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Front Page / NATIONAL[The Hindu]
- Can courts make life terms more rigorous, asks SC
- NCRPB tells States to submit action plan to curb pollution
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INTERNATIONAL [The Hindu]
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Editorial/OPINION [The Hindu]
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ECONOMY [The Hindu]
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Indian Express
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Live Mint
Click here to Download 9 PM Daily Brief PDF (21st Dec. 2016)
Front Page / NATIONAL[The Hindu]
[1] Can courts make life terms more rigorous, asks SC
Context
The Supreme Court will examine whether courts are statutorily empowered to make life imprisonments harsher for convicts by adding the term “rigorous” while delivering a sentence of life imprisonment.
What has happened?
A Bench of Justices P.C. Ghose and U.U. Lalithas said that it would consider whether the Criminal Procedure Code (CrPC) or any other penal law empowered the courts to add the term ‘rigorous’.
Backdrop
The Supreme Court decided to hear on this aspect while considering the appeal filed by Ram Kumar Sivare, who is serving rigorous life term in a Chattisgarh jail, for murder.
- The State High Court had upheld the trial court judgment convicting and awarding life term to Sivare and Bhuneshwar Prasad for stabbing to death Anil Bhoyar on January 5, 2010 near a government hospital in Durg district of Chhattisgarh following a quarrel over a minor issue
Petitioner’s contention
Challenging the High Court verdict in the murder case, Sivare’s lawyer and senior advocate Parmanand Katara, contended that the judgment pronounced by the lower courts was “unconstitutional and ultra-vires” as penal and procedural laws do not empower them to qualify the life sentence awarded to a convict with the term “rigorous”.
[2] NCRPB tells States to submit action plan to curb pollution
The Hindu
Context
NCRPB said that air pollution in Delhi is a matter of serious concern and Delhi, along with Uttar Pradesh, Haryana, Rajasthan and Punjab should act in unison to mitigate the suffering of the people.The Board will soon file an affidavit before the Delhi High Court regarding the matter.
What has happened?
In the light of deteriorating air quality, the National Capital Region Planning Board (NCRPB) has asked Delhi and adjoining States to submit action plans to control air pollution in the Capital.
Affidavit to HC
The Board will soon file an affidavit before the Delhi High Court regarding the matter. The CPCB said that an action plan to curb pollution was prepared under the directions of the Supreme Court in November, which could be part of the affidavit to be filed by the NCRPB.
Increase tree cover
Delhi, Haryana, Uttar Pradesh and Rajasthan have been asked to increase forest and tree cover in the NCR in a phased manner to 20 per cent of total geographical area while expressing concern over the present cover of just 3.30 per cent in 2012, declining from 4.30 per cent in 1999.
Naturally Conservation Zones
The NCRPB made it clear that NCZs are the major natural features identified as environmentally sensitive areas, which include the extension of Aravalli ridge in Delhi, Haryana and Rajasthan, forest areas, the rivers and tributaries of Yamuna, Ganga, Kali, Hindon and Sahibi, sanctuaries, major lakes and water bodies such as Badkal lake, SurajKund and Damdama in Haryana Sub-region and Siliserh lake in Rajasthan.
Prepare Regional Plan-2041
The Board also authorized the NCRPB Secretariat to initiate preparation of Regional Plan-2041 for the National Capital Region.
More inter-State links
The Board also discussed 14 inter-State links with the aim of facilitating seamless travel in the NCR, which includes Kalindi by-pass road from Ashram Chowk to Faridabad by-pass, development of Mehrauli–Guragaon Road as NH-236 to ease traffic on NH-8 and connecting Nelson Mandela T-Point at Vasant Kunj with the existing Gurgaon-Mehrauli Road to reduce travel time.
INTERNATIONAL [The Hindu]
[1] India, Kyrgyzstan seek a global pact against terror
The Hindu
Context
India and Kyrgyzstan finalized plans for joint military exercises, and reiterated the need for a global convention against terrorism
Matter: KyrgyzstanPresident’s 4-day visit to India
Things finalised
- Following a bilateral summit at Hyderabad House, the delegations finalised plans to hold the annual joint military exercises named “Khanjar-IV” in February-March
- The “Khanjar-II” exercises were held in March 2015 in Kyrgyzstan and “Khanjar-III” in March-April 2016 in Gwalior
Joint statement
A joint statement which marked the end of the visit took note of the IT support that India had provided to the Kyrgyz military institutions, including building three IT centres in the past two years
- the high-altitude Kyrgyz-Indian Mountain Training Centre being built in the city of Balykchi, which will be used to train Indian military personnel
- Both sides reiterated the demand for global counter-terror norms to fight terrorism in Asia, and called for the adoption by the United Nations of the draft Comprehensive Convention on Combating International Terrorism.
Editorial/OPINION [The Hindu]
[1] An unkind postscript
Context
The Governor of the Reserve Bank of India, Urjit Patel, said there was a ‘confluence of thought’ in the government and the central bank to deal with black money by removing existing Rs.500 and Rs.1000 notes as legal tender.
Article talks about the new restrictions imposed by RBI upon depositing old tender
New conditions announced
Anyone depositing Rs. 5,000 or more into a bank account will have to satisfactorily explain to two bank officials why this was not done earlier
Exception:
- Those opting to disclose unaccounted income under the new amnesty scheme, the Pradhan Mantri Garib Kalyan Yojana, face no restriction on depositing old notes.
- Finance Minister has suggested that such explanations will not be required for anyone making a deposit for the first time
Why this move is an unfair one?
As per author there may be genuine reasons for people not to have deposited the old tender at the banks till now including their faith in the earlier announcements that old tender could be deposited until December 31st.
[2] Time for a policy shift
Context
The unorganized manufacturing sector should be reoriented towards non-household units to provide efficiency gains.
Small vs large units
In the first few paragraphs author mentions that in the context of the manufacturing and agriculture sectors, the debate on small versus large dominated the intellectual space for several decades.
He states that,
- Usually thought to be efficient: Small units are usually thought to be efficient in terms of resource use and management, and technically more efficient
- Lack of access to resources: Small units do not have access to several kinds of resources, particularly in relation to credit and marketing facilities, and are not able to reap the economies of scale. Thus, large units may reveal better performance indicators and may have an edge in market competition.
What is a manufacturing sector?
The Manufacturing sector comprises establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products.
Unorganized manufacturing sector (UMS from here on)
Authors state that UMS, which is composed of both household and non-household units, accounts for a majority of the total manufacturing employment in India
- Type of units: Small in size
Authors point out that to ensure decent wages to the workers in this sector and to ensure pro-poor growth, the units in this sector have to be made economically viable.
Organised vs Unorganised units
Comparing economic viability: Authors state that one way of the economic viability of unorganised manufacturing units is to consider the performance index in terms of ‘technical efficiency’ relative to the organised sector units
What is technical efficiency?
It is the ability of an industrial unit to transform inputs into output judged against the best practice units in the same industry
Results of research
Studies done by the authors and many other scholars point out that,
- Within the unorganised sector, units seem to reveal similar characteristics in terms of performance indicators, while organised sector units are much better performers
- Unorganised sector units are not able to benefit in the process of rapid economic growth. The demand side factor or agglomeration-specific factor does not impact on the performance of unorganised sector enterprises in a favorable way
- Organised sector units respond positively to a rise in income in the region where they are located, which possibly can be explained in terms of quality differences in the products manufactured by the organised and unorganised sectors
- With a rise in income, demand for products shifts away from the unorganised to the organised sector
- Ancillarisation:the process of ancillarisation is expected to benefit unorganised sector units indirectly by creating greater opportunities through inter-sector linkages, the increasing role of labour intermediaries and payment of wages on piece rate basis do not seem to be facilitating this process
What is Ancillarisation?
The following requirements are to be compiled by an industrial undertaking for being regarded as ancillary industrial undertaking:
- “An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or
- production of parts, components, sub-assemblies, tooling or intermediaries or
- the rendering of services & the undertaking supplies or renders or proposes to supply or
- Render not less than 50% of its production or services, as the case may be, to one or more other industrial undertaking & whose investment in fixed assets in plant & machinery whether held on ownership terms or on lease or on hire purchase, does not exceed Rs 10 million.”
- The level of infrastructure also does not exert a positive impact on the performance of the unorganised sector, while the efficiency of the organised sector improves with a rise in the availability of infrastructure.
Overall conclusion
On the whole, unorganised sector enterprises exist to provide means of survival only, which is especially true for household units.
Steps that can be taken
- Improving product quality: Designing policies to help improve the product quality within the unorganised sector
- Improving access: steps need to be initiated for improving their accessibility to infrastructure provisions. There are many unorganised sector units, particularly ones that are operated by households, which are located in remote rural areas.
Issues with unorganised units
- Inability to expand: Unorganised manufacturing units cater only to local markets and are not able to expand their market size in a significant way
- Inadequacy of infrastructure
- Absence of credit and marketing facilities
- Issue of electricity pricing.
Other findings
Authors point out that findings of some past research on the efficiency of India’s unorganised manufacturing sector point to
- Higher technical efficiency of small industrial units in urban areas than their counterparts in rural areas reflecting advantages due to the location
- Smart City programme: Authors state that this programme designed to boost urbanisation is expected to make unorganised manufacturing more economically viable. How?
- Access to investment: Several small towns (census towns) which have been recognised as urban by Census 2011 but still do not have urban local bodies are not able to draw investment meant specifically for urban areas. Once they are treated as a part of urban areas, unorganised sector units in such localities will benefit significantly
- Sub-contracting: Since engagement in sub-contracting activity enhances to some extent technical efficiency of unorganised manufacturing units and the incidence of sub-contracting is relatively greater in urban areas, it follows that a process of rapid urbanisation will help.
Problem with household units in unorganised manufacturing sector
Authors state that household units suffer from following problems,
- Less efficient: Household-based units with only family labour are known to be much less efficient than non-household manufacturing units, also known as ‘establishments’ which are relatively bigger in employment size and make use of non-family hired labour
- Poor performance in labor standards: In terms of labour standards, household units perform far worse than unorganised non-household units
Important Question
Therefore, an important policy question is whether the unorganised manufacturing sector should be helped to restructure increasingly from household units to establishments. Such a transformation will provide efficiency gains to unorganised manufacturing, but may come at the cost of some loss in employment.
ECONOMY [The Hindu]
[1] Credit costs hinder cashless economy
The Hindu
Context
Imposed indirectly on merchants, these are passed on to customers through increased sale price.
What has happened?
On November 18, Reserve Bank of India (RBI) issued a circular asking banks to waive charges levied on transactions by merchant establishments using point of sale (PoS) terminals. “Customer charges, if any, being levied on all such transactions (are) waived till December 30, 2016, subject to review,”
What are Customer Charges or MDR?
In this case, the Customer Charges also known as Merchant Discount Rate. It refers to the rate charged to a merchant by a bank for providing debit and credit card services.
Merchants have not passed on the waiver to the consumer. Why?
Q: Why is there a reluctance on the part of the banks to waive the fee, even if it is meant for a limited period?
Current MDR
- For debit cards: 1 per cent per transaction
- For credit cards: The rate could go up to 2.5 per cent
Who gets how much?
The charge is borne by the merchant and goes to the issuer bank (the bank that has issued the card), the acquirer banks (the bank that installed the PoS terminal) and payment gateways such as Mastercard, Visa and Rupay. The issuer bank gets the maximum share of the MDR.
Case of a debit card
Let us take the case of debit cards. Debit cards are issued to customers who have a savings bank account and the money from that account gets debited immediately after the card is swiped for a transaction.
When a depositor keeps the funds in the savings account for which she earns 4 per cent, the bank, in turn, lends that money which can earn it at least 6.5 per cent, a risk-free rate.
- Cost savings: Issuing a debit card to the customers saves cost for the bank. RBI studies have found that if a customer visits a bank branch for a transaction, the cost incurred by the bank is in the range of Rs.30-32, but when the customer visits automated teller machines, the cost comes down to Rs.14-15 per transaction
Q: Why does a bank need to charge a merchant for debit card transactions; a charge that acts as a disincentive for the merchant to install the machine?
Credit cost, imposed indirectly on the merchants is, in turn, passed on to all customers through increased selling price of goods and services
Thus, credit-less digital payments cross-subsidise the hidden cost of credit embedded in the payment system
Point of Sale terminals (PoS) growth
Following the demonetisation exercise, installation of PoS terminals has seen an exponential growth.
- SBI: State Bank of India (SBI), for example, saw 3.75 lakh transactions every day in the PoS terminals before November 9 amounting to Rs.94 crore per day. After demonetisation the number increased to 16.43 lakh transactions amounting to Rs.324 crore per day
Q: Would waiving off the charge completely prove optimal?
- Complete waiver detrimental: According to a top central banking source, while there is scope for further rationalising the charges, waiving them off completely could be detrimental to decisions on further investments by banks.
MDR should be at optimal level
The committee, set up to present a roadmap for digital payments, headed by finance secretary RatanWatal, said in its report that the MDR rate should be at an optimal level. As per the report,
- Keeping it optimal: The MDR must be low enough to ensure that merchants adopt the payment method, and encourage customers to use such payment methods. At the same time, the MDR must be high enough to cover costs, and incentivize issuers and acquirers to keep acquiring greater number of merchants
- Regulatory caps: Regulatory caps placed upon MDR may ultimately hamper the growth of the payments industry
- Market drive approach: Setting of MDR should be market-driven.
Indian Express
[1] Good signalling
Indian Express
Context
EPFO cutting rates is a step in the right direction. There must be no roll-back.
Article talks about the decision of EPFO to cut interest rate and why this move is the right one in the current situation.
Give it a go through once.
Live Mint
[1] Formulating an Act Manipur policy
Context
Development in the region cannot be seen as an incidental benefit to a national foreign policy.
Issue: India’s Act East policy with a special focus on Manipur
Act East policy
India’s “Look East” policy was reoriented to “Act East” policy in 2014
The policy intends to
- Create a better relationship with South-East Asian countries
- The policy at its core focuses on using India’s eastern border states to improve trade relations with South-East Asia.
Weak link
Author states that the weakest link in the Act East policy is the dismal state of the states along the North Eastern border.
Why Manipur?
Manipur, which shares 355km of its border with Myanmar and remains India’s most economically viable border to the south-east.
Backdrop
Manipur’s contentious merger with India and subsequent land and identity issues have resulted in a cycle of violence and insurgency movements within the state. The lack of competent governance institutions, infrastructure and economic growth has further intensified the inadequacies within the state.
- Impact of AFSPA: Author points out that the Armed Forces Special Powers Act in Manipur, which has been in place since 1958, has continued to alienate the local population, and act as a deterrence for modernization of state police and counter-insurgency forces.
- Tribal trouble: Existing tensions between the majority Meitei ethnic group who occupy the valley and hill tribes like the Kukis, Nagas and Zomis have added to the trouble
- Outer forces: Vested interests within the state and outside interests have intensified existing tensions by calling for a stricter definition of who can be a resident, calling for control of outsider entry into the state, and greater autonomy for the hill district
- Increased speculation: The signing of the Naga framework accord between the National Socialist Council of Nagalim (Isak-Muivah) and the National Democratic Alliance government in 2015 has also increased speculation about the territorial disintegration of Manipur as Manipur’s northern districts have been long claimed by Nagas as part of the greater Nagalim territory.
- Creation of new districts: The creation of the seven new districts (on 9 December), with at least three districts dividing the Naga-dominated areas in northern Manipur, has given new life to this tension, resulting in the continuation of a two-month economic blockade and now a curfew.
What state and central governments can do?
The Union and state governments must come together to act on these issues
- Phased removal of AFSPA&implementation of the Sixth Schedule, which gives autonomy to tribal districts, rather than an inner-line permit which will restrict the entry of people, will give people greater control.
What is an Inner Line Permit?
Inner Line Permit (ILP) is an official travel document issued by the Government of India to allow inward travel of an Indian citizen into a protected area for a limited period. It is obligatory for Indian citizens from outside those states to obtain a permitfor entering into the protected state.
- Ceding administrative control to small groups: Tribal groups currently in conflict with the state over land should be given administrative control of that area which will remove any incentive for rise of small insurgent groups and will shift the responsibility for maintaining peace from state to the groups themselves.
Manipur & Myanmar
- More than a shared border: Manipur has historical and cultural contiguity with Myanmar, apart from having a clear navigable, active trading route with Myanmar
- Securing the trade route: The roadway between Moreh in India and Tamu in Myanmar is the core of trade and connectivity to South-East Asia. India’s planned trilateral highway starts from Moreh and is designed to cross Myanmar, extending all the way to Mae Sot in Thailand. Legalizing, securing, and streamlining this existing natural trade route will ensure economic connectivity remains, and benefits the state
- Developing Moreh as a Smart City: Focus on developing Moreh as a smart city will help improve infrastructure and will also be a vital step in its development as the main trading point on the India-Myanmar border
- Stopping illegal cross border imports: Manipur, after Mizoram, remains the port of choice for drugs and arms originating from the golden triangle on the Myanmar, Laos, Thailand border.Better security infrastructure, a narcotics agency with more powers, better equipment, a modernized border force, and streamlining of trading posts can help stop illegal cross border imports.
Conclusion
Manipur, along with other eastern states, needs to be made a stakeholder in any foreign policy that involves acting east. Development in the region cannot be seen as an incidental benefit to a national foreign policy. An Act East policy that uses the growth and regional impact of a stronger, better-governed Manipur will have far greater impact on India’s commitment to its eastern neighbors.
Read More: Golden Triangle
[2] Reforming healthcare in India
Context
India’s largely unorganized healthcare sector is focused on curing sick people rather than preventing sickness itself
Triple disease burden of India
Authors state that India is facing a triple disease burden as of now,
- Maternal and child health
- Infectious
- Non-communicable diseases
Question
What prevents India’s healthcare system from delivering world-class services, especially for the over 800 million people of rural India?
- Low funding of healthcare sector
- Health insurance covers less than 5% of total health expenditure. The formal private network is a miniscule component of India’s health sector and is focused on secondary and tertiary care for urban India
Present situation
Burden on the individuals: Over 60% of healthcare expenditure in India is incurred by individuals whenever they seek care
Informal healthcare providers: Money is spent on seeking healthcare services from several informal providers and on purchasing large quantities of irrational medicines directly from pharmacies.
As a result, India’s largely unorganized healthcare sector is focused on curing sick people rather than preventing sickness itself.
So, why not create a free market for healthcare sector?
This won’t work because
- High degree of variability: Unlike other expenses, those on healthcare tend to have a high degree of variability and are most often unexpected
- Negligent behavior: Seldom people think about their health when they are in absolutely fine condition. Health becomes a prime issue only when we are suffering from an ailment. Due to these factors, health insurance is never on the radar of a common citizen in India
- Complete dependence on doctors: A common citizen is not even aware of his/her health status and is completely dependent on the medical practitioner for advice
All of the above factors explain as to why a free market model cannot work in healthcare sector and why this sector is state regulated
Principles behind a successful health system
A careful study reveals three essential principles that are central to the design of each of these successful health systems:
- Pre-payment with pooling: Countries have either used higher taxation levels to achieve this or have required residents to mandatorily purchase some form of health insurance. Britain is an example of a largely tax-financed health system while Germany is largely reliant on mandatory health insurance. Japan mandates citizens to enrol with one of its several insurers for universal coverage. The money thus collected is then aggregated into large pools which are able to absorb the high level of variability of health expenditure.
- Concentrated purchasers with organized providers: The second principle is that these pools are managed by one or more large agencies, which use pooled money to pay for healthcare for their members, and thereby discipline both providers and consumers. Britain uses public trusts, Germany sickness funds, Japan uses multiple insurers and Thailand adopts a single national health security office which buys only from primary care-led integrated providers.
- Distinction between the roles of the purchaser of health services and the providers of healthcare: In several countries, there is a distinction between the roles of the purchaser of health services and the providers of healthcare. In such examples, a public trust or designated organization could receive pooled finances, acting as a purchaser.
- Mix of public & private:Providers could be a mix of public and private accredited facilities that compete for contracts based on high-quality services and on a capitation basis. Health insurers provide a wider suite of innovative products, covering outpatient and primary care. This enables the shift towards a futuristic healthcare design where payments to healthcare providers are based on achievement of outcomes.
- The government’s role as an active shaper and steward of the entire health system: The third and most crucial design principle in all effective health systems is that the government plays an active role in designing and supervising the entire health system, instead of focusing only on the management of a health system owned by itself
Way forward
In the 1960s, countries such as Thailand, Brazil and South Korea had health statistics similar to or worse than India’s in 2010, but transformed the status quo over four decades. In India, each state represents a different social, economic, and cultural environment, and will need a customized approach towards its health systems’ redesign.
Conclusion
Each state in India can take lessons from these design principles to build a strong healthcare system
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