Brief of newspaper articles for the day bearing
relevance to Civil Services preparation
- GS PAPER 2
- Black money hunt yet to yield results {Law on Black Money}
- US doesn’t see India as hyphenated with Pak {International Relation}
- We understand India’s security concerns: US {International Relations}
- Tilting towards the Saudis {International relations}
- Nudging the voter in one direction? {Elections}
- Babus to suggest ways to reboot flagship schemes {Government Schemes}
- Over the barrel {Hydrocarbon Policy}
- The new Indian federalism {Federalism}
- Making India a leading power {International Diplomacy}
- China wants to power the world {International Affairs & Technology }
- GS PAPER 3
- Global economy losing momentum, governments must act: IMF’s Lagarde {Global Economy}
GS PAPER 2
[1] Black money hunt yet to yield results + Panama offers to help India
Issue
- Not enough success to recover black money despite several efforts, and hunt is still going on to estimate black money parked in tax havens by Indian.
- The Panama papers bring out another list of Indians who have parked their money in tax havens.
- (For detailed article on The panama paper click this)
A senior official who has been integral part of Special investigation team said
- “On our own there is very slim chance that we would be able to make any major breakthroughs,”
- All major databases on which action have been initiated have all come from foreign sources. Like HSBC Geneva or Liechtenstein
Justice M.B. Shah, chairman of the SIT on black money
- “Lot of things have been done, but it cannot be seen easily.”
- New restrictions are in place to control misuse of export-import facilities.
Former Supreme Court judge said
- Strict implementation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 could lead better results.
Voluntary disclosure
- Over the years, the Indian government has made several attempts to recover black money, by mostly offering opportunity to people to declare their black money.
- The first such scheme was in 1951, which led to the collection of Rs. 10.89 crore in taxes, and there have been eight more such schemes till 2014.
644 declarations only
- The Modi government’s first major announcement was the setting up of the SIT on black money.
- It followed it up with a three months compliance window between July and September 2015 under the black money Act.
- It resulted in 644 declarations, totalling declaration of foreign assets worth Rs. 4,164 crore.
- A total of Rs. 446 crore was collected as tax and penalty.
Government of Panama
- Promised India assistance in investigating those who figure on the latest list of the rich and the influential who have parked money in secretive tax havens.
- Government of Panama had already started introducing tighter financial regulations, with new laws limiting the use of bearer shares by Panamanian corporations.
- The Panama government said the Financial Action Task Force (FATF) had recently taken note of the steps taken by the country for transparency in its economy. At its February 19 meeting, the FATF “congratulated” Panama and Angola on taking steps to prevent money-laundering.
- As a result, the FATF assigned the task of supervising Panama’s financial services to a regional FATF-style organisation in Central America. Panama has the largest community of Indians in Central America, mostly in the Panama Canal Zone.
Conclusion
- India need a clear laws, support from tax haven government to have transparent money transaction system and strict implication of the laws and acts.
[2] US doesn’t see India as hyphenated with Pak
Context
- Obama had spoken of the concern about rising nuclear stockpiles in India and pakistan
How was it seen
- It was seen as a re-hyphenation or coupling of India and Pakistan in the context of rising nuclear stockpiles which is a security threat
- Ministry of External Affairs accused Obama of having a “lack of understanding of India’s defence posture
Who clarified it
William Burns, President of the Carnegie Endowment for International Peace, former Assistant Secretary of State till 2014 said:
- India is seen as a responsible nuclear power and the US-India civil nuclear deal in 2005 was not just a bilateral deal
- Potential nuclear risks of countries with arsenals, this kind of issues get raised
[3] We understand India’s security concerns: US
Context
- Obama had spoken of the concern about rising nuclear stockpiles in India and Pakistan saying “We’d need to see progress in Pakistan and India, that subcontinent, making sure that as they develop military doctrines, that they are not continually moving in the wrong direction” at the Nuclear Security Summit
How was it interpreted by India
- It was seen as a possible “lack of understanding of India’s defence posture”.
How the White House responded
- Concerns regarding a possibility of nuclear war between India and Pakistan was a major priority of US and de-escalating the tension.
- Recent improvements in relations would greatly enhance prospects for lasting peace, stability and prosperity in the region
Obama’s comments were motivated because despite repeated calls by US to stop from stockpiling nuclear material, Pakistan continues to deploy weapons. - Also stating the reasons that tactical nuclear weapons are likely to be stolen due to their smaller size and mode of employment, this risk could include nuclear weapons if there is conflict
- Strategic security dialogue that will provide a dedicated venue for exchange of ideas on India’s intentions and defence needs, and to discuss issues that they may have related to strategic stability.
[4] Tilting towards the Saudis
Context
- The visit of the PM of India to Saudi Arabia is seen as as following the regional policy of its immediate predecessor.
History
- During the Cold War years, India maintained close economic cooperation with both Saudi Arabia and Iran, the rival poles in regional geopolitics
- New Delhi warmed up to Israel in the 1990s as part of the country’s efforts to diversify its diplomatic engagement in the post-Soviet world
- The bi-directional approach has been expanded to a tri-directional foreign policy to accommodate the three key pillars of West Asia — Saudi Arabia, Iran and Israel.
- Ties with Iran, however, took a beating during the sanctions years when New Delhi cut its energy cooperation significantly despite its vitality and huge energy potential
- Complete lack of interest on India’s part to reboot ties with Iran even after international sanctions on the country were removed following the nuclear deal.
The Saudi significance
- Saudi Arabia is India’s largest supplier of crude oil
- 70% energy needs are fulfilled by Riyadh, which makes it key player in India’s energy security
- India is the largest recipient of foreign remittances from the Kingdom
- 11 mn in West Asia and 3 mn in Saudi Arabia are the number of Indians working there, therefore stability is high on India’s core agenda
- Riyadh declaration was signed in 2010 which set the framework for enhanced cooperation in security, defence and economic affairs
- Since the there has been improved security cooperation and intelligence sharing between India and Saudi Arabia
- Saudi Arabia and India also issued joint statements regarding Pakistan’s dual policy towards terrorism, considering Saudi Arabia is close ally of Pakistan
- India is a vital market for Saudi Arabia, because the US and China are not much dependent on the region for energy
What India should do
- India will have to factor these developments in its overall West Asia approach.
- The best way to do it is to restore the balance in its West Asia policy.
[5] Nudging the voter in one direction?
PM Modi had advocated for making Lok Sabha and State Assembly polls coterminous. (click here for earlier article on this issue)
‘The permanent campaign’ was a phrase coined and popularised by Sidney Blumenthal, adviser to Bill and Hillary Clinton, in his 1980 book that lamented the culture of election campaigns crowding out time for policymaking.
India’s own version of the ‘permanent campaign’
- In the last 30 years, there has not been a single year in which there has been no election either to a State Assembly or to Parliament.
Impact of elections
- costs and resources
- intangible impact is far more burdensome
If we keep the benefits of simultaneous elections aside, there arise some questions like
Question: will holding simultaneous elections to the State Legislature and the Lok Sabha impact voter behaviour, and hence electoral outcomes?
Voting for the same party
- Analysis shows that on average, there is a 77 per cent chance that the Indian voter will vote for the same party for both the State and Centre when elections are held simultaneously.
- In 16 cases of simultaneous elections between 1999 and 2014, cumulatively 302 million voters expressed their choices across 2,601 Assembly constituencies in six States. In 77 per cent of these constituencies, the winner came from the same political party.
Analysis
- This trend of choosing the same party has gone from 68 per cent in 1999 to 77 per cent in 2004 to 76 per cent in 2009 and 86 per cent in 2014.
- Analysis also shows that the ability or willingness of the voter to vote differently is only decreasing with time.
To determine a truer impact of concurrent elections on voter behaviour,
- Analysed six cases during this same period when Parliament elections and State Assembly elections were held separately but within six months of each other.
- In 61 per cent of Assembly segments, the voters chose the same party for both Parliament and State, down from 77 per cent when elections were held at the same time.
In a complex plural democracy such as India’s, electoral outcomes are a manifestation of various factors.
Justifiable attempts to alter India’s permanent election malaise can have a tangible and perhaps undesirable impact on voter behaviour.
Conclusion
- The belief that the voter distinguishes between voting for her State government vis-a-vis the national government has no evidence.
[6] Babus to suggest ways to reboot flagship schemes
Context
To ensure a visible impact is seen on the ground before the 2019 general elections, a group of bureaucrats has been constituted to work on the major themes of the NDA govt. such as Digital India, Swachh Bharat and Skill India
Who will constitute the group
Joint secretaries from select ministries.
What is the objective of the plan
- To take the development model to the next level for quicker delivery. The plans will be based on views of multiple ministries with the involvement of all mid-level and above government officials
Why has the group been constituted
- To put more substance and speed into the action plans for the flagship programmes such as Digital India, Swachh Bharat, Skill India and Make in India as well as initiatives in the health and education sectors
- Some new initiatives could be unveiled on the basis of these deliberations during the government’s second anniversary celebrations
What has been done till now
- Interactions are being held to evolve a fresh strategy
- Initial presentations have been circulated to the respective nodal agencies for their comments and inputs
- The ministers concerned have also been instructed to hold discussions with officials at the level of deputy secretary and above to finalise a strategy.
How will the plans help in policy making
- The new action points formulated by the joint secretaries’ group that pass muster with the government could then be added to the Prime Minister’s monthly monitoring system to ascertain the status of various critical projects and policies across the country.
- On the fourth Wednesday of every month, the Prime Minister usually meets secretaries of the Union government and chief secretaries of all State governments to review the progress of projects under implementation
- These meetings are held over videoconference, using an ICT-based multimodal monitoring system called PRAGATI (Pro-Active Governance and Timely Implementation).
[7] Over the barrel
Context
- New hydrocarbon policy is an improvement. But government must address ‘softer’ operating issues.
Historic context
- Oil prices have followed a cyclical path, with decadal long transitions from peak to trough and vice versa
- The price of oil in 1970 (annualised inflation adjusted to March 2015) was $20.63 per barrel.
- In 1980, it peaked at $107 .36 per barrel.
- By 1990, it was down to $41.78 and continued to drift lower, troughing at $17.26 in 1998
- Ten years later in 2008, it hit triple digits averaging $100 per barrel
- Companies shifted their gaze from relatively low cost and geologically straightforward onshore basins to difficult and complex environs like Alaska and the North Sea, it was not easy for them, with billions in sunk costs, to shift direction.
- Today, this reason has weakened for two reasons. On the supply side, it is because of fracking technology. The operating model for the exploration and production of unconventional hydrocarbons enables companies to shut down production relatively quickly when prices are down and ramp it up equally rapidly when prices rise. The lead time is in months and not years
- On the demand side, it is because of the structural improvement in the efficiency of oil usage. In the 1980s, the US consumed approximately one barrel of oil for every $1,000 addition to their GDP. Now they need less than half that amount for the same incremental GDP gain
HELP
- HELP-Hydrocarbon Exploration Licensing Policy
- Help makes several positive changes. It introduces the concept of “open acreage”. This will allow companies to define the contours of the block they wish to explore.
- It establishes the principle of market-related pricing.
- This will replace the de facto policy of administered pricing.
- It gives companies the freedom to market the products.
- All companies have severely retrenched exploration budgets and India has never ranked high on their geological map as a prospect
Some issues
- The operationalisation of a signed contract is a cumbersome and time-consuming process. There are a plethora of approvals to secure and companies are often caught in the cross hairs of inter- and intra-ministerial and Centre and state disputes.
- Second, tax administration is a major bugbear. The retroactive tax controversy has compounded an already deep concern about dispute resolution. Most oil companies in India are embroiled in one form of legal dispute or other.
[8] The new Indian federalism
India is seeing fiscal centralization and fiscal decentralization at the same time.
- States will be giving many of their tax powers to New Delhi once the goods and services tax (GST) becomes a reality. But more taxes are transferred to them thanks to Fourteenth Finance Commission.
- The very fluidity of the transition will create its own opportunities.
States are managing their budgets better than New Delhi has in recent years.
- The combined revenue deficits of the states has come down sharply over the past decade.
- Some fiscal deterioration seems likely in the new fiscal year, given the need to put money aside for the bailout of discoms under the Ujwal Discom Assurance Yojana as well as to budget for higher staff salaries following the recent pay commission recommendations. The bond markets have been jittery over the past few weeks because of the extra borrowing by the states.
- And it remains to be seen whether the states respond to higher spending by cutting investment in new capital assets.
- There will be more clarity on these issues only when all states have announced their budgets.
- The states have actually run revenue surpluses in recent years, though there are variations between states.
- What this essentially means is that state governments are funding their revenue spending from annual tax collections.
- They have been borrowing only to create capital assets.
- The trend is even more starp when you consider primary revenue deficits, or revenue deficits minus interest payments.
- The upshot: the states have actually been more disciplined than New Delhi over the past decade.
Why so?
- it has been shown in several studies that political units with more homogenous populations find it easier to agree on the provision of public good.
The ability of the states to run revenue surpluses could be linked to the fact that states are more homogenous in terms of their population than the nation as a whole, which has led to the rise of powerful chief ministers with broad political mandates.
- free trade integrates economies but also provides incentives for smaller political units that are no longer hindered with a small domestic market thanks to falling trade barriers.
It is perhaps no surprise that regionalism has grown in Europe as its economy has been integrated.
Will the creation of a single Indian market thanks to GST encourage not just the demand for greater political rights by existing states but also embolden local elites to push for the creation of new states?
- The possibility cannot be dismissed.
- The first round of states’ reorganization was based on cultural identity, specifically language. There could be another round that is driven not by language but by economic reasons.
- Ambedkar had said that while each state should have one language, each linguistic group need not be consolidated into one state.
- Large linguistic states could be broken into smaller units of around 25 million in the interests of efficient administration.
- Andhra Pradesh has recently been bifurcated. And there are persistent debates about the need to divide large states such as Uttar Pradesh and Maharashtra.
It is now increasingly clear that a lot of action has shifted to the states
- They have done better at capital investment than New Delhi has.
- The states have always been at the forefront of policy innovations—and this could continue in the coming years. Gone are the days when elected chief ministers had to seek meetings in the Planning Commission to get funding.
But there is a challenge as well
- The states will have to build capacity to spend more, design policies and provide public goods.
- The largest states will soon have economies that are bigger than what the Indian economy as a whole was in 1991.
- Managing these large economies will require skill.
[9] Making India a leading power
Context
- India has been on international stages and despite that, it still has to find its way for a stronger role in the world
What has been India’s policy
- Since the Cold war, New Delhi has taken a low profile in international arena
- Narrowly defined self interest meant India had not said enough on global issues over the last 25 years
- India has has been reactive on regional and international issues and not proactive
- Last 25 years of reforms have resulted in high economic growth rates and the elevation of India as one of the world’s leading economies
- India is today 7th largest economy
- India is 3rd in purchasing power parity terms
- Self reliance and inward economic orientation has kept India to itself and world did not really matter
What should be done
- We have seen some of that in India’s efforts to facilitate a practical outcome in the climate change summit at Paris last December and promote regional cooperation in the subcontinent
- Large countries like China and India must take to more ambitious foreign policy principles
- China no longer maintains a low profile. It is taking the lead in building new regional institutions and pressing for a reform of the global power structure.
Why India should shape the world around itself
- 40% of India’s GDP is linked to global trade and managing this interdependence becomes critical for sustaining economic development at home
- India is expected to contribute to the maintenance of regional order in Asia
- As India becomes the world’s fastest growing economy, the expectation is that Delhi will take larger responsibilities to facilitate global economic revival and strengthen regional economic integration
- Countries are still recovering from global economic crisis of 2008, Russia is asserting power, the rising power of China, America thinking of retrenchment of migrants, chaos in Europe and turmoil in middle east, India cannot afford to stay aloof from these developments
Conclusion
- International leadership is a vital necessity for India to accelerate its internal economic development and improve its national security environment.
- India’s ability to lead in the region and the world will depend critically on how effectively it modernizes its internal political and economic structures.
[10] China wants to power the world
Issue
- China’s ambition of powering the world
What is the plan?
- China’s State Grid Corporation,which is world’s biggest power company is “actively in bidding” for power assets in Australia, hoping to add them to a portfolio of Italian, Brazilian and Filipino companies.
- The idea is to connect these and other power grids to a global grid that will draw electricity from windmills at the North Pole and vast solar arrays in Africa’s deserts, and distribute the power to all corners of the world.
Is it really possible?
- It’s a crazy idea but technically, the vision is plausible.
- It faces considerable geopolitical hurdles, including laws (in Japan, for example) that prohibit importation of power from foreign countries.
- Another question is how to manage such a system.
- Then there’s the matter of cost. State Grid estimates it would cost $50 trillion to develop a truly global grid. That would require international buy-in over decades.
- At a time when short-termism and nationalism are rising worldwide, such a possibility seems remote.
Silverlining
- The $50 billion in cash generated by State Grid last year gives the company the deep pockets and political standing to put its priorities on the international energy agenda.
- Regarding management, there would be no central power distributing authority. Rather, an Internet-like smart grid would distribute power as needed, its allocations shifting automatically as the globe turned and different regions reached their peak energy demand.
- While a supergrid may never be built, bigger and bigger regional networks are sure to grow.
Conclusion
- Such an idea would be a boon for wind and solar power producers.
- But because the grids envisioned are regional, they’d suffer from the uncertainties of relying on renewables.
- A global grid would solve that problem by linking power generators at the poles and at the equator.
- The sun would never set on the Global Energy Interconnection, and power would flow day or night.
GS PAPER 3
[1] Global economy losing momentum, governments must act: IMF’s Lagarde
Christine Lagarde, the chief of the International Monetary Fund (IMF), has cautioned
- “The recovery remains too slow, too fragile”
- Global economy is losing momentum and governments should take action to preserve the recovery.
- Advanced economies still face a hangover from the global financial crisis of 2007—2009 in terms of too much debt, low investment, and, for some, high unemployment.
- urged governments to take pro-growth reforms and to increase spending on public infrastructure.
- Mediocre growth that doesn’t help ordinary people much risks political backlash that “has consequences for the social and political fabric in many countries,”
- She warned against turning to protectionism favouring domestic producers in competition with foreign firms as a response. “The answer to the reality of our interconnected worth is not fragmentation, it is cooperation,”
In January, the IMF forecast global growth of 3.4 percent this year.
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