Brief of newspaper articles for the day bearing
relevance to Civil Services preparation
- GS PAPER 2
- Uttarakhand crisis: HC rejects Centre’s plea {Bills and Laws}
- Why low outgo for drought relief: SC {MGNREGS Funds}
- U.S. for stronger ties with India
- GS PAPER 3
- FB, Twitter, Google asked to set up India servers {Cyber security}
- Messaging becomes ‘snoop-proof’ {Cyber security}
- The Panama paper trail {Black Money}
- Govt. plans sops for SEZs, small exporters to spur shipments {Investment model}
- Tax receipts at Rs.14.6 lakh cr, exceeds estimates {Tax revenue}
- No jobs in sight {Employment}
- Equality in good economics {Inclusive growth}
- FDI in e-commerce: 50 shades of grey {FDI}
GS PAPER 2
[1] Uttarakhand crisis: HC rejects Centre’s plea
What happened?
- Uttarakhand High Court on Wednesday has rejected the Central government’s plea to adjourn the hearing of a case challenging President’s Rule in Uttarakhand.
Critical Analysis of S. R. Bommai v. Union of India
- This landmark case, in the history of the Indian Constitution has great implications in Center-State relations.
- It is in this case that the Supreme Court boldly marked out the paradigm and limitations within which Article 356 has to function.
- The Supreme Court of India in its judgment in the case said that it is well settled that Article 356 is an extreme power and is to be used as a last resort in cases where it is manifest that there is an impasse and the constitutional machinery in a State has collapsed.
- It should be noted here that the views expressed by the bench in the case are similar to the concern showed by the Sarkaria Commission.
The SC laid down certain guidelines so as to prevent the misuse of A356 of the constitution.
- The majority enjoyed by the Council of Ministers shall be tested on the floor of the House.
- Centre should give a warning to the state and a time period of one week to reply.
- The court cannot question the advice tendered by the CoMs to the President but it can question the material behind the satisfaction of the President. Hence, Judicial Review will involve three questions only:
- Is there any material behind the proclamation
- Is the material relevant.
- Was there any mala fide use of power.
- If there is improper use of A356 then the court will provide remedy.
- Under Article 356(3) it is the limitation on the powers of the President. Hence, the president shall not take any irreversible action until the proclamation is approved by the Parliament i.e. he shall not dissolve the assembly.
- A356 is justified only when there is a breakdown of constitutional machinery and not administrative machinery
A356 shall be used sparingly by the centre, otherwise it is likely to destroy the constitutional structure between the centre and the states. Even Dr. Ambedkar envisaged it to remain a ‘dead letter’ in the constitution.
Relevance of this case
- It was expected that it would put a check on arbitrary dismissal of state governments in future and strengthen the federal structure of Indian policy which had hitherto been damaged on several occasion particularly when different political parties were in power at the centre and the state.
[2] Why low outgo for drought relief: SC + Act Now
Issue
- No food and no work for farmers in drought hit states.
Supreme Court gives directions to Union Government
- Supreme Court has asked the Union government not to “turn a blind eye” towards drought-hit states.
- In such areas, relief has to be given immediately and not after one year.
- The court highlighted the delay in MGNREGA payments, the pendency is most severe in states most affected by drought.
- Rs 10,588 crore are pending under the MGNREGA — the main programme to counter extreme rural distress.
- The court said that unless the Centre allocated funds, the States would remain helpless onlookers unable to fully implement schemes like MGNREGS.
- Two months ago, apex court expressed its strong disappointment over the implementation of the National Food Security Act across several states.
Petition filed by Swaraj Abhiyan
- It has asked the apex court to treat the situation as a calamity and provide guidelines for the effective implementation of the National Food Security Act, MGNREGS and basic water supply to drought-hit States.
Response from Centre
- Additional Solicitor-General Pinky Anand submitted that the Centre would release over Rs. 7,500 crore towards wage dues under the MGNREGS.
Farmers Problem
- The country has been suffering an extended bout of El Niño, which adversely affects rains and overall productivity.
- Unlike in the past when reduced productivity was partially offset by better price realisation, this time even that has not happened due to depressed global commodity prices.
- Farmers need immediate help both in terms of food and work availability.
Blessings in Disguise
- Every major agrarian crisis in the country has yielded some breakthroughs.
- Droughts and famines in the mid-1960s paved the way for the adoption of the high-yielding seed varieties that helped bring in the Green Revolution.
- The massive famine in Maharashtra in the early 1970s led to the enactment of the Maharashtra Employment Guarantee Act in 1977, which later became the blueprint for the MGNREGA.
- The time is ripe for another revolution — this time in water-use efficiency.
- Research shows that India uses two to four times more water to produce a unit of major food crop than China and Brazil.
- The Centre must take the lead in shifting the focus from high-cost large irrigation projects towards increased groundwater recharge and efficient water use, such as drip irrigation, by constructing check dams and farm ponds.
[3] U.S. for stronger ties with India
Context
- Defence Secretary Ash Carter will visiting India before going to Philippines and later a US navy ship in South China sea
What he said
- U.S. is looking for stronger and closer relations with India, because it is geo-politically grounded
- Reiterated that the U.S. Pivot to Asia and India’s Act East policy implied convergence of concerns and interests.
- Allowing space for India’s autonomy even as strategic ties deepen between the two countries comes against the backdrop of renewed efforts to conclude three defence agreements –
- the Logistics Supply Agreement (LSA),
- the Communication and Information Security Memorandum of Agreement (CISMOA)
- the Basic Exchange and Cooperation Agreement (BECA).
- Defence Secretary said there were two key elements to the U.S.-India strategic cooperation.
- First, the Pivot to Asia – Act East convergence
- Second, Defence Technology and Trade Initiative
Critic of agreements with US
Agreements would push India into a permanent embrace with the U.S. and limit India’s strategic choices.
GS PAPER 3
[1] FB, Twitter, Google asked to set up India servers
Union Home Ministry had requested Internet companies like Facebook, Twitter, WhatsApp and Google
- to maintain servers in India to help get real time information about accounts, which spread mischievous and incendiary messages
- to install a server, they would have to register as an Indian company and hire more people.
- Most of these companies don’t do that
Twitter removed 39 accounts on request
- Twitter removed 39 accounts on requests from the government and the police in India from July 1 to December 31, 2015.
- Twitter is yet to respond to the government’s request for details of the fake handle of Lashkar-e-Taiba chief Hafiz Saeed (@HafeezSaeedJUD) account.
- This was one of many cases, in which the government faced problems in getting real time information about such accounts.
[2] Messaging becomes ‘snoop-proof’
- World’s largest messaging app, Whatsapp owned by social networking major Facebook, would protect all personal communication by enabling end to end encryption.
- The new feature will allow users to access messages while barring everybody else, including government agencies, from snooping.
- Every call, every messages, video, file, and voice messages will be protected.
- Latest version only available to android.
- The latest announcement is to use encryption for other platforms too like ios and microsoft.
- There are fears that criminals and terrorists will communicate safely.
- But many believes that encryption allows more privacy in the new digital age.
[3] The Panama paper trail
11 million secret documents from the Panama-based law firm,Mossack Fonseca
{Earlier articles are The panama paper and Black money hunt yet to yield results + Panama offers to help India)
- Mr. Obama described global tax avoidance as a huge problem.
- In many countries including India it is perfectly legal to park money in various kinds of shadowy companies in tax havens.
- In India a lack of clarity persists about the legality of buying offshore companies, a service that is expressly provided by Mossack Fonseca.
- The lack of clarity exists despite the Reserve Bank of India’s evolving guidelines on offshore remittances and investments since 2004.
- While the guidelines, such as those of the Liberalised Remittance Scheme, are specific to remittances utilised by residents to service various overseas requirements such as medical treatment and education
- They have been modified over time to permit the setting up of 100 per cent subsidiaries and joint ventures within the limit of $250,000 a year.
- One of the few stipulations is that money cannot be sent to countries identified as “non-cooperative” by the global Financial Action Task Force.
- The RBI guidelines have largely been a reactive measure to address flows to tax havens.
- Following the Panama Papers and the scrutiny of the accounts of Indians named in them should pave the way for yet another tightening of the norms.
- The problem of black money stashed overseas has to be dealt with both at the multilateral level, through tightened capital flow norms, and domestically, through a zero tolerance approach to illegal transfers.
[4] Govt. plans sops for SEZs, small exporters to spur shipments
Issue
- Prolonged decrease in merchandise exports
How to increase exports
- Offering incentives for small exporters
- Package to revive Special Economic Zones (SEZs),
Who are small exporters
- Labour-intensive export sectors and organic food producers will get concessions and a package is on the anvil for SEZs so that they can utilize large tracts of unused land available with them
What Trade bodies want
- Better infrastructure to shore up exports and called for tax benefits to be extended to small and medium units.
- Fiscal support for modernisation and expansion of the production base
- Help exporters comply with international best practices and standards, as well as address problems relating to poor infrastructure, inadequate trade finance, high logistic costs and inflexible labour laws.
Steps that govt will take
- Categorising the entire export credit given by all lenders separately under priority sector lending without riders, ensuring better coordination with Indian missions overseas
- Relaxing norms for the Export Import Bank of India (Exim Bank) and Export Credit Guarantee Corporation of India (ECGC) to give them greater operational flexibility.
- Setting up of three dedicated zones for manufacture of Active Pharmaceutical Ingredients (API or drug raw materials) and other pharmaceutical items, incentives for the bio-tech industry especially for skill development, sops for manufacture and export of electronic items
- Targeted measures to address the problems of small importers of steel items, exporters in the gems & jewellery and seafood sectors, are the other steps being considered.
Board of Trade (BOT)
- These proposals will be taken up soon with other Ministries and regulatory authorities
- Commerce & Industry Minister Nirmala Sitharaman chairs the Board of Trade (BOT)
- The 72-member Board is a government-industry panel looking into measures to boost exports.
Indian Exports
- Indian exports have declined from $314 billion in FY’14 to $310 billion in FY’15.
- Exports in FY’16 are expected to shrink further to nearly $260 billion.
[5] Tax receipts at Rs.14.6 lakh cr, exceeds estimates
Context
- The aggregate Budget Estimates (BE) for total direct and indirect tax revenues for the fiscal year 2015-16 was Rs 14.45 lakh crore, which was revised to Rs 14.55 lakh crore. The actual collection (provisional) is Rs 14.60 lakh crore
Reason for high tax revenue
- Increase in indirect tax collections
- Indirect tax revenue for 2015-16 was Rs.7.11 lakh crore, which is higher than the BE and RE by Rs.65,618 crore and Rs.9,885 crore, respectively
Total tax collections grew by 17.6% higher than in 2014-15
Indirect tax collections were 31.1% higher than in 2014-15
Direct tax collections grew 7.61% higher than in 2014-15
Direct taxes
- Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer.
- It is a tax applied on individuals and organizations directly by the government e.g. income tax, corporation tax, wealth tax etc
Indirect taxes
- Indirect Taxes are applied on the manufacture or sale of goods and services.
- These are initially paid to the government by an intermediary, who then adds the amount of the tax paid to the value of the goods / services and passes on the total amount to the end user.
Central Board of Direct Taxes
- The Central Board of Direct Taxes (CBDT) provides essential inputs for policy and planning of direct taxes in India and is also responsible for administration of the direct tax laws through Income Tax Department.
- The CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963.
[6] No jobs in sight
Providing quota in private jobs will help cool down anger among SC and STs, thereby stemming the rise of Maoist militancy among them
The reason for rising maoist militancy
- lands of these vulnerable communities “are being snatched away for business purpose.This land has gold and coal beneath it. You dig it out and shoo them away.
- The youth then take up the wrong path”.
- Maoist militancy is not just a security challenge, but results from deeply embedded socio-economic causes.
- Major reason is that they have no jobs and future to look forward to.
- agrarian crisis, like low public investments in dry-land agriculture and farmer income protection, failures of land reforms, promotion of unsustainable, high-cost, risky agricultural technologies, the ecological degradation of the countryside, decline and dispossession from forests, contraction of rural credit, and many more
- In tribal areas, the penetration of large corporations that tend to be predatory, extractive and exploitative further fuels the crisis.
What it leads to?
- This manifests itself in farmer suicides, endemic hunger, mass annual distress migration, the violent Patidar and Jat job reservation agitations and, in some regions, in Maoist militancy, the last of these aggravated by human rights violations by counter-militancy security operations.
Quota in private jobs for sc and st will have positive outcome
- There is a colossal, unprecedented and ever-mounting crisis of employment for the young in India today.
- The Government jobs available are not sufficient to serve the need.
- The hopes of young people are shifting, to the private sector.
Why to have quota?
- At a time when the few jobs that are being created are in the private sector, and there is wide evidence of the bias shown by this sector against employing youth from socially discriminated categories, there is a strong case for job reservations.
It is a mirage
- But let us remember that only around 8 per cent of jobs are generated in the formal sector, of which more than half are in the public sector; therefore, this measure, even if implemented, would still touch only the fringe of the problem.
- There is today incontrovertible evidence that the current growth model built on large private investments is unable to generate jobs.
- Growing millions of young people find no future in agriculture, and there are few non-agricultural livelihoods available in rural India.
- The Socio-Economic Caste Census showed that more than 55 per cent of rural households possess no land, and are forced to survive exclusively by distress manual labour.
- Marginal and small farmers are not much better off.
- Most of them are reduced to footloose migrants, travelling, working and surviving under conditions of great hardship away from their homes.
What should be a better way?
- Employment in the organised sector actually went down after 1997, while that in the unorganised sector rose.
- Massive public investments in agriculture and rural job creation would help create enormous local markets that could spur jobs and demands from below.
- Huge expansions in the broken school, higher and technical education, and health and child care services would not just generate jobs, but also render youth entering work more productive and equipped with marketable skills.
Conclusion
- There are no signs of improvement in job creation in the distant horizon.
- If jobs are not creating in future, risk of developing more and more maoist militancy will cloud india.
- India should create jobs in agriculture and allied services to avoid vicious cycle of migration.
- Without changing course drastically, we will continue to profoundly fail our young, with both tragic and explosive outcomes.
[7] Equality in good economics
Issue
- Importance of Human Development
Background
- The world has made astounding strides in reducing poverty and improving the health, education and living conditions of hundreds of millions of people since the publication of the first Human Development Report in 1990.
- But this improvement has not been distributed equally and disparities, both between countries and within them, still remain.
Why there are disparities?
- Differences have taken root for a variety of reasons.
- These include “vertical inequalities”, like skewed income distribution.
- And “horizontal inequalities”, such as those that exist within groups because of factors like race, gender and ethnicity, and those that form between communities, owing to residential segregation.
- A combination of vertical and horizontal inequalities can generate extreme exclusion and marginalization, which in turn perpetuates intergenerational poverty and inequality.
Awareness on the rise
- The world has become increasingly aware of inequality’s pernicious effects on democracy, economic growth, peace, justice and human development.
- It has also become clear that inequality erodes social cohesion, and increases the risk of violence and instability.
Why we need to reduce inequality?
- If inequality continues to rise, higher growth will be needed to eradicate extreme poverty than if the economic gains were more evenly distributed.
- It obstructs not only the pursuit of collective goals and the common good; it also erects structural barriers to development, for example, through meagre or regressive taxation and underinvestment in education, health or infrastructure.
- The effort of tackling inequality is at the root of shaping a world that is not only fair, but also peaceful, prosperous, and sustainable.
[8] FDI in e-commerce: 50 shades of grey
Context
- Expert verdict on policy notification in 100% FDI in ecommerce has come a long way since the early years
History
- FDI in multi-brand retail, e-commerce companies were getting hyper-funded and the question of policy impact on e-commerce started coming up.
- The government clarified that FDI in e-commerce remains disallowed
- Despite that clarification, several billions of dollars from foreign institutions made their way into e-commerce businesses in India between 2012 and 2015.
- All leading e-commerce businesses, without exception, were inventory-led, though structurally disguised as marketplaces.
Loopholes in FDI
- No FDI was allowed in retailing business let alone foreign owned business houses doing business in the ecommerce sector in India
- The way to get around this, Indian owned front end entity that invoiced the customer and partially foreign owned backend entity that provided a range of services, the two entities had a business contract between them
- So the foreign company was just seen as providing range of digital and marketplace services rather than selling merchandise, and thus being FDI compliant
What was the perception of FDI
- Key principles behind the policy around FDI in multi-brand retail or e-commerce were that foreigners should not own the Indian consumption story
- E Commerce firms were foreign-owned and their sales primarily constituted Chinese-made products
- When BJP was in opposition, it strongly opposed foreign investments, but now billions of dollars are being pooled in as foreign investments and deregulate tech entrepreneurship and there seems a conflict in promoting Make in India and opening up digital entrepreneurship led by ecommerce
What 100% FDI in ecommerce clarifies
- It simplifies the artificially complex structures of e-commerce companies
- It keeps the bureaucratic trouble makers away
- It simplifies business contracts between entities
- It levels the playing field for retailers
- It diffuses the potentially controversial political rhetoric
Concluding points
- Leading e-commerce companies will continue with an inventory-led business strategy and substantial control over pricing and physical movement of inventory.
- The policy notification will lead to changes in structure rather than alteration of business strategy
- Business can continue as usual and that is great because without the policy notification, there was uncertainty around whether it could.
1. The lead article of the day is covered under Editorial Today. Click here to read.
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