9 PM Daily Current Affairs Brief – 27 January 2017

Context
Article is concerned with a new idea floated by EPFO wherein group housing scheme has been proposed against an individual scheme at present

What has happened?

The Employees’ Provident Fund Organisation (EPFO) has mooted a group housing scheme which will enable members to form cooperative housing societies and use their entire provident fund savings towards buying land, constructing homes or paying housing loan instalments

The proposal

• Addition of new paragraph 68BD: The Employees’ Provident Fund Organisation has proposed addition of a “new paragraph 68BD as a group housing scheme so that Employees’ Provident Fund members forming a cooperative society of 10 or more employees may be given not only a one time Employees’ Provident Fund withdrawal but also an option to pay loan instalments towards housing loan to banks from the monthly contributions received in Employees’ Provident Fund Scheme, 1952.”
• At least 3 years of subscription required: Employees with at least three years’ subscription to the Employees’ Provident Fund scheme will be allowed to withdraw their savings for housing purposes, including repayment of loans from their monthly contributions
• No cap:There will be no cap on the amount of Employees’ Provident Fund savings that can be drawn for purchasing land, constructing a house or repaying housing loans, under the proposed scheme
  • Present situation: At present, an employee who has completed five years of service is allowed to withdraw Provident Fund savings equivalent to 36 months of the member’s salary (basic salary and dearness allowance) for construction of a flat or 24 months of the salary for purchasing land 

Who can avail the benefits of the scheme?

According to the proposal, members of an existing cooperative society formed under any present law can avail this scheme, provided at least 10 members of the housing society were subscribers to the Employees’ Provident Fund scheme.

Context

The First Deputy Prime Minister of Ukraine, Stepan Kubiv, said that his government appreciated India’s neutrality

India’s stand on annexation of Crimea

India has maintained that the situation should be resolved peacefully.

Backdrop

Mr Kubiv is in India for the Global Partnership Summit

• Joint inter-government mission: In Delhi, he held a meeting with Minister of State for External Affairs M.J. Akbar during which both sides firmed up plans for the joint inter-government commission which is likely to meet for the sixth session in Kiev in April. Mr. Kubiv is the co-chairman of the commission with Mr. Akbar.

Arms offer

On top of his agenda is Ukraine’s offer of military hardware to the Indian armed forces

• Ukraine wants to complete the contract, signed in 2009, on modernisation and overhauling of An-32 fleet for the Indian Air Force. Armoured infantry vehicles, equipment engineering, patrol boats, space research are some of our other priorities in relation with India

High level political dialogue

India and Ukraine are also on track to revive high-level political dialogue. The last big visit from India was 12 years ago when President A.P.J. Abdul Kalam visited Kiev in 2005.

Video: Here is a short clip by BBC explaining the Crimean crisis

Context

Article deals with the Supreme Court’s verdict in the Krishna Kumar Singh vs State of Bihar and how it has put an important check on the rampantly abused power of promulgating ordinances

Issue: Power to issue ordinance under Article 123 & Article 213

 Power to promulgate ordinances

Author states that the power to promulgate ordinances goes against the very objective which the framers of the constitution set out to achieve i.e. separation of powers

• Separation of powers: The founders’ aim was always to impose a separation of power between the three recognised wings of government. In this arrangement, the legislature (Parliament at the Centre, and the Assemblies and the Councils in the States) is tasked with the primary job of making laws; the executive’s role is to administer the country by enforcing these laws; and the judiciary interprets the laws, sees if they are being followed, and, where required, reviews them to ensure that they are constitutionally compliant

• Neither a check nor a balance: The executive’s power to issue ordinances, therefore, goes against this structure for this power acts neither as a check nor as a balance on the authority exercised by the other branches of government

An exceptional measure

Author states that a reading of the constitution makes it clear that the authority to issue ordinances is to be used only to meet the emergent demands of extraordinary situations

• Article 123, which defines the ordinance-making power of the Union executive, states that when both Houses of Parliament are not in session, if the President is satisfied that “circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinance as the circumstances appear to him to require”
  • Nature of effect of an ordinance: It further provides that any ordinance shall have the same force and effect as a statute of Parliament, provided it is laid before both Houses.
  • To be laid before house within six weeks: The ordinance so made will “cease to operate at the expiration of six weeks from the reassembly of Parliament”, or if Parliament at any time before the conclusion of the period passes resolutions disapproving of the ordinance
• Article 213 of the Constitution places on the Governor, acting on the advice of the Council of Ministers of his State, the power to pass ordinances on subjects of State authority.

Actual situation

Seldom used as an exceptional measure: In practice, however, ordinances have scarcely been used as a purely exceptional measure. They are used to scuttle and bypass the democratic requirements & to overcome numerical shortcomings thereby using ordinance-making power as an alternative tool of legislation

• Most recently, the Central executive had issued an ordinance in 2014, which it subsequently re-promulgated three times without approval, to overturn significant benefits guaranteed by the land acquisition law enacted by Parliament in 2013

 Krishan Kumar Singh vs State of Bihar

Bihar government had issued a series of ordinances to take over 429 Sanskrit schools transferring in the process the services of all the teachers and other employees of the schools to the State government

• 1^st ordinance: The first ordinance, which was issued in 1989, was followed by a succession of five ordinances, none of which was placed before the State legislature. Ultimately, the government failed to enact a statute confirming the terms of the ordinances, and the last of them was allowed to lapse on April 30, 1992
• Plea filed by employees in HC: The employees of the schools, who stood discharged from service, as a result of the termination of the ordinances, took the State government to court

Questions before SC
Author states that when the case ultimately reached the seven-judge bench for arguments there were two fundamental questions to be answered:

1. Whether the ordinances issued by the Bihar government were constitutionally valid
2. Whether the petitioners had derived any legal right that survived the termination of the ordinances or in simple terms, do the acts undertaken under an ordinance which eventually fails to be ratified by Parliament and become law survive even after the ordinance ceases to exist?

SC judgement in Krishna Kumar Singh case

Q1: Whether the ordinances issued by the Bihar government were constitutionally valid

Ruling: The SC bench held that not only repromulgated ordinances, but even ordinances issued at the first instance, are subject to judicial review

• Investigate if there has been a fraud: Bench ruled that the court, in these cases, he held, will not enquire into the adequacy or sufficiency of the material before the President or the Governor, but it can investigate to see if there has been either a fraud or an abuse of power committed by the executive
• Reliance on Bommai case: Here, bench placed reliance on the celebrated S.R. Bommai case (1994), where a nine-judge bench of the court had ruled that the judiciary could strike down a proclamation of emergency when the power had been exercised by the executive to secure an oblique purpose

Q2: Whether the petitioners had derived any legal right that survived the termination of the ordinances or in simple terms, do the acts undertaken under an ordinance which eventually fails to be ratified by Parliament and become law survive even after the ordinance ceases to exist? 

Ruling: It ruled that an ordinance is distinct from a temporary legislation, and it therefore doesn’t automatically create rights and liabilities that go beyond its term of operation

• Effect remains until ordinance is operational: SC ruled that as ordinance is not a creation of legislature unlike a temporary statute or law so the orders under ordinance have the same force and effect of a legislation only so long as they are operational
  • Public interest test: In other words, once the conditions imposed by Article 123 or Article 213, as the case may be, are violated, the question of what effects will survive from the ordinance will have to be independently assessed. In such circumstances, the court must examine whether the undoing of acts performed under an ordinance would run counter to public interest

Author’s contention

Public interest test problematic: Author contends that the public interest test as envisaged by SC judgement could prove to be problematic in future.

• Case of irreversible outcomes: There may well be cases where an ordinance creates outcomes that are irreversible, despite public interest demanding its reversing

A vital check

Author states that the court’s verdict has to be seen as placing a vital check on what has until now been a power rampantly abused by the executive

Conclusion

Author concludes by stating that inconvenient as legislative debate and deliberation can be, the legislature constitutes a critical foundation of our democracy

Context
The idea of a basic income is not new

Issue: Universal Basic income

Not a new idea
Author states that the idea of a universal basic income is not a new one.

Read More: To know in detail about the historical genesis of the idea of basic income please visit this link

What Bertrand Russell wrote about basic income?
“A certain small income, sufficient for necessities should be secured to all, whether they work or not, and that a larger income — as much larger as might be warranted by the total amount of commodities produced — should be given to those who are willing to engage in some work which the community recognises as useful.” Even on finishing education, no one should be compelled to work, and those who choose not to work should receive a bare livelihood and be left completely free”

The Finland trial
Finland government has launched a pilot project guaranteeing a basic monthly income to its citizens.
• What would be done under the pilot project?
Two thousand randomly selected unemployed Finns will for the next two years receive €560 in guaranteed tax-free incomes every month. The payments will continue even when they try out odd jobs. If the pilot is successful, the programme could be extended to all adult Finns.

Read More: Finn trials

Why UBI is needed?
Economists are advocating universal basic incomes for,
• Fighting Inequality & Slow wage growth
• Countering adverse effects of advancing automation
• Countering fears that immigrants will take away jobs
• Unequal growth distribution: While free trade and technological advances have grown national incomes, not every individual is better off. There are winners and losers. Redistributive government intervention is needed so that no one is left worse off
• Safety net for the weak: To those too weak, unwell or challenged physically to pick up skills and take up jobs, guaranteed incomes provide a safety net
• Supplements earnings: Where people are skilled and employed, but receive low wages, as seen in the case of handloom weavers or in small enterprises, basic incomes can supplement earnings and support welfare.

Read More: A case for Universal Basic Income, A case against Universal Basic income

Lessons from a pilot project in India
The ‘transformative’ potential of guaranteed unconditional incomes was demonstrated in Madhya Pradesh back in 2014, which is documented in the book Basic Income: A Transformative Policy for India (2015)

What was done? Amounts equal to less than third of monthly expenditure were given to families living below poverty line

Positive impacts
Several positive impacts were noted.
• Rise in nutrition intake: pecifically, consumption of pulses, fresh vegetables and meat was up 1,000%, 888% and 600% respectively. As a result, incidence of illness dropped. Enrolment and attendance, especially among female students, in schools improved
• Equitable development: it resulted in more equitable development. On receiving the payments, marginalised individuals began exercising agency within their households and the community
• Economic benefits: There were also cursory economic benefits as villagers worked harder than before, with a number of adults engaging in two economic activities (own-account farming with small business on the side)
• Indebtedness decreased as the propensity to save increased over the pilot period.

The feasibility quotient
Author states that
• Mounting deficit: If a basic income is introduced in addition to the two statutory income transfer schemes for food (Food Security Act) and wage jobs (MGNREGS) already in place, the government’s deficit will mount.
 Reforming both schemes: Both schemes will have to be reformed by paying attention to issues like MGNREGS funding, implementation and course
• Removing all existing subsidies: A new universal basic income for all Indians won’t be affordable unless it replaces the whole multitude of programmes and subsidies currently in place

Author suggests
Author states that a much better idea would be to implement a basic income targeted towards deprived and the needy based on socio-economic census

Context

The absentees at the Astana talks on the Syrian conflict hold the cards for the next steps.

Article presents a brief commentary regarding the recent meeting held in Astana over the war in Syria. It further provides insights into the whole situation and a possible roadmap for success of the negotiations.

Give it a go-through once

Context

Terming the overall Points of Interconnect situation as “better” than before, regulator TRAI has said Vodafone and Idea Cellular are meeting norms in all circles, while for Bharti Airtel the congestion level is beyond the permissible limit in eight circles

Article is fairly simple. Give it a go-through

Read More: PoI issue has been explained quite clearly here

Author urges Pakistan to give up the mantra of “permanent enemy” vis-à-vis India and come to terms with new regional and global realities

Author here is pointing towards recent republic day parade ceremony wherein UAE’s crown prince was the Chief Guest while simultaneously hinting that Pakistan’s traditional friends are slowly and gradually shifting against its existing anti-India policy

Relevant points from the article

Why UAE must give India more attention?

• Difference of size between the two South Asian neighbors: Compared to $60 billion in bilateral trade between the UAE and India, its volume of trade with Pakistan stood at only $7 billion in 2015. Although the UAE is the fourth major foreign investor in Pakistan, the cumulative value of those investments stands at $20 billion, much less than the UAE’s investment relationship with India
• Pakistan’s policy of tolerance for jihadi terrorism: Author states that the second, more significant, reality that is undermining Pakistan’s ability to remain the UAE’s first friend in South Asia is its policy of tolerance for jihadi terrorism.The January 11 attack by Pakistan-backed Afghan Taliban belonging to the Haqqani Network at the governor’s house in Kandahar resulted in the death of five UAE diplomatic staff and the wounding of its ambassador to Kabul, Juma Mohammed Abdullah Al Kaabi. Such incidents demonstrate how the UAE and Pakistan might be moving in opposite directions
  

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Context

Article provides the flaws of the Gujarat model of reconstruction and development in the wake of the 16^th anniversary of Bhuj earthquake

Bhuj Quake

As the nation celebrated its 68th Republic Day, Gujarat mourned the 16th anniversary of the worst disaster that struck the state on January 26, 2001. Gujarat’s historic earthquake killed over 20,000 people, injuring 1, 66, 000, destroying nearly 4,00,000 homes

• While many believed that Gujarat would take years to get back to normal, the massive rehabilitation and reconstruction undertaken brought a resilient Gujarat back from the rubble. Bhuj, epicentre of the earthquake, managed to emerge strong after the disaster

Unprecedented pace of development

Author states that the pace of development in Bhuj following the disaster has been unprecedented.

• The town is now spread over 56 sq km — almost four times its size in 2001. It boasts high-rise apartments, sprawling supermarkets, beauty salons, recreation centres, wide four-lane highways, a modern earthquake-resistant hospital and an operational airport
• Land has become an attractive investment. It is now common to hear Hindi spoken in Bhuj and hotels and cyber cafes complete to win the business of immigrants.

 Gujarat model of reconstruction

In Bhuj’s rebuilding, the Gujarat approach is widely looked at as a model for reconstruction. The Gujarat model has been replicated in the post-earthquake reconstruction in Nepal in 2015 and in Kashmir Quake of 2005

Issues with the Gujarat model

• A biased model:Any relief programme needs to be based on proper assessments of needy and vulnerable groups. But the rehabilitation packages announced soon after the Bhuj disaster offered unequal treatment to various categories of earthquake-affected people
  • Unequal aid: Those who’d suffered equally in terms of damages were given unequal amounts of aid
  • Higher assistance to places near the epicenter: The size of agricultural lands was also adopted as one of the criteria for assistance given. Places nearer the epicentre received higher assistance
  • More relief to urban areas:Relief provisions also accorded more assistance for completely collapsed houses in urban areas than rural locations
  • Disproportionate benefits to the rich:Pre-earthquake house sizes were taken into consideration; that meant richer people were likely to derive larger benefits
  • The pro-rich, anti-poor bias of development plans in terms of land use: Expensive public land in Bhuj has been given to better-off residents; land inhabited by the poor in Rabari was acquired for government offices
  • Informal sector affected: Widening of roads for public transport adversely affected hawkers and other occupiers of public space, who were evicted
  • No compensation without entitilement: The 60 per cent population of Bhuj town, who lived in 32 unauthorised pockets outside Kotvistar for over 25 years, did not receive any compensation from the government as they didn’t possess requisite land entitlement (legal claim on the land)
    • Dismantling of Bheer Bazaar: Bheer Bazar, earlier the centre of all commercial activities where artisans and hawkers worked, was dismantled
    • Waghri community driven out: The Waghri community (mainly comprising of Muslim labourers) residing near Dadupeer Road for generations was also driven out, on the pretext of encroachment
    • Flawed relocation: Most relocation has been done on agricultural land acquired from other villages. Some villagers either lost land or were relocated far away
      • Lack of financial resources to maintain expensive infrastructure: The new villages are also larger; this meant expensive infrastructure, again “provided” by the government. But what wasn’t thought of was the lack of village committees’ financial resources to maintain this infrastructure; local village committees had to increase taxes, which many villagers can’t afford
    • Lack of sufficient empowerment of local bodies: Author points out that while NGOs emerged as a significant stakeholder in rehabilitation, local self-governing bodies like panchayats and municipalities were not sufficiently empowered.

 Addressing marginalization of poor

As Bhuj shows, the current model does not have any effective policy framework to address social exclusion and the marginalisation of the poor. But any discussion on disaster management must address the proper assessment and identification of vulnerable groups

Conclusion

Author concludes by stating that reconstruction doesn’t mean only rebuilding houses but rebuilding lives, particularly of the weak. That alone leads to real development

Context

In the light of the recently released report of the committee on digital payments article states that there is no compelling need to give tax refunds to consumer and fiscal intervention will only lead to complications on the road to less cash economy

A word of caution

Author states that after it was reported that some of the suggestions of the committee maybe considered in the forthcoming budget, the finance ministry has clarified that the government has not taken a final view on the recommendations and a decision will be taken in due course.

• The government would do well to move carefully and avoid decisions that will have negative implications in the long term

Boosting digital transactions

Article points out that at present, a number of things are working simultaneously in India that will increase transactions through digital modes

• Technological developments such as increasing penetration of smartphones and development of applications such as the Bharat Interface for Money (BHIM) will help, for instance
• Licensing of new banksby RBI: The Reserve Bank of India (RBI) has given licences to new-age banks which are likely to come up with innovative solutions for payments as they roll out services

Author’s contention: Avoid taking some measures as suggested by digital payments committee

As the shift to digital payments started before the currency swap was announced and a meaningful transition is likely to happen over time, hence, Author contends that government should avoid taking some of the measures suggested by the panel as there is no need for fiscal intervention. Few of such steps are,

• Taxing cash transactions: The proposal to tax cash transactions above Rs50000 will create unnecessary complications
  • Concerns of informal sector: India has a large informal sector which functions on cash and will take its time to completely move to digital modes of payment. It is likely that a lot of money will move out of the banking system just to avoid transaction tax.Consequently, the move can result in outcomes that are exactly the opposite of what is intended.
  • Current norm is sufficient: Author points out that the current norm of furnishing PAN for transactions above Rs 50000 is sufficient for tracking purposes
• Subsidy to non-income-tax assesses or small merchants for buying smartphones: It is highly unlikely that a subsidy of up to Rs1,000 for buying mobile phones will actually encourage people to use digital modes of payment
• Tax refunds for consumers using digital payments: There is no compelling need to give tax refunds to consumers as it will further complicate the tax structure and filling process which needs to be simplified

Article suggests

• Reducing the number of high value denomination: One of the ways to discourage cash usage is to significantly reduce, if not completely withdraw, high-value notes from circulation. A composition of currency notes in favour of smaller denominations, supplemented by a strong digital payments network, would be more useful in discouraging the use of cash
• Regulatory framework: The government, along with the RBI, needs to work on plugging regulatory gaps so that the system is in a position to scale up and handle large volumes of transactions. Currently, there are disputes between banks and mobile wallets. More work is perhaps required at the operational level to ensure that transactions are secure and consumer interests are well protected.
  

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