- Open competition: The process of recruitment would be through open competition, and if designed with the right incentives of pay, promotion and career progression, it could potentially become an attractive employment avenue for bright and capable young law graduates.
- Supreme Court has also supported the creation of AIJS and has directed the Union of India to take appropriate steps in this regard.
Chief Ministers’ conference 1982
The idea of an AIJS was approved in the chief ministers’ conference in 1982, and most states were in agreement but following points were raised in opposition,
- Lack of knowledge of regional languages would affect judicial efficiency
- Reduced chance of promotion: Avenues for promotion would be curtailed for those who had already entered through the state services
- Judiciary’s independence: It would lead to an erosion of the control of the high courts over the subordinate judiciary, which would, in turn, affect the judiciary’s independence
Who is opposing the idea of AIJS?
Author states that, the judicial side of the court machinery is entirely in favour of an AIJS. It is the administrative side that has been opposing this idea.
Advantages of an AIJS
- It will bring in uniformity in selection process and standards
- It will improve the quality of judicial officers in high courts, and one-third of the judges would enter the high courts through the route of promotion from subordinate courts. By extension, judges of the Supreme Court are drawn from the high courts. In this process, the persons eventually selected into the judiciary would be of proven competence.
- The quality of adjudication and the dispensation of justice would undergo transformative changes across the judicial system, from the lowest to the highest levels
- It will make the judiciary more accountable, more professional, and more equitable
Conclusion
The prime minister and the chief justice of India have raised red flags about the problems that plague the courts. There is no time better than now to start doing something about these problems.
[2] Faith and its limits
Context
Author tries to bring forth the fact that our constitution doesn’t endorse orthodox religious practices under the guise of religious freedom.
Backdrop
- The Supreme Court of India upheld the validity of police bans on the Anand Margi practice of performing tandavanritya. Its community leaders saw it as a denial of their constitutionally protected right to religious freedom
- Rajasthan High Court in 2015 declared illegal the practice of santhara
- Author points out that, now the provision for religious freedom under the Constitution is being invoked by Muslim theologians who are opposing a ban on triple Talaq.
Right to religious freedom: Article 25 (Part III)
Freedom of conscience and free profession, practice and propagation of religion
(1) Subject to public order, morality and health and to the other provisions of this Part, all persons are equally entitled to freedom of conscience and the right freely to profess, practise and propagate religion
(2) Nothing in this article shall affect the operation of any existing law or prevent the State from making any law
(a) regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice;
(b) providing for social welfare and reform or the throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus Explanation I The wearing and carrying of kirpans shall be deemed to be included in the profession of the Sikh religion Explanation II In sub clause (b) of clause reference to Hindus shall be construed as including a reference to persons professing the Sikh, Jaina or Buddhist religion, and the reference to Hindu religious institutions shall be construed accordingly
Classifiersattached to Article 25: Article is prefixed with the words “subject to public order, morality, health and to the other provisions of this Part”, which set conditions for the legal protection of religious practices of any community.
- The following words,“other provisions of this Part” implies that other provisions contained in Part III of the constitution i.e. other fundamental rights contained in Part III are above the right to religious freedom
Example: Right to equality and Equal protection of laws wherein state shall not deny equal protection of laws to any person or group of persons on the basis of religion alone.
- Clause 2: Clause 2 of Article 25 clearly states that “nothing in this article” shall prevent the state from regulating or restricting by law any “economic, financial, political or other secular activity which may be associated with religion”
Author presents the reader with the following question,
Q: What is, then, the yardstick to decide if any particular tradition is a genuine religious practice or a “secular activity associated with religion”?
A: Supreme Court has evolved an “Essential practices Doctrine” to judge as to what constitutes a genuine religious practice.
Muslim religious practices
Under Islam, religious principles are placed in two separate compartments
- 1. Ibadaat (spiritual matters)
- 2. Muamlaat (temporal matters)
Further categorisation:
Farz (obligatory absolutely) or wajib (obligatory generally): Practices specifically instructed by the Quran (divine book) or Hadith (Prophet’s sayings)
Mustahab (recommended) or Jaez (permissible): All other actions mentioned in religious books
- Covered under right to Religious freedom: Religious practices that are farzor wajib for the Muslims will be covered in India by the religious freedom clause of the Constitution. Even what is recommended by religious texts can perhaps be claimed to fall under that protective umbrella i.e. Mustahab
- Not covered under Religious freedom: what is merely permissible — and certainly not any hateful practice that according to Muslim theologians themselves is bidat (against true religion)
Conclusion
Author states that the provision for religious freedom under Article 25 closes with a final clarification that “nothing in this article” shall prevent the state from making laws providing for social welfare and reform. In its deeper meaning this assertive clause — applicable to all communities — engenders a fiduciary obligation (The relationship wherein one person has an obligation to act for another’s benefit) for the custodians of state authority to move in this direction as and when necessary.
Live Mint
[1] Cleaning up India’s air pollution problem
Context
Author brings forth the issue of pollution in New Delhi & what possible steps government can take at state and central level to control it.
Backdrop
Anyone who ventured out at night in New Delhi in the past few days would have experienced something akin to one of Victorian London’s infamous pea soupers—the thick fogs caused by air pollution that proved lethal to more than a few of the city’s inhabitants. The onset of the haze blanketing the capital come winter has become an annual ritual.
Magnification of the problem
The levels of particulate matter i.e. PM10 and PM2.5—the most dangerous components of air pollution—spiked severely after Diwali. The former was recorded at eight times the safe limit and the latter at 10 times. This further magnified the already persisting problem of pollution in Delhi.
Reason for increased pollution in winters
The burning of agricultural waste in states like Punjab and Haryana, vehicular emissions, dust from construction sites and factory emissions, among other factors, combine in the winter months when lower wind speeds and shallow inversion layers prevail across much of the Indo-Gangetic plains.
Steps taken by the State & central government
- The evolution of India’s road transport landscape—from the introduction of catalytic converters in cars and unleaded petrol in 1995 and 1998, respectively, to the reduction of sulphur content in diesel in 2000
- Steady progress of successive emission norms
- Punjab government banned burning of paddy straw
- Delhi government plans to retrofit crematorium chimneys and vacuum clean and sprinkle water on Delhi’s roads
Deficiency in measures
- Paucity of research to guide policy: There have been a number of studies in Delhi examining the effect of air pollution on respiratory functions and the associated morbidity, including a comprehensive one by the Central Pollution Control Board in 2008. But there has been little focus on the effects on cardiovascular health, an issue that is receiving increasing attention globally
- Lacking a broader Indian context: An IIM Ahmedabad research paper, Air Pollution in Indian Cities: Short Term Mortality Impacts and Interactions with Temperature, there is a lack of epidemiological evidence in the broader Indian context. The researchers found out that the studies deal with the short-term impacts of air pollution on mortality only for Delhi and Chennai.
- Lack of political will and imagination to implement proven methods: Congestion charges and restricted parking have been successful from London to Singapore. An emphasis on convenient, easy-to-access public transport has been similarly successful. Similarly, there is a lack of effort to find a synergy between the rising demand for fodder and the agricultural waste that contributes to air pollution via biomass burning
- Lack of adequate enforcement: Rules are routinely flouted in India in absence of a strict enforcement. Example: Industrial emission norms and pollution under control certificates are two such examples where a strict control by the government will help in bringing down pollution levels.
Conclusion
Author concludes the article by referring to the Great Smog of 1952 which caused premature deaths of over 10,000 people in London and forced the British government to introduce Clean Air Act 1956 and put an end to the pea soupers. India has it worse; according to the Global Burden of Disease report, outdoor air pollution was responsible for 620,000 deaths in 2010. It’s time, perhaps, for a similar clean-up effort.
[2] Are BRICS states ready to unleash their growth potential?
Context
Author stresses on the fact that if BRICS leaders can shun their political differences then the initial vision with which the grouping was envisioned can be realized.
Backdrop: Creation of BRICS
Bric in singular, which is what it started out as, was an invented country grouping of the research department of Goldman Sachs in 2001—Brazil, Russia, India and China.
- With the bursting of the dot-com bubble, the ground was fertile for creating a new group of large economies and investing it with the responsibility of powering growth in a globalized world.
- It became Brics with the inclusion of South Africa 10 years later
Author points out that the initial vision alluded to BRICS economies assuming global pre-eminence within 50 years but 15 years that have passed so far are not encouraging.
Author presents us with a major question,
Q: How well are the Brics countries poised to unleash their growth potential through providing economic opportunity for all?
A: Author states that, to find out an answer, the best measure with all its limitations, is the World Bank’s Ease of Doing Business (EDB) rankings
- The 2017 edition of this annual exercise has come out recently. It assigns to each of 190 countries an index value configured as an average across 10 constituent indicators. These include time taken to get construction permits and electricity connections, procedural issues with paying taxes and such
- The 2017 edition shows very little change from 2016 in the relative standing of Brics countries.
- DTF score: For each of the 10 indicators, the distance to frontier (DTF) score is obtained for each country, as a percentage of the distance from the worst to the frontier. Of the Brics five, Russia shows the highest improvement in its index value relative to 2016. It has to be remembered that even if a country stays where it was on a particular indicator, its DTF index could change if the performance of the worst country changes (the frontier is revised only once every five years)
India:The index value for India has improved by roughly 0.6 over last year
- Present ratings as per DTF score: Russia has an index value of 73.19, India has 55.27, with South Africa (65.20), China (64.28) and Brazil (56.53)
Limitations of the data
- Data is collected from the largest city in each country and in context of BRICS, the 2 largest cities.
- Each constituent indicator is measured by the median or modal duration between application and receipt of permit, as assessed by knowledgeable people. The principal structural problem in India is that the dispersion around such a median is very high on the upside.
Why WEF’s competitive index is not so useful?
The World Economic Forum’s Competitive Index by contrast encompasses far too wide a range of indicators to be useful
What BRICS should be doing?
- Brics needs to set up working groups which would meet sequentially in the different countries, and take on board the particular issues needing redressal in each within a particular sector
Author says that,
When the Brics idea first took shape, I was actually in favour of it. At the time of its formation, there was no G20, only G8, and I saw it as recognition of the importance of wider global partnerships.
- It was not a free trade group, which was refreshing because it indicated intent to develop other avenues of mutual economic assistance. There have indeed been some positive moves in that direction, like,
- NDB: There is the New Development Bank (NDB) for infrastructure lending, with a focus on renewable energy. Headquartered in Shanghai, it started operations in July 2015
- Currency reserve: There is also a Brics currency reserve arrangement amounting to $100 billion, operationalized in July 2015. Access for members to short-term liquidity to tide over external crises is defined at the amount of capital contributed, less for China, more for South Africa
- Credit rating agency: The proposal to set up an independent credit rating agency was mulled over in 8th annual BRICS summit in Goa
Russian stance
Author says that Russia has no intention of ascribing itself to a group identity in international arena. Russia seems more interested in bilateral deals with individual members of Brics, especially if they include a defence equipment purchase component, rather than in the group itself.
Chinese position
Author states that China despite recent downturn in its economy still retains the position of dominance in economic terms in BRICS. Like Russia, China also is above any group identity and is on the look-out for raw materials throughout the world
Example: At the same time at which the Brics NDB was started, China spearheaded a parallel Asian Infrastructure Investment Bank (AIIB) with roughly the same size of authorized capital and much wider country membership extending well beyond Asia but the sector-wise focus of NDB on renewable energy gives it a more progressive outlook
Conclusion
If BRICS countries display the statesmanship needed to rise above political differences and see the advantages of mutual cooperation, the grouping might yet validate that 2001 vision of the Goldman Sachs research department.
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