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Mains Marathon

Answered: Mains Marathon – UPSC Mains Current Affairs Questions – February 7



Find the Suggested Answers below:


1.“Those who fight corruption should be clean themselves.” Critically comment. (GS 4)

“जो लोग भ्रष्टाचार से लड़ते हैं उनको पहले खुद को साफ करना चाहिए।” गंभीर रूप से टिप्पणी दें।

Suggested Answer:

“Those with glass doors do not throw stones at houses of others.”
This adage teaches us that unless and until one possesses a specific quality or virtue, s/he isn’t qualified to lecture others about it. Hypocrisy is not a virtue, and being hypocritical is not only universally frowned upon, it is also devoid of moral authority.

For example, once a mother approached Ramkrishna Paramhans and asked him to forbid her son from eating sweets. Paramhans asked them to return after a week. Next week, Paramhans simply asked the kid not to eat sweets. The mother, puzzled, asked “What stopped you from saying this same thing last week?” The saint replied “Till last week, I used to eat sweets. Now I don’t. Therefore, now I can ask your child to stop eating sweets as well.”

Moral authority notwithstanding, if a corrupt person leads the fight against corruption, s/he risks the progress of the fight itself, since his/her corrupt acts can be divulged to the public at any point of time. People flocked in large numbers to Anna Hazare because of his reputation as a man of unquestionable integrity, transparency and honesty.

At the same time, it has to be accepted that the people who pledge to fight corruption must get their hands dirty. They must be like lotus petals which do not get muddy despite being surrounded by muck.

Also, there is a possibility that a person may have been corrupt in the past but has now reformed himself/herself after seeing the error of his/her ways. Such people should be supported instead of being treated with utter scepticism and distrust.

Thus, it is not always necessary that those who fight corruption must be clean themselves. What matters is that the resolve to fight corruption must be strong, and they should be honest about their past transgressions, if any. They should be clean at present, and their past actions should serve to strengthen the fight, instead of crippling it.


2.What do you understand by (a) Political democracy and (b) Fiscal democracy? In this context, highlight why we may have achieved political democracy, but not fiscal democracy? (GS 3)

आप (क) राजनीतिक लोकतंत्र और (ख) राजकोषीय लोकतंत्र से क्या समझते हैं? इस संदर्भ में, उजागर करें की हमने क्यों राजनीतिक लोकतंत्र हासिल कर ली है, लेकिन वित्त लोकतंत्र नही?

Suggested Answer:

 Political democracy is a means for the people to choose their own leaders and hold them accountable. It offers the citizens the freedom to express their thoughts and views subject to reasonable restrictions. It signifies the will of the people living in a country at present.

Fiscal democracy refers to the freedom of the elected government to spend and tax so as to best serve the people at present, instead of being tied down by expenditure commitments of the previous governments.
Fiscal democracy can be said to be achieved when a government can spend on the present-day priorities instead of past ones. For example, spending on climate change right now needs higher priority than what previous governments would have assigned to it.

India has achieved political democracy to some extent, by inculcating democratic values amongst its citizens, providing a robust electoral system, regional parties representing linguistic and religious minorities, political decentralization with 73rd and 74th amendments etc.

However, it has not yet achieved fiscal democracy as:

  1. India has a history of populist schemes that are seen as entitlements by the successive generations. This makes it very difficult to even revamp these schemes to suit present priorities. It constrains government spending.
  2. The cost of financing these entitlements increases with time, and further constrains fiscal space for present-day spending priorities. Thus, the present government has to spend on priorities of previous governments, hampering fiscal democracy.
  3. In India, paying tax is seen as a burden instead of a duty. Thus, governments, in order to get elected, resort to lower taxes as a populist measure. This hampers revenue growth and constrains fiscal space. In India, only 7 out of 100 voters pay taxes. India also has a low tax-to-GDP ratio at 17%.
  4. Indian political system has perpetuated this mindset of entitlements and low taxes. Thus, it can be asserted that political democracy has been achieved at the expense of fiscal democracy.
  5. The trend of spending on doles also results in higher borrowing >> higher fiscal deficit >> higher burden for future generations >> cripples fiscal democracy for future governments. This also draws fiscal allocation away from creation of capital assets.

This mindset of voting for populist governments doling out freebies cannot be considered to be a true political democracy, since the electorate is not enlightened enough to make sound political choices.

India has millions of poor people who are at risk from problems such as climate change and non-communicable diseases. With nearly 65% of the population below 35 years of age, the present governments need to plan for their social security and healthcare. For the fiscal space to be created for these priorities, the citizens need to be enlightened enough to understand the malaise that unproductive subsidies and doles affect on the system.

Therefore in India, it is only by achieving more political democracy that proper fiscal democracy can be attained.


3.The ratings granted by rating agencies reflect poor standards and are anomalous as far as India and China are concerned. Elaborate. (GS 3)

रेटिंग एजेंसियों द्वारा रेटिंग गरीब मानकों को प्रतिबिंबित करती हैं, जहाँ तक भारत और चीन का सवाल हैं। प्रकाश डालें।

Suggested Answer:

Credit ratings agency act assign ratings to debtors based on the ability to pay back debt and after assessing other risks including the risk of default. Credit ratings to countries are assigned after assessing macroeconomic scenario, political stability, the willingness to repay existing debt and other variables.

How the ratings are anomalous with respect to India:

  1. India was denied a ratings upgrade from BBB- on account of its low per capita GDP and relatively high fiscal deficit among peers. It did not take into account that while the peers are languishing in terms of growth, India is a bright spot with a growth rate of more than 7% and a debt of 68.6% of GDP (as compared to Japan’s more than 200% of GDP)
  2. India has dramatically improved in terms of macroeconomic stability, including reining in inflation by adopting inflation targeting and instituting a Monetary Policy Committee (MPC), but this has not led to a ratings upgrade.
  3. India has shown high willingness to pay, as demonstrated by the great lengths the government went to during the 1991 BoP crisis. It has never defaulted in its debt payments. This has not been considered by the agencies.
  4. India has adopted numerous reform measures for Ease of Doing Business, and has made strides in transparency with RTI and e-governance. It has instituted a Bankruptcy code, and several welfare measures like CSR and social security schemes. This holistic development has not been considered by the ratings agencies while assessing for an upgrade.

How the ratings are anomalous with respect to China:

  1. After 2008 crisis, China launched a credit expansion that led to a massive increase of 86% to its credit-GDP ratio. Simultaneously, its growth has declined to 6.5%, resulting in an ominous scissor-pattern graph which is considered as posing a serious risk to any economy. Despite this, its ratings were upgraded to A+ from AA- in 2010.
  2. Despite declining growth since then, and the signs of a real estate bubble, these ratings have been unchanged. The ratings agencies are wilfully ignoring the Chinese economy’s dangerous path.
  3. China is a very opaque economy with no press freedom. There is widespread scepticism regarding the macroeconomic figures that are placed in public domain, since third-party scrutiny is seriously curbed by the authoritarian one-party state. These variables have not been considered by the ratings agencies.
  4. Persistent devaluation of yuan in order to boost exports, dumping of commodities in various economies etc are other factors which exemplify China’s erroneous behaviour in global exchange, but the ratings agencies have turned a blind eye to them.

Credit rating agencies have suffered severe dent in credibility after they failed to predict the 2008 financial crisis and they certified the mortgage-backed securities that were at the heart of the crisis with a AAA rating. Moreover, most of the popular agencies suffer from a pro-Western bias. To circumvent this, emerging economies from BRICS have set up their own credit ratings agency, which will be functional soon.
Thus, it is important for the investors to look at other variables before investing, instead of solely relying on ratings by the credit rating agencies.


 

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Daily Editorials for UPSC IAS Exam Preparation

Daily Editorial – Anti-corruption mechanism and analysis of Prevention of Corruption (Amendment) Bill, 2013

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Anti-corruption mechanism and analysis of Prevention of Corruption (Amendment) Bill, 2013


Prevalence and state of corruption in India can be measured from the fact that citizens of India have started to believe that it is an integral part of the administration and inborn feature of the Indian democracy.

Rank of India on Transparency International’s index, 2015

India was placed at 76th position out of 168 countries with a score of 38 out of a possible 100 in Transparency International’s Corruption Perceptions Index 2015,

India has been improving its position from 85 and 94 in 2014 and 2013, respectively.

But in terms of score, country’s score was unchanged in 2015 from 38 on a scale of 100.

Anti-corruption mechanism in India

Indian Penal Code, 1860:-

  • Section 169 of IPC, 1860, deals with the cases of public servant unlawfully buying or bidding for property.
  • In this case, public servant shall be punished with imprisonment of upto two years or with fine or both. If the property is purchased, it shall be confiscated.
  • Section 409 deals with the criminal breach of trust by a public servant.
  • The public servant shall be punished with life imprisonment or with imprisonment of upto 10 years and a fine.

The Benami Transactions (Prohibition) Act, 1988

  • The Act prohibits any benami transaction except when a person purchases property in his wife’s or unmarried daughter’s name.
  • Any person who enters into a benami transaction shall be punishable with imprisonment of upto three years and/or a fine.
  • All properties that are held to be benami can be acquired by a prescribed authority and no money shall be paid for such acquisition.

The Prevention of Money Laundering Act, 2002

The Act states that an offence of money laundering has been committed if a person is a party to any process connected with the proceeds of crime and projects such proceeds as untainted property.

“Proceeds of crime” means any property obtained by a person as a result of criminal activity related to certain offences listed in the schedule to the Act.

A person can be charged with the offence of money laundering only if he has been charged with committing a scheduled offence.

The penalty for committing the offence of money laundering is rigorous imprisonment for three to seven years and a fine of uptoRs 5 lakh.

Anti-corruption Agencies:-

The three main authorities involved in inquiring, investigating and prosecuting corruption cases are:-

Central Vigilance Commission (CVC),

The Central Bureau of Investigation (CBI),

And the state Anti-Corruption Bureau (ACB).

  • Cases related to money laundering by public servants are investigated and prosecuted by the Directorate of Enforcement and the Financial Intelligence Unit (FIU).
  • The CBI and state ACBs investigate cases related to corruption under the Prevention of Corruption Act, 1988 and the Indian Penal Code, 1860.
  • The CBI’s jurisdiction is the central government and Union Territories while the state ACBs investigates cases within the states. States can refer cases to the CBI.
  • The CVC is a statutory body that supervises corruption cases in government departments.The CVC can refer cases either to the Central Vigilance Officer (CVO) in each department or to the CBI.
  • Prosecution can be initiated by an investigating agency only after it has the prior sanction of the central or state government.
  • All cases under the Prevention of Corruption Act, 1988 are tried by Special Judges who are appointed by the central or state government.

Prevention of Corruption Act, 1988

Following are the mains provisions of Prevention of Corruption Act, 1988:-

  • If a public servant takes gratification other than his legal remuneration in respect of an official act or to influence public servants is liable to minimum punishment of six months and maximum punishment of five years and fine.
  • The Act also penalizes a public servant for taking gratification to influence the public by illegal means and for exercising his personal influence with a public servant.
  • If a public servant accepts a valuable thing without paying for it, he shall be penalized with minimum punishment of six months and maximum punishment of five years and fine.
  • It is necessary to obtain prior sanction from the central or state government in order to prosecute a public servant.

Present arrangement under section 13(1) of POCA, 1988

Corruption under Section 13 (1) of the Act is defined in four different ways:-

  1. First, a public servant accepts a bribe or makes pecuniary gains without any advantage to the bribe-giver.
  2. Second, both the public servant and some other person benefit.
  3. Third, it is not known whether the public servant has benefited or not, but someone else has benefited.
  4. And lastly, no benefit has accrued to the public servant or anyone else, but a certain act has led to a loss to the exchequer.

Rationale behind proposing amendment

  • It is the 4th definition of the corruption, which has created the problems for civil servants.
  • Prosecuting civil servants for such losses would make large number of civil servants vulnerable to future prosecution.
  • It makes Civil servants prone to political and media pressure.
  • This will make civil servants more and more risk averse.
  • It inhibits fearless decision-making that may involve exercise of discretion and bona fide errors.

Prevention of Corruption (Amendment) Bill, 2013

The bill proposes some amendments to the PCA and is pending before Parliament as of now. Following are some amendments proposed:-

  • To establish that the public servant had disproportionate assets, two things would have to be proven:
  1. The possession of monetary resources or property disproportionate to his known sources of income, and
  2. The intention of the public servant to enrich himself illicitly.
  • The Bill redefines criminal misconduct by a public servant to only include:
  1. fraudulent misappropriation of property under one‟s control, and
  2. Intentional illicit enrichment and possession of disproportionate assets.
  • Government or higher officials’ sanction before prosecuting the serving officers, now has been extended to retired public servants too.
  • Deletion of Section 13(1)(d)(iii), which relates to the public servant obtaining for any person pecuniary advantage “without public interest”.
  • Bill proposes to insert a new Section 17A that would bar investigating agencies from beginning an inquiry or investigating the offences without prior approval.
  • Under the Bill, the burden of proof is transferred to the accused person only for the offence of taking a bribe. In this case, he would have to establish that the reward that he obtained was not a bribe.

Criticisms of POCA, 2013

  • Bill narrows down the definition of corruption.
  • Bill makes it more difficult to hold someone guilty of disproportionate assets as it raises the threshold of proof.
  • The proposed amendment makes it more risky for a bribe-giver to give evidence against a bribe-taker.
  • Additional layers of protection for even retired civil servants would make it difficult to prosecute corrupt public servants.
  • Inserting Section 17A means government will have the power to decide the initiation of prosecution.
  • Major proposed amendment demands prior approval from a “competent authority” even for registering a case under the PC Act against any public servant.
  • Providing civil servants with blanket immunity from either investigation or prosecution is is neither necessary nor in the larger interest of our society and our economy.

Suggestions

To reforms the anti-corruption mechanism, the structure of authorities investigating the cases should be reformed. The following measures should be taken for that purpose:-

  • Making sure that investigating agencies are insulated from extraneous influences.
  • In the present structure, vies of the investigating officers can be suspended without any cogent reason.
  • The culture should be inculcated in the investigating agencies that officers are able to express their views freely.
  • An independent prosecuting agency under a director of prosecution appointed in the same manner as a judge of the high court for the states and a judge of the Supreme Court for the Central investigating agency.
  • Power that vests with the investigating agencies needs to be balanced by ensuring independent scrutiny of evidence by a competent legal mind.
  • Special courts should be set up, to try such cases expeditiously

Conclusion

Not only does corruption in India worsen poverty, it also drags the whole country’s development down by stealing its resources. Hence much more efforts are needed so that all aspects of corruption can be dealt with.


 

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Can Foreign Contribution Regulation Act curb corruption in NGOs ?

Foreign Contribution Regulation Act (FCRA) allows the NGOs to receive donations, grants and assistance from overseas sources. Some of the NGOs have global networks to address global issues and they get funds for a variety of purposes. Total funds flowing in are approximately Rs. 500cr.

FCRA requires several permissions for accepting foreign contributions by the NGOs. They are from :-

  • RBI
  • Ministry Of Home Affairs

NGOs comply with these. So what’s the problem?

The problem is not with compliance of the this regulation but the use and forward channelizing of these resources. Whether these funds are used for their stated purposes- socio economic progress, poverty alleviation or anti national activities.

»»» Another issue us the credential of NGO directors who run a non profit organisation for the benefit of people and not for maintaining a luxurious life. Unfortunately this has been found in some cases.

»»» In recent times, concerns have been raised that NGOs do not spend adequate amount on their core objectives. There is not enough transparency in the administration of these trusts. This results in disproportionate high administrative expenses.

What are these expenses? Buying land , buildings, setting up offices, consultancy fees etc.

This goes against the grain of service motto where the ultimate recipient is supposed to get the maximum.

»»»There is a pressing need to combat corruption in NGOs in two respects :-

  • Whether funds are channelized for the stated objective.
  • Whether the funds are misappropriated and misused for making money, even black money through round tripping , money laundering.

Some features of FCRA

FCRA – prime objective of the Act is to regulate the acceptance and utilization of foreign contribution and foreign hospitality by persons and associations working in the important areas of national life. The focus of the Act is to ensure that the foreign contribution and foreign hospitality is not utilized to affect or influence electoral politics, public servants, judges and other people working the important areas of national life like journalists, printers and publishers of newspapers, etc. The Act also seeks to regulate flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to the national interest and to ensure that individuals and organizations may function in a manner consistent with the values of the sovereign democratic republic.

As per FCRA guidelines, Indian NGOs receiving foreign funds need to be independent from any foreign agency’s control, and should be registered as per the rules of the Indian Societies Act.