9 PM Daily Brief – 7 January 2016

A brief of newspaper articles for the day bearing
relevance to Civil Services preparation

What is 9 PM brief?

---

National

---

[1]. North Korea claims to have tested hydrogen bomb/ The dictator’s bang

The Hindu | The Indian Express

Context:-

North Korea declared on Tuesday that it had detonated its first hydrogen bomb.

North Korea’s stand:-

This is their self-defensive measure to defend their right to live in the face of the nuclear threats and blackmail by the United States and to guarantee the security of the Korean Peninsula

Doubts about the success of the test:-

N.Korea has faced difficulties in developing a fission weapon since its first test in 2006, it’s not impossible this miniaturised fusion bomb is just a “fission booster” — a small-scale fusion that boosts the fission process — but isn’t a hydrogen bomb.

Responses:-

South Korea and Japan have underscored the existential threat posed to them.

If confirmed, Pyongyang’s bomb would violate UN resolutions.

China, North Korea’s only friend, will be called upon to use its leverage to bring Kim to the table

[2]. Job scheme facing fund crunch 

The Hindu 

Key Points:-

The demand by States for the release of money under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to clear pending liabilities and dues needs to be catered to.

Since MGNREGS is a demand-driven wage employment programme and funds are required to be released to the States on demand being raised at the field level.

The States are pressing for release of funds to liquidate the pending liabilities and for smooth implementation of MGNREGS during the fourth quarter of the current financial year.

Impact:-

It has resulted in distress for MGNREGS workers, as people did not get work as per demand and faced inordinate delays in the payment of their wages,

States had exhausted their funds and were showing a negative balance, signalling a shutting down of the programme in these States.

Need of the hour:-

Funds need to be released immediately to enable workers across the country, particularly in the drought-hit States, to get the much needed respite

[3]. MUDRA bank under SIDBI

Business Standard

Context:-

To ensure more money for micro and small enterprises, the Union Cabinet has approved conversion of MUDRA Ltd (Pradhan Mantri Micro Units Development Refinance Agency), into a bank, besides the setting up of two credit guarantee funds.

Mudra Yojana and the Stand-Up India scheme:-

The two funds will cater to loans disbursed under the Mudra Yojana and the Stand-Up India scheme, to support women entrepreneurs and those from backward classes.

The renamed Mudra agency (to be called the Small Industries Development Bank of India Bank), will be a wholly owned subsidiary of the Small Industries Development Bank of India. It will undertake refinancing operations.

This will help in reducing risk taken by banks and financial institutions in the case of defaults under the scheme.

NCGTC:-
The National Credit Guarantee Trustee Company (NCGTC) will be a wholly-owned company of the Government of India, constituted under the Companies Act to manage and operate various credit guarantee funds.

 

---

Economic Digest 

---

[1]. India to counter ‘non-issues’ at WTO talks

The Hindu

Context:-

The government is firming up a strategy to prevent ‘attempts’ by rich nations to introduce ‘new pro-corporate issues’ into the World Trade Organisation (WTO) deliberations and negotiations on mega free trade agreements.

These Concerns will be raised when the Doha Round negotiations resume at the WTO headquarters in Geneva.

What happened in Nairobi?

The Declaration in Nairobi last month it did not include measures primarily meant for improving trade prospects of developing and poor nations.

What are the outstanding issue of DDA?

The outstanding issues include an effective ‘Special Safeguard Mechanism’ (or a tool to help developing countries protect the interests of their poor farmers by temporarily increasing duties to counter farm import increase and price fall) and a permanent solution for the issue of public stockholding for food security purposes.

Strategy to show resent:-

India will make it clear that discussions on any ‘new issue’ can take place only after resolving all the outstanding matters related to the Doha Round talks.

It will ask the developed nations to establish the relevance of these issues in the context of trade and will try to ensure that there is a consensus among all 162 WTO member countries in taking up such an agenda.

India will also strengthen the alliance of developing and poor countries to put an end to the attempts to introduce ‘new issues’ into the WTO talks

What are the new issues?

These ‘new issues’ that the developed world is keen to introduce into the WTO’s Doha Round talks include global value chains, e-commerce, labour, climate-related trade (such as environmental services and goods), competition policies, investment pacts, government procurement and state-owned enterprises, on all of which the rich nations have superior standards or rules than the developing and poor countries.

Concerns regarding new issues:-

The developing nations feel these standards or rules regarding New Issues might become non-tariff barriers, hurting their exports to rich nations while the rich nations will be able to indirectly open up the developing markets.

Other platforms:-

In the Regional Comprehensive Economic Partnership (RCEP) talks too, India will state that the focus should be on expeditiously concluding discussions on the goods, services and investment chapters of the pact.

India will oppose the first world attempts to bring in any “non-trade and WTO-plus” issues such as labour and environment into the RCEP.

[2]. Govt. to implement BS-VI norms by 2020

The Hindu 

Context:-

The government, in a move to fight pollution, will implement Bharat Standard (BS)-VI emission norms by April 1, 2020.

Along with Swacch Bharat (Clean India) pollution-free India is also needed. This is a revolutionary decision and important to address pollution

Cooperation:-

The minister urged automobile manufacturers, who had opposed an early deadline to implement the norms due to financial burden, to co-operate.

Push behind the decision:-

The decision was taken a day after the Supreme Court pressed for implementing clean vehicular fuel norms soon amid concerns on rising air pollution in the country, especially in Delhi.

The Supreme Court had asked the government to implement BS-VI norms earlier than the April 2021 deadline fixed by the Union government.

Impact:-

The move will lead to increase of car costs by Rs.30,000-Rs.40,000 as per our rough estimates

Current scenario:-

At present, BS-IV auto fuels are being supplied in over 30 cities while the rest of the country has BS-III fuels.

Diesel cars tend to be better than petrol models when it comes to CO2 output.

For more on BS VI norms:- http://www.cumminseuro6.com/customise/upload/files/20_a.pdf

[3]. Govt to toe ILO Proposals on Unorganised Labour

The Economic Times 

Highlights:-

The cabinet on Wednesday also approved a proposal to adopt International Labour Organization (ILO) recommendations on formalising the unorganised workforce in the country.

The government will have to facilitate the transition of workers and economic units from the informal to the formal economy while respecting workers’ fundamental rights and promote creation, preservation and sustainability of enterprises and jobs in the formal economy

There is no financial implication on India in adopting the ILO recommendation, which is applicable to all workers in the country which ratifies the instrument

The workforce in the urorganised sector is often deprived of safety and security measures which in turn impact their physical and mental well-being over a period of time

Other Information:-

The cabinet also cleared a pact which will pave the way for a Singapore government agency to operate and maintain Ahmedabad and Jaipur airports.

The cabinet also approved a proposal for taking up hybrid annuity-based public private partnership (PPP) model under Namami Gange Programme to reform the wastewater sector in India.

[4]. Getting Railways on track

Financial Express 

Highlights:-

Fixing the losses in Railways is of vital importance if it’s to be able to continue functioning. The Railway Regulator Bill is the need of the hour.

If the government doesn’t agree to raise passenger fares to levels fixed by the regulator, it will have to pay the Railways for the subsidy.

Normally, the regulator should be in place after the Railways has a functional commercial accounting system in place—this could take 1-2 years—but it is possible for the regulator to fix fares based on approximate costs for now, and fine tune this when the Railways has a fully functional commercial accounting system in place.

If this is not done, with the Railways going broke, and the finance ministry not able to bankroll it indefinitely, its expansion and even continued operations are in jeopardy.

[5]. Govt to benchmark solar tariff lower

Business Standard 

Highlights:-

Closing the pricing gap with conventional power, the Union government is planning to benchmark solar tariff at Rs 4.5 a unit.

The move comes in the wake of constantly falling tariffs in competitive bidding for solar power projects.

The government is planning to award majority of projects through the VGF mode to stabilise the market

[6]. India needs integrated transport plan

Business Standard 

Context:-

The article cites the delay in executing the various rail and road projects between cities like Delhi and Meerut to showcase the lack of coordination among various government departments.

The problem:-

India’s transportation system is planned by different authorities in isolation. The division of responsibilities of overseeing different transport modes between ministries at the national level not only inhibits efficiently coordinated development, it stands in stark contrast to international practice.

What is needed?

What is required is an integrated plan that ensures connection of various transport systems as part of an integrated model. A unified ministry of transport with a clear mandate to deliver a multi-modal transport system is the need of the hour

---

Opinions & Editorials 

---

[1]. The Way Forward in Nepal 

The Hindu 

Context:-

The author discusses the recent developments in Nepal India Relations.

Addressing the demands of Madhesis:-

The Nepali cabinet announced a package for the madhesis consisting  of

Constitutional amendments on participation in the state organs on the basis of “proportionate inclusiveness”

Delineation of electoral constituencies on the basis of population.

Demarcation of provinces was to be undertaken in a three-month period through a political mechanism on the basis of consensus, and other demands — including those pertaining to “citizenship” — are to be resolved through negotiation and appropriate notification.

Indian Government’s reaction:-

India lauded the move as positive steps that help create the basis for a resolution of the current impasse in Nepal.

The statement further urged “all Nepali political forces to now demonstrate the necessary maturity and flexibility” so that a resolution to the current crisis could be found.

Effect of Indian Support:-

The formal Indian statement has been followed by an informal easing of supplies, particularly fuel and LPG.

Concerns of Madhesis:-

Madhesis three-point package as “inadequate” and declared that it fell far short of their 11-point charter of demands.

Originally, there were four principal demands — demarcation of provinces, restoring population as the primary criteria for electoral constituency delimitation; proportional representation in government jobs; and issues relating to citizenship.

Growing Demands

The list of Madhesis demands have grown now.

It now includes democratisation of the army and other security agencies; restructuring of the judiciary; declaring Nepal a multi-national state; equal status to other languages like Hindi and Bhojpuri; a reference to the principle of “proportional representation” in the section on Fundamental Rights and the establishment of a constitutionally empowered Inclusion Commission to monitor implementation of the proportional representation principle.

Divisive tendencies:- 

Differences have now emerged within the Madhesis Political party as some would like to continue with the agitation while others are uncertain.

The China Card and its exposed inabilities:-

Nepal flaunted its China card when a deal was struck for supplying 1,000 metric tonnes of petroleum products to alleviate the shortage.

Considering that the annual requirement is closer to a million tonnes, this is a tiny amount. Also the infrastructure in terms of roads and bridges to the Tibet border does not permit movement of heavy tankers and LPG bullets.

Nepal’s attempts at negotiating long-term agreements with China have not gone very far.

Reason for such an impasse:-

The fact is that nobody thought that the Madhesi agitation and the consequent restrictions on cross-border movement of goods would last this long.

As a result, nobody had a Plan B and rhetoric replaced communication.

With the key players losing control, the situation went into a tailspin.

The Nepal government found it convenient to stoke Nepali nationalism and deflect attention away from its own incompetence by blaming India.

The Madhesis demands continued to grow with no negotiations in sight and rising anti-Indianism hardly sat well with Mr. Modi’s “neighbourhood first” diplomacy.

Way forward:-

Nepal government needs to offer a healing hand to the Madhesis to get them on board.

If he fails, he may find it difficult to deal with the ensuing instability.

The Madhesis need to reach out to the other marginalised groups.

For India, the challenge is to give greater political content to its engagement, rebuild trust with the Nepal government, and revive the positive sentiments generated by Prime Minister Modi’s visits in 2014.

[2]. Underestimating disability

The Indian Express 

Context:-

The article analyses the situation in India where the percentage disabled people are underestimated.

Indian Scenario:-

Census 2011 tells us the percentage of disabled is 2.21 per cent; 2.41 per cent of the male population and 2.01 per cent of the female population.

This shows that we are underestimating disability. We aren’t defining and capturing it adequately.

From 1872 to 1931, all censuses asked a question on disability. No such question was asked between 1941 and 1971. A question was asked in 1981, dropped again in 1991. Questions were again asked in 2001 and 2011.

Need for social approach:-

We still approach disability from a medical or pathological angle, focusing on a condition regarded as “abnormal”.

In contrast, in most developed countries, the focus has shifted to a social approach, highlighting institutional and social arrangements preventing those with impairments from leading normal lives.

Surveys show a different picture:-

NSS figures on disability are much higher — three to four times more. In the course of the Eleventh Plan (2007-12), the erstwhile Planning Commission suggested that the disability figure was 5-6 per cent of the total population. As life expectancy increases, because of its correlation with age, disability will also increase.

The census essentially functions on the basis of self-reporting of disability and, sometimes, the question isn’t even asked. In all probability, the gap between true disability and measured disability is more for mental disability than for physical disability.

[3]. Investing in the right infrastructure

Livemint

Context:-

Recent reports state that India currently has just 16,400 court halls and even fewer judges. Over 36% of high court judges’ posts and more than 4,500 posts of subordinate judges lie vacant. Most see these shortages as contributing to the backlog of cases in the judiciary. That is but the tip of the iceberg.

Secured Lending:-

 Almost all private sector lending (other than credit card debt) is secured.

Lenders insist on collateral because of the cost, delay and uncertainty associated with enforcing creditor rights.

Borrowers have no choice but to provide the collateral, as alternative sources of funding are unavailable. Such secured lending is not an economically desirable outcome, as it comes with high hidden economic costs.

Problems of Secured Lending:-

The loan decision is no longer driven by the potential economic benefit expected from the activity for which the loan is sought. The lending decision is more closely linked to the value of the collateral provided to secure the loan.

Loan defaults and non-performance don’t just impact the activity for which the loan was taken—they adversely impact otherwise healthy assets that have been provided as collateral.

Secured lending makes the encumbered capital assets vulnerable to value erosion from unrelated transactions.

How lack of Law infrastructure aggravates this problem?

Court delays are seen as an opportunity to game the system. For instance, unscrupulous high-value borrowers identified as wilful defaulters by banks are using court delays as a device to buy time and delay or defray the impact of their defaults.

The resulting costs are being picked up by the banking system, because of their impact on capital adequacy and overall risk within the banking system

Need of the hour:-

Investing in rule of law infrastructure would reduce transaction costs in India, and thereby increase transaction volumes and associated revenues to the government, benefiting economic growth and productivity.

More importantly, ensuring that the rule of law is well supported with sufficient infrastructure also assures the people of India that their fundamental rights are secure and well protected.

[4]. The need for a more professional bureaucracy

Livemint

Context:-

Government has asked Bureaucrats to come up with ideas for transformative change in various areas such as governance, education, and health and employment generation

Transformative change will first require professionalizing the bureaucracy at the top. Good administrators may not always turn out to be good policymakers.

Changes needed:-

Abolishing Corruption:-

Abolishing interviews for appointments at the lower levels of the central government. If state governments also follow this practice, this will help curb corruption in appointments.

Need for specialist:-

Increasing complexities in governance and challenges in the area of development require innovative ideas, which the generalist nature of the existing bureaucracy may not be in a position to provide.

It will require attracting specialists with technical expertise from outside, along with a revamp of the existing system of governance.

Technical expertise:-

What the government needs to do is to make way for people with technical capabilities who can design policies and programmes, possibly by leveraging technology, and oversee implementation.

Aadhaar is a shining example of this approach where Nandan Nilekani converted a big idea into reality,

Manmohan Singh and Montek Singh Ahluwalia entered the government from the outside and went on to play an important role in the country’s economic reforms.

Problems of Bureaucracy:-

Steel frame of bureaucracy:-

Even after forming committees and framing recommendations not much has changed over the years as the “steel frame” of bureaucracy and the system of governance that India inherited from its colonial ruler has remained fairly intact.

 Inputs rather than outcomes:-

The existing governance systems are heavily dependent on rule-based approaches. There is a preoccupation with process, adherence to procedures, conformity with budget provisions and economy of inputs.

The success or failure of a scheme is also evaluated on the basis of quantum of resources consumed. As a result, the focus of governance has been more on inputs than on outcomes.

Primary education is a good example. While the allocation has increased significantly over the years, learning outcomes have left much to be desired.

At state level:-

Reforms in bureaucracy and governance are relevant not only at the central level, but also at the state level.

With increasing decentralization and greater fiscal autonomy, states will need to build capabilities to be able to design and implement programmes in an effective manner.

Furthermore, as states compete for investments, it is likely that the ones with a more professional bureaucracy will gain.

[5]. A bold disinvestment strategy needed

Business Standard 

Context:-

The article discusses the plight of sick PSUs and how they can be strategically disinvested to augment Public expenditure.

Need of a bolder plan:-

Government is trying to restructure and improve the sick PSU companies without a clear game-plan.

What India needs is a much-bolder plan—over the next 10 years—to divest at least half of the government shareholding, largely through strategic disinvestment.

Benefits of strategic Investment:-

If these proceeds are used to leverage private funding of the same magnitude, India could be able to invest an additional $50 billion per year—roughly 2.5% of GDP—in public infrastructure for the next 10 years.

It’s not just about unlocking funds for public infrastructure; strategic disinvestment also improves the efficiency of capital use. It should be remembered that the PSUs which were strategically disinvested under the previous NDA government have done exceedingly well, thereby enhancing efficiency and improving the return on assets.

This will  increase the return on capital.

This will also help draw in private investment, including FDI.

Adhoc plans will not work:-

Such a medium-term plan should be based on performance, size and sector. Ad hoc expediency based on yearly targets is not going to work.

To be avoided:-

Russian-style privatisation—where most of Russia’s state assets were sold to “oligarchs”—must be avoided. Transparent processes, competitive bidding and ensuring that some of the funds are set aside for worker compensation are vital for strategic disinvestment to succeed.

Way forward:-

We need to develop a 10-year plan to divest at least 50% of PSU assets, shift the proceeds into the strategic investment fund and reap the rewards. The business of the government is public infrastructure, not public companies. Transforming public assets into public infrastructure would be a lasting reform.

---

By: ForumIAS Editorial Team

---