9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – January 18

  • Front Page / NATIONAL [The Hindu]
  1. SC orders inspection of pollution check Centres
  2. Britain to leave EU’s single market: Theresa May
  3. SC asks govt. to file status report on Ganga rejuvenation
  4. India becomes Associate member of CERN
  • Editorial/OPINION [The Hindu]
  1. In the nick of time
  2. Voting in a season of discontent
  3. The real meaning of independence for RBI
  4. An Afghan agenda for Trump
  • ECONOMY [The Hindu]
  1. Finance Ministry suspends Dec. 21 tax circular on indirect transfers
  2. Industry seeks foreign partners for trade pact
  • Indian Express
  1. Permission To Prosecute
  2. Cities at crossroads
  • Live Mint
  1. Tough times ahead for India in Afghanistan
  2. What is the optimal policy response to demonetisation?

Front Page / NATIONAL [The Hindu]

[1] SC orders inspection of pollution check Centres

The Hindu



Highlighting the urgency to find immediate solutions to curb air pollution rather than mull over possible solutions, the Supreme Court has asked the Environment Pollution Control Authority to inspect over 900 Pollution Under Certificate stations across Delhi



The bench was hearing a suggestion that pollution certificates should be linked to vehicle insurance


Centre’s submission

Centre submitted that even the functioning of several of the pollution checking stations in Delhi were suspect

  • Consultations with stakeholders were on to ban pet coke and furnace oil as industrial fuel in Delhi-National Capital Region.


Show cause notices

Centre submitted that 962 stations in the national Capital, 174 have been issued show cause notice for irregularities. These pollution centres check at least 5,000 vehicles a month

  • Of the 962 centres, 75 have been suspended, 14 cancelled and warning notices were issued to 78


Status report

  • Bench asked the centre to furnish a status report regarding the show cause notices issued to the PUC centres
  • The court has asked for a status report on the proposal to ban pet coke and furnace oil by the next court hearing on February 6


[2] Britain to leave EU’s single market: Theresa May

The Hindu



British Prime Minister Theresa May has made it clear- the U.K. will make a clean break from the European Union and leave its single market of some 500 million people


Article provides us with view of British PM in the aftermath of BREXIT and how things could shape up.

Give it a light read



[3] SC asks govt. to file status report on Ganga rejuvenation

The Hindu



Almost two years after the Supreme Court voiced scepticism about the government’s self-proclaimed promise to clean up the Ganga river, the apex court has sought a fresh status report from the Centre on what it was doing to revive the holy river



Bench has directed the government to file a report on the construction and functioning of sewage treatment plants alongside the river, which runs through five States.

  • The court wants the report by 24th Jan 17



The report has been sought on a 32-year-old pending public interest litigation petition filed by environmental lawyer, M.C. Mehta


Scepticism by SC
In 2014, the Supreme Court voiced its scepticism about the various efforts over the decades to return the Ganga to its pristine self, once even saying that it “does not expect Ganga to be cleaned up even after 200 years.”

  • NGT, the last hope: In 2014, the Supreme Court said that its “last hope” rested on the National Green Tribunal (NGT) and referred the task of monitoring industrial units along the Ganga to the NGT.
  • The apex court had even empowered the tribunal to cut off water and power connections if the units are found to be polluting the river.


IIT’s consortium

  • Roadmap to rejuvenate Ganga: In January 2015, the government had informed the Supreme Court that a consortium of IITs was preparing a road map to rejuvenate the river.
    • Setting up sewage treatment plants: It informed that a proposal is on track to have a total of 80 sewage treatment plants (STPs) which would process, in a day, 368 million litres of water flowing into the river in the five river basin States
    • Detailed report submitted: In March 2015, the government submitted a detailed report prepared by the IITs for the revival of the river to its former “wholesome” self


Ganga River Basin Management Plan (GRBMP)

The Ganga River Basin Management Plan (GRBMP) 2015 drafted by the IIT consortium had pointed to several problems, from rapid urbanisation to over-grazing, which has led to the slow destruction of the river



[4] India becomes Associate member of CERN

The Hindu



India became an Associate member of CERNwith the Indian government completing its internal approval procedures in respect of the agreement it had signed with CERN on November 21, 2016


What does it mean?

Following benefits will accrue to India as an associate member of CERN,

  • Access to data: India will have full access to all data generated at CERN. As there are many experiments in CERN, there will be plenty of information available. When we were not an Associate member, India could data only from those experiments where we were participating
  • Participation in experiments: India will be able to participate in all experiments. India may have to pay additional charges for participating in the experiments. Moreover, India can choose the experiments where it wants to participate
  • Bidding opportunities will give Make in India a boost: Whenever any CERN facilities get upgraded and go through maintenance, it will provide opportunities for Indian industries to participate.
    • Indian industry will be entitled to bid for CERN contracts, which will allow it to work in areas of advanced technology. So the “Make in India” will get a boost due to CERN.
  • Eligible for staff appointments: Indian scientists will become eligible for staff appointments, it will enhance the participation of young scientists and engineers in operation and maintenance of various CERN projects. “Indian scientists and engineers working in CERN will learn how to operate and maintain the facilities. So when they return it will be useful for India


Does India need to pay any fees?

India has to pay about Rs. 40 crore a year as an Associate member. According to him, it is a small fee compared to the huge scientific and commercial benefits that India will stand to gain.


India & CERN: Over 50 years together

India has been actively involved in CERN’s scientific activities for over 50 years

  • Substantial contributions to LHC: Indian physicists, engineers and technicians have made substantial contributions to the construction of the LHC accelerator and to the ALICE and CMS experiments, as well as to accelerator R&D projects
  • Several agreements signed: In 1991, India and CERN signed a Cooperation Agreement, setting priorities for scientific and technical cooperation. India and CERN have signed several other protocols since then
    • TIFR & CERN: India’s involvement in CERN began in the 1960s with researchers from the Tata Institute of Fundamental Research, Mumbai participating in experiments at CERN
    • In the 1990s scientists from Raja Ramanna Centre for Advanced Technology, Indore too got involved in CERN experiment
    • Researchers from TIFR, Raja Ramanna Centre for Advanced Technology and other institutes built components for an accelerator (LEP) and detectors (L3, WA93 and WA89)
    • Observer status: India was granted Observer status to the CERN Council in 2002


CERN convention: The CERN convention was signed in 1953 by the 12 founding states. Currently, CERN has 22 member states. Besides India, Turkey, Pakistan, Ukraine are Associate members and Serbia and Cyprus are associate members in the pre-stage to membership


Editorial/OPINION [The Hindu]

[1] In the nick of time

The Hindu


Goods and Services Tax (GST) Council has made some breakthroughs on outstanding negotiables that were holding up the introduction of the indirect tax regime.


Article details about the resolution of key issues pertaining to GST between centre & States.


Note: Please refer to the brief dated 17th Jan 17 for the relevant news.


Addressing concerns of industry

It is an opportune time to address some of the concerns raised by another key stakeholder — industry

  • Need around six months’ time: Firms have indicated they would need about six months to gear up for the new tax regime once the laws, rules and all the minutiae of implementation, including the rates for different products and services, are known.
  • Clarity required:More clarity and finesse are also needed on the harsh penal provisions, including the power to arrest, proposed in the draft GST law (that lists out 21 offences) and the creation of an anti-profiteering authority that can act against firms that fail to pass on benefits of tax rate cuts to consumers
  • Preventing the return of Inspector Raj: While it is important to protect the consumer, a clear rule-based framework is necessary to ensure that one of the biggest gains envisaged from GST — an exponential change in ease of doing business — isn’t shadowed by fears of a return to inspector raj



Author concludes by saying that government should try and address all the gaps and shortcomings of the GST before fully implementing it, even if it results in a delay of few more weeks



[2] Voting in a season of discontent

The Hindu



Election pundits are busy interpreting how the state of affairs in Manipur will play out in the March election.


Main issue dealt with in this article: How the ongoing Manipur economic blockade might affect the polls that are due to be conducted in March?


Give it a light read.


[3] The real meaning of independence for RBI

The Hindu



The demonetisation decision has led several observers to express concern about the autonomy and institutional integrity of the Reserve Bank of India (RBI)


Issue: Autonomy of RBI


Not a republic

Author sets the tone for the article by stating that people raising questions about the autonomy of RBI being compromised when it surrendered to government’s will on demonetization, forget that RBI is not a self-governing republic



Author states that a cursory reading of the RBI Act (Section 7 on Management) lays out things quite clearly.

  • Part (1) of Section 7 states: “The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest”
  • Parts (2) and (3) spell out the roles for the Central Board and Governor.
  • Order of precedence: There is a clear ‘seniority’ principle with (1) taking precedence over (2) which takes precedence over (3)


Author’s contention

The decision to demonetize high-denomination currency was taken by the government in public interest after consultation with RBI.

  • Doing its duty: The RBI Board did its duty by ratifying/recommending the action and it was then left to the Governor and his officers to implement the decision. Surely, the RBI could not take a policy decision as major as demonetisation unilaterally. Nor indeed could it turn it down unilaterally


The exact role of a central bank

Function 1: Ensuring a low and stable inflation

Author states that it is critical to understand what autonomy and institutional integrity mean for a central bank like the RBI. The RBI, like most central banks, consists of technocrats and bureaucrats who are unelected and not directly accountable to the people. In a democracy, the final responsibility of all policy decisions must lie with the elected representatives of the people, either the government or Parliament or both.

  • Demand for central bank’s independence: The notion of central bank independence first gained traction in the advanced economies when it was noticed that elected governments often chose to disregard price stability in favour of growth, especially in the run-up to elections resulting in adverse effects on the economy
  • Central goal of a central bank:The central goal of central bank independence was to ensure low and stable inflation via the autonomous conduct of monetary policy. It is important to note that is not the central bank’s discretion to decide what the targeted rate of inflation ought to be (or indeed what the optimum rate of growth should be); that remains the job of the elected government. But once that target is laid down, the central bank must ensure that it meets those targets with complete operational autonomy


Situation in India

  • RBI decided the rate in India: In India, until the monetary policy framework and an inflation target were spelt out in 2016, it was the RBI which decided what a reasonable rate of inflation should be
  • Too much power: It was the RBI Governor — just one person — who had complete control over monetary policy goals and decisions. That was vesting too much independence in an unelected official
  • The proper way:The proper way to conduct monetary policy is via explicit goals laid out by the elected government which are then executed by a group of experts — a Monetary Policy Committee — rather than one individual, without any interference from the government


Function 2: Managing Debt


Author states that the RBI is the government’s debt manager.

  • A separate agency: It has been proposed that this function should be handed over to an independent debt management agency, a contention resisted by RBI
  • Not an assault on RBI’s independence: The separation of debt management from the RBI is not an assault on the RBI’s independence by the government. Instead, it is to remove the conflict of interest that exists in the RBI’s functions of setting interest rates, and management of the government’s debt. The latter could influence the former when it ought not to. The RBI’s independence to carry out its primary mandate, the efficient conduct of monetary policy, will only be enhanced by separating the debt management function.


Function 3: Regulation of Banking system

The third major role played by the RBI is in the regulation of the banking system.

  • Author states that like any other regulatory agency, RBI must be allowed to function independently in this regard without any government interference. Moreover, there has been no evidence to suggest that the government has interfered in any way
  • Separate roles: Government is the owner of Public Sector Banks (PSBs) which control nearly 70 per cent of lendingwhile RBI is the regulator. Both the domains are independent of each other



Author concludes by stating that there has not been any assault on the RBI’s autonomy. The government, when it exercises its right as sovereign, whether to set an inflation target or to demonetise high-value currency, is acting well within the norms of the law and the spirit of democracy. Any attempt by unelected officials to obstruct would only be abuse of their autonomy.



[4] An Afghan agenda for Trump

The Hindu



The U.S. President-elect must address Pakistan’s treacherous role in Afghanistan at full tilt.


Give it a go-through once




ECONOMY [The Hindu]

[1] Finance Ministry suspends Dec. 21 tax circular on indirect transfers

The Hindu



In a bid to soothe the nerves of foreign portfolio investors spooked by a fresh tax burden on indirect transfers mooted by the Central Board of Direct Taxes last month, the Finance Ministry on Tuesday put the tax department missive in abeyance until further notice


The circular

The tax department circular issued on December 21 clarified that all foreign portfolio investors (FPIs) with more than 50% of their assets in India and owning over 5 % stake in any listed entities would incur tax under India’s indirect transfer provisions



The stakeholders have presented their concerns stating that the circular does not address the issue of possible multiple taxation of the same income


[2] Industry seeks foreign partners for trade pact

The Hindu



India’s top industry bodies are attempting to build a coalition with counterparts in other nations with similar interests to give a fillip to the country’s proposal for a Trade Facilitation in Services (TFS) Agreement at the World Trade Organisation (WTO)-level

The proposed TFS aims to

  • Make it easier for professionals and skilled workers to move across borders for short-term work, as well as ensure portability of their social security contributions.


Global seminar

Two leading industry bodies — CII and FICCI — will hold a global seminar in Delhi and Mumbai on the topic in Feb 2017


Importance of coalition building

The importance of coalition building has been acknowledged by the WTO when it stated that, “coalitions give developing countries a stronger voice in negotiations. The resulting agreements mean that all countries, including the most powerful, have to play by the rules


Indian Express

[1] Permission To Prosecute

Indian Express



Diverse SC judgments leave a loophole to stifle investigations against public servants


Author’s contention

Author states that the conflicting views of the Supreme Court on the precondition of “sanction” for prosecution of a public servant under Section 19 of the Prevention of Corruption (PC) Act, 1988 have created a legal loophole which could be exploited by unscrupulous public servants to stifle a criminal investigation


What does the Section 19 state?

Section 19 of the PC Act states:

“No court shall take cognizance of an offence… alleged to have been committed by a public servant except with the previous sanction.”


Balancing competing interests

The provision aims to balance two competing interests

  • One is the need to ensure that an honest public servant is not hounded in the performance of his or her duties by frivolous complaints
  • The other is that investigation into an allegation of crime isn’t choked at the threshold due to the power wielded by a public servant


Bar on cognizance till sanction is imposed

Section 19 imposes a bar on the court to take “cognizance” of an offence till sanction is obtained from the government.

  • The bar is against the court to take cognizance for the purposes of trial
  • There is no prohibition either under the PC Act or the Criminal Procedure Code (CrPC) to start an investigation by lodging an FIR or through a court-initiated investigation under Section 156(3) CrPC


Anil Kumar vs. M.K. Aiyappa (2013) judgement

Author states that a two-judge bench in Anil Kumar vs. M.K. Aiyappa (2013) 10 SCC 705 appears to have unsettled the law on this subject.

  • The court held that Section 19, PC Act applies at the threshold itself and an application under Section 156(3) CrPC for investigation is not maintainable without obtaining prior sanction of the competent authority
  • This has recently been followed by the Supreme Court in L. Narayana Swamy vs State (2016) 9 SCC 598


Opposite view

Author states that while the Aiyappa judgement takes the view that,

  • even an investigation cannot be ordered under Section 156(3) CrPC without sanction, larger benches of the apex court have taken a diametrically opposite view. What is that view?
  • The SC rightly take the view that any investigation into a crime cannot be stifled at the threshold itself by giving power to the executive to scuttle it through sanction


R.R. Chari vs. State 1951

In R.R. Chari vs. State 1951 (3 judges), the court held that there was no requirement of sanction for ordering an investigation under Section 156(3) CrPC


State of Rajasthan vs Raj Kumar (1998)

In State of Rajasthan vs Raj Kumar (1998), it was held that there was no requirement for sanction before filing a chargesheet under Section 173 CrPC


Subramanian Swami vs Union of India (2014)

A bench of five judges of the apex court in Subramanian Swami vsUnion of India (2014) held that

  • Section 6A of the Delhi Special Police Establishment Act, which had required prior sanction for investigation into crimes by high-ranking public servants, was unconstitutional
  • Investigation cannot be subverted: investigation is central to the criminal justice system and cannot be subverted by imposing a restriction on the police at the threshold itself
  • Status is irrelevant: If there is an accusation of bribery, graft, illegal gratification or criminal misconduct against a public servant”, the status of the offender is not relevant


Author argues

At this point author argues that,

  • If the abovementioned is the stated legal position, then there is no rationale as to why a court should be excluded from directing an investigation under Section 156(3) CrPC without sanction but the practical consequences of Aiyappa and Narayana Swamy result in prohibiting even the issuance of a direction for investigation by a court under Section 156(3) CrPC



Author points out that the precondition of “sanction” could give a possible tool to the executive to evade a potential investigation

  • A high-ranked public servant could influence the police not to set criminal law in motion by registering an FIR. And the hands of the court would be tied.


High Courts start to disregard Aiyappa judgement

Author states that several high courts have started to openly disregard Aiyappa

  • Maneesh vs State: The Kerala High Court in Maneesh vs State held the judgment inAiyappa was not binding on it
  • C. Shiv Kumar vs State: More interestingly, the very judge of the High Court of Karnataka who penned down the Aiyappa judgment, which was upheld by the Supreme Court, has in a subsequent judgment in N.C. Shiv Kumar vs State held that his judgment ignored “settled principles established by earlier judgments of the apex court rendered by larger benches”.



Author concludes by stating that it is need of the hour that SC render an authoritative pronouncement and correct the apparent anomalies in the state of the law on sanction.



[2] Cities at crossroads

Indian Express



Article focusses on what is known about waste-to-energy plants


3 essential ingredients

Author states that a credible municipal solid waste management solution should have 3 essential elements,

  • Segregation: Segregation of biodegradable or wet waste from dry waste at source
  • Employing Bio-methanation plants: : Once segregation is achieved, municipal governments can use wet waste to produce compost and biogas in bio-methanation plants
  • Waste-to-energy plants: Dry waste, after removing recyclable elements, should go to waste-to-energy plants: This will reduce the volume of waste that remains to be sent to landfills


Technologies used by Waste-to-energy plants (W2EP)

Author states that a number of waste-to-energy plants are coming up in urban India, using

  • Incineration
  • Refuse Derived Fuel (RDF)-based combustion or conversion technologies such as pyrolysis and gasification


Note: Incineration-based waste-to-energy plants rely on mass burning of municipal solid waste, which involves complete combustion of miscellaneous waste materials into ash. The latter is also true of RDF combustion-based plants


The confusion & questions

Author points out that following questions and apprehensions have been voiced in public domain,

  • Damaging impact: Any potential damaging impact of waste-to-energy plants on the environment, the quality of air in particular, and consequently, on public health
  • Financial feasibility: Whether these plants are financially viable


Need for high quality emission filters

Depending on what is being combusted (and this is a huge challenge to determine with municipal solid waste), the gases generated during combustion of waste may contain dioxins and furans, which are toxic and can be lethal.

  • Emission control: These plants therefore need to put in place emission control filters of a very high standard to check the release of harmful gases into the atmosphere. There is a need for continuous monitoring of emissions and sharing information openly, if public apprehensions are to be put at rest


Global situation wrt incineration based plants

  • Singapore: Singapore uses incineration with due environmental precautions in managing its municipal solid waste after recycling 60 per cent of its waste (among the highest rates in the world)
  • Japan: Japan and a number of European countries also rely on incineration, with due precaution, as they try to minimize the waste that needs to go to landfills
  • United States: The United States had a long free run with incineration plants, but thanks to the environmental movement, there has been a significant tightening of regulations with respect to emissions since the 1970s. The abundance of land in the US led to greater recourse to landfills. But incineration plants are making a comeback and with these, so is the need for vigilance on emissions


Cleaner technologies

Author states that the innovations in waste-to-energy technologies worldwide have been focusing on new technologies which can deliver cleaner emissions but are considerably more expensive, like

  • Pyrolysis
  • Gasification
  • Plasma gasification


How abovementioned technologies work?

These technologies involve,

  • Heating solid waste at very high temperatures: Heating of solid waste at very high temperatures in an oxygen-controlled environment, such that the thermal reactions produce synthesis gas (or syngas)
  • Advantage of Syngas: It has the advantage that it can be burned directly or transported through pipelines and/or tankers for use in electricity generation, refining, chemical and fertiliser industries
  • Expensive: While syngas can be converted into a clean energy source, the technologies are expensive


Examples from India

A waste-to-energy plant based on pyrolysis-gasification technology was set up in Pune in 2012, but it has failed to deliver after repeated trials. Why it failed? It failed due to,

  • High cost of cleaning syngas
  • Number of technical snagsincluding the fact that it had overestimated the calorific value of the waste and underestimated the moisture content. The company now produces RDF using 300 tonnes of dry municipal waste per day — less than half of what was intended in the design of the original plant.


Failure of Pollution control boards

Author states that pollution control boards set up by the government of India and state governments were expected to provide technical assistance and keep a check on the emissions/environmental footprints of waste-to-energy plants but they have not kept pace with the rapidly evolving technology in the field of pollution control and were not able to check routine defaulters


NGT offers a ray of hope

  • NGT was set up: Recognising the need for a more empowered body that could enforce adherence to environmental regulations, the National Green Tribunal was set up in 2010, as an independent judicial body under an act by the Parliament of India
  • Nudging the action out of boards: As a judicial body in charge of supervisory jurisdiction over all environmental matters, NGT has, in many cases, nudged the pollution control authorities and State Pollution Control Boards/Municipalities to act
  • It has been putting the weight of legal compensation and enforcement behind its rulings.


Hopefully, NGT will receive full support from the Central Pollution Control Board in its quest for scientific evaluations of the environmental impact of waste-to-energy plants


Need of subsidy

Author points out that the level of subsidy required to make W2EP financially viable presents another set of problems

  • Significant capital required: These plants involve significant capital investment
  • Cost is higher: The cost of energy produced is higher than from the grid, unless there are government subsidies


Why subsidy should be given for W2EP?

  • Resource recovery: They help in resource recovery by generating electricity from waste
  • Cost savings: They help in saving cost of transportation to a landfill
  • Making electricity produced competitive: Meagre benefits from municipal bodiessuch as land for free or at token amounts plus a tipping fee for each tonne of waste processed doesn’t make the electricity produced from W2EP competitive to conventional sources


Author suggests

A transparent method must be found to determine the maximum subsidy feasible through competitive bidding


Conclusion: W2EP not a solution to our energy problem

Author concludes by stating that it is important to emphasise that electricity generation from waste is not the most efficient way of generating electricity. It is a way of resource recovery from municipal solid waste and should be considered as a by-product of waste management. Enthusiasts sometimes speak of waste-to-energy as a solution to our energy problem — this is not correct. However, if implemented to global emission standards, it could be a pathway to scientific and sustainable disposal of municipal solid waste, given the scarcity of urban land in the country, while also generating some much needed electricity



Live Mint

[1] Tough times ahead for India in Afghanistan

Live Mint



Pakistan has managed to sell the flawed theory that the Taliban can be used to fight the Islamic State


Give it a light read



[2] What is the optimal policy response to demonetisation?

Live Mint



A positive demand shock is not the optimal response to a negative supply shock as it will only exacerbate price pressures


Demonetization has already been covered in ample detail.


Give it a go-through once



9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – 17 January

  • Front Page / NATIONAL [The Hindu]
  1. GST stalemate resolved, rollout deferred to July 1
  2. SC-appointed panel to tackle air pollution
  3. Centre notifies green action plan for Delhi
  4. Supreme Court revives hearing on Andhra Pradesh bifurcation
  5. SC slams States’ stance on PILs
  • Editorial/OPINION [The Hindu]
  1. The pragmatist’s pivot to India
  2. Vagaries of the job market
  3. ‘Serious job losses are taking place’
  • ECONOMY [The Hindu]
  1. Demonetisation has hit India’s growth: IMF
  2. Richest 1% own 58% of total wealth in India
  • Indian Express
  1. Defining The Beneficiary
  2. Who will judge the judges?
  • Live Mint
  1. A time of change for the oil industry
  2. A role for India in rebuilding Syria

Front Page / NATIONAL [The Hindu]

[1]  GST stalemate resolved, rollout deferred to July 1

The Hindu



The Goods and Services Tax (GST) Council arrived at a consensus on contentious issues such as administrative control over tax payers in the new indirect tax regime.


What has happened?

The Goods and Services Tax (GST) Council has arrived at a consensus on contentious issues such as administrative control over tax payers in the new indirect tax regime, thus paving the way for GST to be introduced this year, although three months after the Centre’s original rollout deadline of April 1, 2017.


The consensus

  • A shared taxation base: The entire taxation base will be shared between the assessment machinery of the Centre and the States
  • Who would get to collect tax on the economic activities taking place in Indian territorial waters?
    • As far as the area of 12 nautical miles into the territorial waters is concerned, it’s a part of the Centre’s territory. But as per convention, the States will be empowered to collect tax on any economic activity there
  • Dual control of assessees: As per the formula for dual control of assessees, 90 per cent of those with a GST turnover of Rs. 1.5 crore or less will be assessed for the purposes of scrutiny and audit by the States, and 10 per cent by the administrative machinery of the Centre.
    • Those above a turnover of Rs. 1.5 crore would be assessed in the ratio of 50:50 between the Centre and the States
  • Power to collect IGST: while the power to levy and collect the Interstate GST (IGST) will lie with the Central government, a special provision would cross-empower the States in the same ratio agreed upon for tax assessees.


Way ahead

This consensus would have to be incorporated into the draft legislation, following which all the four draft laws — the Central GST, State GST, Interstate GST, and the Compensation Law — would have to be tabled for approval in front of the GST Council during its next meeting on February 18

  • Following this, the laws would have to be tabled for approval in the legislative bodies of the Centre and the States.



[2] SC-appointed panel to tackle air pollution

The Hindu



Concerned over the deteriorating air quality in Delhi and the NCR, the Environment Ministry has amended laws and formally tasked a Supreme Court-appointed panel with implementing a graded action plan for pollution control.



The comprehensive plan, prepared by the CPCB, focussing on Delhi was submitted to the Supreme Court on December 2. The court had accepted the plan and asked the Centre to notify it.

Once the plan is notified, measures like odd-even car rationing scheme and ban on construction activities will be enforced if level of PM 2.5 breaches 300 micrograms per cubic metre and PM 10 levels stay above 500 micrograms per cubic metre for two consecutive days.


[3]  Centre notifies green action plan for Delhi

The Hindu



Odd-even scheme, halt on construction activities among desperate measures planned to control pollution


What has happened?

Concerned over the deteriorating air quality in Delhi and the National Capital Region, the Environment Ministry has amended laws and formally tasked a Supreme Court-appointed panel with implementing a graded action plan for pollution control.



The comprehensive plan, prepared by the Central Pollution Control Board (CPCB), focussing on Delhi was submitted to the Supreme Court on December 2. The court had accepted the plan and asked the Centre to notify it.


How will the plan work?

Once the plan is notified, emergency measures like odd-even car rationing scheme and ban on construction activities will be automatically enforced in the city if level of PM2.5 breaches 300 micrograms per cubic metre and PM10 levels stay above 500 micrograms per cubic metre for two consecutive days.


Whose responsibility to implement the graded action plan?

Central government has assigned the task of implementing the Graded Action Plan to EPCA (Environmental Pollution Control Authority)


Various provisions of the plan

  • Banning Diesel gensets: The plan recommends that during ‘very poor’ air quality, diesel generators must be banned and parking fee increased by three to four times.
  • Other measures: The plan lists a number of other measures such as closing brick kilns, hot mix plants, stone crushers and intensifying public transport services besides increasing the frequency of mechanized cleaning and sprinkling of water on roads.


Reactions to the plan

NGOs and social activists have welcomed the plan



[4] Supreme Court revives hearing on Andhra Pradesh bifurcation

The Hindu



What better “index” to ascertain whether a State is to be divided or not other than public demand, the Supreme Court said


What has happened?

SC bench has revived a bunch of petitions that were filed by leading Telugu politicians across parties, challenging the bifurcation of the erstwhile State of Andhra Pradesh in 2014. They had wanted the apex court to declare the bifurcation as an illegal and unconstitutional act

  • The petitions claimed that the Centre had introduced the Bill when it was rejected by the Andhra Pradesh State Legislature. It had contended the legality of the provision in the 2014 Act for a common Capital for Telangana and Andhra for a whole decade.


SC issued a notice to centre

Though SC issued a notice to the Centre in 2014, it refused to stay the Andhra Pradesh Reorganisation Act of 2014, leading to the bifurcation of Andhra Pradesh and the formation of new State Telangana


Petitioners demand

Petitioners demanded that there should be a “federal index” for State formation. The Centre cannot be allowed to ride over the federal structure of democracy and divide States into bits.

  • It was then that the CJI asked that “What can be a better index than the entire State (people not the state govt) demanding it [bifurcation],”
  • Sufferings due to bifurcation: Telangana lost 140 of its villages due to the bifurcation, and this was not the first time the people had experienced the sufferings of bifurcation and new State formations.The first time was when Andhra was separated from Madras
  • Violation of basic structure: The petitions said the bifurcation was a violation of the Basic Structure of the Indian Constitution.
  • Against federalism: Petitions further contended that the bifurcation also violated the basic provisions of federalism. The Centre had to first consult the State legislature before passing any law to merge or divide it.


Centre’s response

Centre submitted that a committee had held detailed hearings and filed a report that the people living in parts of the present Telangana wanted a new State.



[5] SC slams States’ stance on PILs

The Hindu



The Supreme Court has slammed several States for their casual attitude towards crucial public interest matters


A fairly simple article.


Give it a go-through

Editorial/OPINION [The Hindu]

[1] The pragmatist’s pivot to India

The Hindu



Article deals with the impact the death of Iranian leader Akbar Hashemi Rafsanjani on January 8 might have on Indo-Iran ties & his role in laying the groundwork for co-operation b/w the two countries


Transforming ties with India

  • Turning point: In September 1993, P.V. Narasimha Rao became the first Indian Prime Minister to visit Iran since the revolution. This, President Rafsanjani noted, was “a turning point”
  • Bailing out India: In March 1994, Iran bailed out India in the UN Commission on Human Rights, blocking a consensus on Kashmir
  • Bonhomie interrupted: 5 months later Mr. Rouhani, then secretary of Iran’s powerful Supreme National Security Council and deputy speaker of parliament, paid a visit to India. He spoke about persecution of minorities, on Babri masjid and the importance of India-Pakistan talks including “true” representatives of Kashmiris, such as the Hurriyat Conference, to resolve the conflict in the Valley. This “unfortunate departure from diplomatic norms”, cast a shadow over relations
  • Rafsanjani cancels his visit: Rafsanjani cancelled his visit to India concerned at being associated too closely with India while the then Organization of the Islamic Conference (OIC) was preparing once more to censure India on Kashmir. This was taken badly in India
  • Change in Iran’s stand: In April 1995, Rafsanjani finally arrived in New Delhi, to be greeted by Prime Minister Rao himself. It turned out to be a landmark visit. Speaking to over 10,000 Shias at Lucknow’s Bara Imambaraand promising ₹10 million for its upkeep — Rafsanjani gave an unexpected endorsement of Indian secularism
  • Three way deal: Rafsanjani signed a three-way India-Iran-Turkmenistan transit agreement, allowing India to avoid Russian or Ukrainian ports
  • Rafsanjani’s trip marked several themes that would shape India-Iranian relations for the next two decades. One was economic diplomacy focussed on connectivity, energy, and trade. Another was mutual concern over the future of Afghanistan, and Pakistan’s role there


Structural factors

Author states that it was not merely Rafsanjani who singlehandedly changed relationship with India. Structural factors, such as India’s economic liberalisation and the situation in Afghanistan, were more important


Economic diplomacy

  • Chabahar deal: Taking economic diplomacy to new levels, both countries signed agreement on Chabahar port in May 2016
  • Oil Trade: In 2016, India’s oil imports from Iran trebled from the previous year, pushing it into fourth place in the ranking of Indian suppliers, and there is pressure on the Reserve Bank of India to allow Iranian banks to open branches in India, which would boost the relatively modest amount of bilateral trade
  • Tehran’s relation with Taliban: Author states that Taliban delegations have been coming to Iran for years and they openly attended December’s International Islamic Unity Conference in Tehran
  • Iran and US: President-elect Trump has time and again called the Iran nuclear deal as amongst the worst ones ever made



[2] Vagaries of the job market

The Hindu




At the onset author states that the mismatch between the number of people reaching the working age and the number of jobs available is matter of global concern

  • In any case, with the growth in global gross domestic product registering a six-year low in 2016, expectations of generation of new jobs were always going to be low


A serious concern

Author directs our attention towards the World Employment and Social Outlook 2017 as per which about 42 per cent of the total working population is affected by a vulnerability. What is the vulnerability?

  • It refers to lack of access to contributory social protection schemes among the self-employed and allied categories, unlike their counterparts in the wage-earning and salaried classes
  • The former segment accounts for nearly 50 per cent of workers in the emerging economies and 80 per cent in developing countries


Another concern

The other implication of an increase in the number of people facing vulnerable working conditions is the real danger this poses of a slowdown in reducing the incidence of working poverty.

  • It is this celebrated rise in income levels in the lowest rungs of the population that lent the current phase of globalization the social and political legitimacy, a phase that has otherwise posed the risks of economic dislocation and unprecedented mass migration


Challenge for policymakers

The challenge for policymakers worldwide is to ensure that incomes do not fall below the levels of basic subsistence as the world marches towards the poverty reduction targets under the 2030 Sustainable Development Goals



[3] ‘Serious job losses are taking place’

The Hindu



Article presents an interview with Nobel laureate Amartya Sen wrt demonetization


Give it a go-through

ECONOMY [The Hindu]

[1] Demonetisation has hit India’s growth: IMF

The Hindu



The demonetisation move could dampen India’s growth by one percentage point in the current fiscal year and 0.4 percentage point next year, compared to its earlier projections, the International Monetary Fund (IMF) said


As per the IMF World Economic Outlook (WEO) update

  • There is marginal upward shift in prospects of growth the U.S and China until 2018, but India, Brazil, and Mexico are among the large economies that have their projections revised downwards
    • Growth estimates: The IMF now expects India to record a growth of 6.6 percent for the current year, and 7.2 percent next year. Earlier, IMF had projected 7.6 percent this year and next year
    • Impact of Demonetization: The downshift is primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative


[2] Richest 1% own 58% of total wealth in India

The Hindu



Article focusses on the findings of the latest Oxfam Study titled “An economy for the 99 per cent”


Findings of the study

  • India’s richest 1 per cent now hold a huge 58 per cent of the country’s total wealth — higher than the global figure of about 50 per cent
  • Just 57 billionaires in India now have same wealth (USD 216 billion) as that of the bottom 70 per cent population of the country
    • Globally, just 8 billionaires have the same amount of wealth as the poorest 50 per cent of the world population
  • 84 billionaires in India: there are 84 billionaires in India, with a collective wealth of USD 248 billion, led by MukeshAmbani (USD 19.3 billion), Dilip Shanghvi (USD 16.7 billion) and Azim Premji (USD 15 billion). The total Indian wealth in the country stood at USD 3.1 trillion


Oxfam said

  • It is time to build a human economy that benefits everyone, not just the privileged few
  • Since 2015, the richest 1 per cent has owned more wealth than the rest of the planet
  • Over the next 20 years, 500 people will hand over USD 2.1 trillion to their heirs — a sum larger than the GDP of India, a country of 1.3 billion people
  • Gender wage gap: Due to a combination of discrimination and working in low-pay sectors, women’s wages across Asia are between 70-90 per cent of men’s


What does the findings show?

  • The poorest half of the world has less wealth than had been previously thought while over the last two decades, the richest 10 per cent of the population in China, Indonesia, Laos, India, Bangladesh and Sri Lanka have seen their share of income increase by more than 15 per cent
  • The poorest 10 per cent have seen their share of income fall by more than 15 per cent


Gender wage gap in India

Oxfam study referred to the recently released Global Wage report and said that,

  • Huge gender wage gap: India suffers from huge gender pay gap and has among the worst levels of gender wage disparity — men earning more than women in similar jobs — with the gap exceeding 30 per cent
  • Poor representation in wage earning category: In India, women form 60 per cent of the lowest paid wage labour, but only 15 per cent of the highest wage-earners. It means that in India women are not only poorly represented in the top bracket of wage-earners, but also experience wide gender pay gap at the bottom
  • Limited agricultural productivity: It also said that more than 40 per cent of the 400 million women who live in rural India are involved in agriculture and related activities. However, as women are not recognised as farmers and do not own land, they have limited access to government schemes and credit, restricting their agricultural productivity.


Read More: You can find the Oxfam study here

Indian Express

[1] Defining The Beneficiary

Indian Express



As the Union budget approaches, debates over welfare grow intense


Give it a go-through once



[2] Who will judge the judges?

Indian Express



In both cases, the Supreme Court reversed its own judgment given a couple of years ago, citing “grave error in justice” as the reason for entertaining respective appeals.


Article is a brief commentary about two recent judgements by Supreme Court of Nepal.


Give it a light read

Live Mint

[1] A time of change for the oil industry

Live Mint



Factors that could shape up the future of oil industry in medium to long term


Structural factors

Author lists out the structural factors that that will shape the industry’s medium to long term future.

  • US Shale industry: Only a decade old it forced Saudi Arabia to scale up its production to the levels of oversupply. Author says that shale industry responds actively to market fluctuations. According to Barclays, capital spending in the US this year will rise 27%, faster than spending by international oil groups. Whatever market demand gap is left open by reduced supply of oil as per recent OECD deal, shale industry will fill it up
  • Diminishing of OPEC: Author points at the lack of unity amongst OPEC nations which means that the compliance of OPEC deal over an extended period of time can be an issue. In condition of non-compliance by a member country, OPEC would need a member which can respond accordingly meaning which can ramp up or scale down the production over and above the OPEC deal commitment. Saudi Arabia has indicated that it might cut production by more than the agreed-upon quantum if needed.
  • Will Saudi Arabia beable to manage the situation?:There is a reasonable chance it will need to do this, given the US shale situation and the possible reneging of other parties to the deal on their commitments. But to what extent will it be able to manage the pain, and for how long, given that it is under considerable economic strain? And if it fails to hold the deal together, what does that signal about Opec’s ability to control the oil market?
  • Steady rise in renewables: In 2015, renewable energy overtook conventional energy in term of new installations for the first time, according to the International Energy Agency (IEA)
    • Can it grow without subsidies?: Author states that this is still new territory and industry’s ability to grow absent subsidies and policy support is suspect; in Europe, investment fell sharply by 21% after clean energy subsidies were withdrawn



[2] A role for India in rebuilding Syria

Live Mint



New Delhi has renewed its pre-war Tishreen power plant commitment but steered clear of any new proposals


Article is a brief commentary about India’s development commitments in Syria, its outlook on Syrian conflict and how it should proceed to help formulate its resolution


Give it a read.




9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – 16th January 2017

Front Page / NATIONAL [The Hindu]

  1. Stay on hearing public appeals till polls
  2. Why can’t FM stations broadcast news, asks SC

Editorial/OPINION [The Hindu]

  1. Julian Assange: Scapegoat or villain?
  2. Smoking e-cigarettes is injurious to health

ECONOMY [The Hindu]

  1. ‘Govt., industry must fight abuse of market power together’
  2. Market regulator tightens merger norms
  3. It’s time to say ‘Irasshaimase’ to Japan
  4. We expect budget to boost employment’

Indian Express

  1. From plate to plough: Growth amidst gloom
  2. The China bogey
  3. Prepare for ‘slow down India’

Live Mint

  1. Demonetisation debates, redux
  2. Reconsidering the 4% inflation target
  3. Water as a force for peace

Front Page / NATIONAL [The Hindu]

[1] Stay on hearing public appeals till polls

The Hindu



Article details Election Commission’s new order

What has happened?

The Election Commission has issued an order barring chief ministers, ministers and political appointees in the five poll-bound States from hearing appeals filed by people before statutory bodies till the election process was over as their decisions could influence voters.

Rationale behind the move

EC has said the hearings by politicians “may have direct or indirect influence on voters and may also disturb the level-playing field” during the elections.

[2] Why can’t FM stations broadcast news, asks SC

The Hindu



If the Supreme Court has its way, private FM radio stations will have an essential role to play in the world’s oldest democracy — dissemination of news.


What has happened?

SC has picked up from a plethora of pending public interest litigation petitions a 2013 one filed by Common Cause regarding broadcasting of news and current affair programmes


The petition

Petition asks for a judicial declaration to end the monopoly of the PrasarBharati Corporation, which owns and operates All India Radio, over news broadcasting and current affairs programmes.

  • The government’s prohibition, Common Cause argued, was in clear violation of the Supreme Court’s landmark verdict in 1995 in the Ministry of Information & Broadcasting vs Cricket Association of Bengal. The apex court then held that “airwaves are public property to be used to promote public good and expressing a plurality of views, opinions and ideas
  • Violation of FRs: Policy Guidelines and of the Grant of Permission Agreements framed by the government which prohibit private FM radio stations and community radio stations from broadcasting their own news and current affairs programmes are clearly violative of the fundamental right of freedom of speech and expression as guaranteed under Article 19 (1) (a) of the Constitution. The right to freedom of speech and expression also includes the right to information, which encompasses diverse interpretations of news and current affairs
  • No such ban in other countries: The NGO argued that no other democratic country had similar curbs. None of the USA’s 14,000-plus radio stations, the 2,000-odd stations in Spain or the 1,000-plus stations each in Italy, France, Greece and Australia are barred from airing news and cultural affairs. In fact, many stations are solely news channels, including specialised ones for community radio


Bench’s contention

The Bench asked

  • Why there should be a continuing prohibition on FM radio stations and community radios from airing their own news and current affairs on a par with private TV channels and the print media
  • Why the government wanted to control news on radio, which covers almost the entire population, even the rural masses, as per official estimates


Directions by Bench

  • Explain gag orders: Bench has directed the government to explain, in four weeks, the series of orders systematically passed between 2008 and 2013 to gag private radio from airing their own news and current affairs broadcasts.


Policy guidelines and regulations

  • On November 28, 2008, the Telecom Regulatory Authority of India recommended that for private FM radio broadcasting Phase III, FM broadcasters “may only be permitted to broadcast news, taking content from AIR, Doordarshan, authorised TV news channels, United News of India, Press Trust of India and any other authorised news agency without any substantive change in the content”.
  • On July 25, 2011, a minor change was made under Phase III policy guidelines for FM to allow broadcast of FM radio news bulletins of AIR without any addition or modification
  • During the third National Community Radio Sammelan on February 10, 2013, the Union Information and Broadcasting Ministry said that community radio stations would not be allowed to broadcast news for some time to come. As a stopgap measure, they could be permitted to re-transmit unedited AIR news.

Editorial/OPINION [The Hindu]

[1] Julian Assange: Scapegoat or villain?

The Hindu



To blame Donald Trump’s victory on Julian Assange or, for that matter, on Russia, not only amounts to a refusal by the Democrats to take responsibility for Hillary’s defeat but is also an insult to the U.S. electorate.

Give it a light read.

[2] Smoking e-cigarettes is injurious to health

The Hindu



In the absence of clear evidence on the effect of e-cigarettes on tobacco de-addiction, the sale of these products must be accompanied by accurate health warnings.


Electronic Nicotine Delivery Systems (ENDS)

Electronic Nicotine Delivery Systems (ENDS), also called e-cigarettes, personal vaporizers, vape pens, ecigars, e-hookah, or vaping devices, are products that produce an aerosolized mixture containing flavored liquids and nicotine that is inhaled by the user. ENDS can resemble tobacco products like cigarettes, cigars, pipes, or common gadgets like flashlights, flash drives, or pens.

  • ENDS are battery-powered; some can be recharged via a USB port, others are disposable
  • Main constituents: The main constituents of the solution by volume, in addition to nicotine when nicotine is present, are propylene glycol, with or without glycerol and flavoring agents


Seller’s contention: tobacco cessation products

Sellers of ENDS market these products as tobacco cessation products meaning they help in tobacco de-addiction


Author’s contention: serious public threat

The tobacco cessation effects of ENDS are not scientifically proven yet, hence, are completely anecdotal at this point. Moreover, absence of any regulatory approval for their use makes them a serious public threat


Increasing import

Market research also projects the compound annual growth rate of the Indian e-cigarette industry at 63.38 per cent in the period 2013-2018 (Research and Markets Report on E-cigarette Market in India 2014-2018)

Cigarettes and Other Tobacco Products Act, 2003 doesn’t cover ENDS

As e-cigarettes contain nicotine and not tobacco, they do not fall within the ambit of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COTPA), which mandates stringent health warnings on the packaging and advertisements of tobacco products


Findings of a survey conducted of 26 prominent and easily accessible e-commerce websites that sell e-cigarettes,

  • 50 per cent have no health warnings on the consumption of e-cigarettes despite the fact that these products contain nicotine
  • 30 per cent display warnings in an inaccessible manner: These websites carry health warnings stating the addictive properties of nicotine and other ill effects of e-cigarettes (including the warning that e-cigarettes are not meant for non-smokers) but do not display them as a part of the description of the product. Instead, these warnings are displayed at the bottom of the web page or clubbed with the section on terms and conditions, unlikely to be noticed by a regular buyer
  • Important dangers missed: Some important dangers of e-cigarettes are not even mentioned on the products. Other dangers posed by e-cigarettes, which do not feature in the health warnings, are the possibilities of the product exploding (incidents have been reported globally) and accidental consumption of the liquid inside the e-cigarette, which leads to death


Unregulated sale of e-cigarettes in India is dangerous. Why?

The current unregulated sale of e-cigarettes is dangerous for a country like India where the number of smokers is on the decline (WHO Global Report, 2015) because of following concerns,

  • Gateway effect: The gateway effect refers to two potential circumstances:
    • The possibility that children (and generally non-smokers) will initiate nicotine use with ENDS at a rate greater than expected if ENDS did not exist
    • The possibility that once addicted to nicotine through ENDS children will switch to cigarette smoking
  • Renormalization effect:The renormalization effect refers to the possibility that everything that makes ENDS attractive to smokers may enhance the attractiveness of smoking itself and perpetuate the smoking epidemic


What should be done?

Accurate health warnings: In absence of any concrete evidence that ENDS promote tobacco cessation, it is imperative that their sale be accompanied by accurate health warnings

  • Significant to India: This is especially relevant in India, where data in the Global Adult Tobacco Survey 2009-2010 suggests that tobacco control laws, particularly the pictorial health warnings and advertisements, mandated under COTPA, have been highly effective in increasing awareness of the health risks of tobacco (smoking as well as non-smoking). More than 70 per cent of persons surveyed noticed health warnings on cigarettes, while approximately a quarter thought of quitting on seeing this warning. The effectiveness of such warnings in ultimately reducing tobacco consumption has also been confirmed by the WHO


Present situation

Lack of a uniform approach: There is a lack of a cohesive approach towards e-cigarettes. Different states in India have taken different routes. Only Maharashtra, Kerala, Karnataka and Punjab have implemented the ban on e-cigarettes. Punjab has classified nicotine as a poison, while Maharashtra treats it as an unapproved drug. Such incoherent policies will only help sellers to scuttle the law via loop holes


Way forward

Imposition of restrictions: The Indian government impose appropriate restrictions on the sale and advertisement, online and otherwise, of e-cigarettes, including proper health warnings, in order to plug the existing regulatory vacuum

Independent research: Simultaneously the government should also commission independent scientific research on the benefits and risks posed by these products in the Indian context.On the basis of this research, it may then make an informed decision regarding their regulation as tobacco imitation products or as therapeutic products.

ECONOMY [The Hindu]

[1] ‘Govt., industry must fight abuse of market power together’

The Hindu



Article contains views expressed by various participants, speaking at a discussion on “Politics of Competition Reforms in India.”


Rajiv Kher (member of Competition Appellate Tribunal)

  • If the spirit of innovation is not thwarted, technology — which had been touching all walks of life — can help mainstream competition up to the municipal level, he said. The term ‘competition policy’ refers to norms preventing restrictive trade practices and abuse of market dominance
  • The consent of all stakeholders, such as the Centre and businesses, is needed to implement norms, right up to the municipal level, against abuse of market power and other illegal practices restricting free trade and competition among businesses
  • Cartelisation: Even municipal institutions are grappling with the problem of cartelisation and such anti-competitive practices


Frederic Jenny’s views (Chairman, OECD Committee on Competition)

  • He referred to the link between trade and competition policy saying most trade pacts that exist have a chapter on competition
  • He said greater competition can lead to increased productivity, investment and economic growth, and in turn reduce poverty. Mr Jenny said in many countries, the poor and the informal sector are the victims of anti-competitive practices that act as a barrier to mobility and access to credit


Allan Fels, former chairman, Australian Competition & Consumer Commission

  • He lauded the political leadership in India for ensuring the passage of the Goods & Services Tax Bill in Parliament, adding that it was also necessary to lay emphasis on the principle of competition.
  • He said it was important to ask whether the firms — that may gain owing to a major tax reduction after the GST comes into effect — will pass on a good part of the benefits to consumers or pocket all the gains.



[2] Market regulator tightens merger norms

The Hindu



SEBI aims to ensure wider public holding, prevent mergers of large unlisted firms with small ones.


What has happened?

In a bid to safeguard the interests of the public shareholders, the Securities and Exchange Board of India (SEBI) has tightened the norms for merger of an unlisted company with a listed entity

SEBI has decided that,

  • Holding of public shareholders post the merger cannot be less than 25%
  • Threshold for institutional shareholders: Further, the watchdog has stipulated a similar threshold for institutional shareholders of the unlisted entity as well, post-merger
  • An unlisted company can be merged with a listed company only if the latter is listed on a stock exchange having nationwide trading terminals
  • E-voting mandatory: To ensure larger say for the public shareholders, the regulator has also made their e-voting mandatory in cases wherein the stake of such shareholders reduces by more than 5% in the merged entity
  • Reduced broker fees: The regulator also reduced the broker fees by 25% from Rs. 20 per crore of turnover to Rs. 15 crore. This will result in reduction of overall cost of transactions and will benefit the investors and promote the development of securities market
  • Include performance of scheme in ads: In order to help mutual fund investors take better informed decisions, SEBI has decided that fund houses will have to include in their advertisements, the performance of the scheme in terms of CAGR for the past one year, three years and five years and since inception.Currently, the fund house only publishes the scheme’s returns for as many twelve month periods as possible for the past three years.


Why this move by SEBI?

  • SEBI was concerned because there have been instances where the route of merger was used to get an indirect listing for an unlisted company
  • There was another category of misuse where under an arrangement; securities were being issued to promoter related persons only.



[3] It’s time to say ‘Irasshaimase’ to Japan

The Hindu



The spirit of ‘welcome’ should aim to cut red tape, remove infrastructure challenges and avoid project delays in India.


Present article seeks to find ways to rejuvenate the partnership between Indian and Japan to blossom into one of the most functional partnerships among nation states in recent history.



As per data from the Japan External Trade Organization (JETRO), Japan’s aggregate outward investment in China during the period 1996-2015 was $116 billion and in India was $24 billion. China has received close to 5 times more investment than India.

  • Targeting $25 Billion annually: The stock of Japanese foreign direct investment globally is $1.3 trillion. The annual outward flow of Japanese FDI is about $130 billion and the U.S. gets about $40 billion annually. India should target at least $25 billion annually for the next 10 years


FDI patterns

From a foreign direct investment (FDI) perspective, based on data from the Department of Industrial Policy and Promotion-India, between April 2000 and September 2016,

  • Japan ranked 4th with an aggregate investment of $24 billion. In comparison, China’s aggregate FDI in the same period was $1.6 billion and that of South Korea was $2.1 billion
  • Annual trade growth from FY95 to FY16
    • Between India & Japan: 6.3 per cent
    • Between India & China: 22.6 per cent


Challenges to the partnership

There are three main challenges which have constrained the Japan-India partnership from achieving its full potential.

  1. Complex regulatory structure: India’s complex regulations, red tape, ad hoc nature of state-level interventions
  2. Logistical challenges: Japanese companies face considerable logistics challenges and non-availability of uninterrupted power supply constrains their manufacturing plans in India
  3. Delays in commencing of projects: While India can emerge as a large market for Japanese infrastructure system exports, there have been incredible delays in the commencement of the projects.


What has government done?

In order to facilitate investment from Japan, the union government has set up a Japan Plus committee which comprised of,

  • 4 senior bureaucrats from the government
  • 3 Japanese officials chosen, one each from Japan’s Ministry of Economy, Trade and Industry (METI), Japan External Trade Organization (JETRO) and the Aichi prefecture
  • Aim: To deal with all aspects of investment mainly challenges faced by Japanese companies post investment


Japan Industrial townships (JITs)

Japan is working on developing 12 Industrial townships called Japan Industrial Townships (JITs) which will operate like Little Japan with all the infrastructure to support the operations of Japanese companies.

  • The JITs face challenges from access to ports, lack of uninterrupted power supply and poor level of benchmarking to global best standards as applicable for industrial parks.


Japanese companies willing to expand in India

As per the JETRO Survey on Business Conditions of Japanese Companies in Asia and Oceania (2015), more than 70% of Japanese companies operating in India have indicated that they will expand operations over the next one to two years.

  • In comparison only 38.1% of the Japanese companies operating in China have indicated that they will expand operations


Tokyo Declaration metrics

The Tokyo Declaration of November 2014 sets a target of,

  • Doubling Japan’s foreign direct investment
  • Doubling the number of Japanese companies operating in India
  • An ambitious investment target of JPY 3.5 trillion ($33.5 billion) within a five-year period. The doubling of foreign direct investment seems unlikely unless some dramatic revival happens


Underperformance vis-a-vis Tokyo targets

  • The number of Japanese companies in India in October 2014 was 1,156 and by October 2015 it was 1,229, an increase of 6%, much lower than the needed growth to achieve the target
  • The cumulative Overseas Development Assistance disbursement by Japan (India is the largest recipient of Japanese ODA) in 2014 was JPY4.6 trillion and in FY 15-16 only JPY 185.6 billion was disbursed


Given the under-performance on all the benchmarks set up under the Tokyo Declaration, timely intervention from the highest levels of both governments can still ensure that the ambitious metrics can be achieved.



The Japan-India relationship is at a unique juncture as Asia is emerging as the powerhouse of the world. The Japanese government must play a more active role in building India’s infrastructure, which will serve as a foundation for sustained economic growth.



[4] We expect budget to boost employment’

The Hindu



While there are hopes and apprehensions on the extent to which the Budget provisions would revive investment and demand, questions abound on how the Budget can be inclusive in its approach and delineate a roadmap for creation of job opportunities.


Article lists down expectations from the budget and challenges it needs to address.


Give it a go-through.

Indian Express

[1] From plate to plough: Growth amidst gloom

Indian Express



Agriculture GDP bucks the trend of decline in other sectors. But can the government help the farmers sustain this growth?


Declining GDP numbers

The first advanced estimates of GDP growth for the financial year 2016-2017 (FY17) show a marginal decline from 7.6 per cent last year to 7.1 per cent this year


A big jump for agriculture

In terms of Gross Value Added (GVA) at basic prices, Agriculture & Allied sectors have registered a big jump from 1.2 per cent in 2016 to 4.1 per cent in 2017 despite being hurt badly by drought from last two years.


  • This sector engages around half the workforce of the country and provides food security
  • Central Statistical Organization (CSO)’s credibility has increased: NITI Aayog had forecasted a higher growth rate of 5.5 per cent and by displaying that it is not swayed by such anticipations CSO’s credibility has increased


Lowest growth rate since 1991

Author points out that the first three years of the present government are likely to yield an agri-GDP growth of just 1.7 per cent per year, and the growth for the forgotten Twelfth Five Year Plan (FYP) (2012-13 to 2016-17) is going to be 2.2 per cent per annum.

  • This will be the lowest growth rate registered in any FYP since economic reforms began in 1991, and way below the target of 4 per cent, indicating the biggest failure of policy making


A lost opportunity

The Kharif foodgrain production in FY17 registered an impressive growth of 8.9 per cent over kharif of FY16, led by a very high pulse production

  • Massive increase in pulse production: Kharif pulses recorded a whopping increase of 58 per cent. This was the result of very high pulse prices — around Rs 180-200/kg in retail markets before the sowing season& a very good monsoon
  • Drop in prices:With a 58 per cent increase in production, prices of tur and moong came tumbling down. In several markets, prices went below the minimum support prices (MSPs)
  • A wasted opportunity:This was a golden opportunity for the government to build a buffer stock of two million metric tonnes and support farmers by ensuring that market prices do not drop below MSP. But this opportunity was not tapped fully; the area under pulses may drop next year, and imports increase.


Kharif Oilseeds: Similar story like pulses

The case of kharif oilseeds was similar.

  • Massive increase in Soybean harvest: Production jumped by 41 per cent, led by the 65 per cent increase in the soybean harvest. As a result, soybean prices crashed in major markets, going below the MSP at places
  • A wasted opportunity: Here also government could have built a buffer stock and not allowed the prices to plummet below MSP but nothing of this sort was done. Hence, oilseed dependency will remain


Opportunity lost

India is the largest importer of pulses and one of the top two importers of edible oils. The total import bill on edible oils and pulses hovers around $12-15 billion. India has had a Mission on Oilseeds and Pulses for the past 25 years, without much success in increasing production. Now, when production jumps, the system is not geared to ensure even the MSP to farmers.

  • This will surely discourage farmers and the country will remain dependent on imports of pulses and oilseeds for years to come.


What should have been done?

  • Removing restrictions: Author states that the minimum policymakers could have done was to remove restrictions on free functioning of exports and markets


Significance of oilseeds and pulses

  • Cutting fertilizer subsidy load: Oilseeds and pulses are grown in relatively less irrigated and poorer regions, consume much less water and fix nitrogen in soil, thus, saving large fertilizer subsidies. Therefore, supporting them should be a national priority
  • Boosts demand: It will also help alleviate poverty faster and boost the demand for manufactured products, thus helping industry. Tractor demand is already showing recovery with a 15-20 per cent growth over the corresponding period last year.



Author concludes by stating that we need an agri-friendly policy which relieves Indian agriculture of the dependency on monsoons. An effective MSP policy will also alleviate the distress factors pertaining to farmers.



[2] The China bogey

Indian Express



New Delhi’s frustration with Beijing ought not lead it into a too-quick embrace of a US-led military alliance


With a regime change comes a change in the mindset. A similar change is being witnessed in US with a new President-elect at the top.

  • While keeping a policy of positive relations with China, US will simultaneously try to create a counterbalance to stop China from assuming a bullying role in South China Sea and further
  • India, Japan and Australia form a key part of that counterbalancing approach


Caution is the way forward

Author points out that in the light of recent downturn in Indo-China relations over NSG membership and Beijing’s technical hold over matter of Masood Azhar in UN, India should be cautious to not be too quick to embrace US –led military alliance in Asia. Why?

  • Unclear outcomes: Because the gains of entering into an Australia-India-Japan-US maritime alliance in the Pacific are not clear
  • Escalation of tensions: It might lead China to escalate tensions along its disputed borders with India, as it has done in the South China Seas. The partnership might give India gains in military technology but that, by its mere existence, is unlikely to deter small wars and conflicts on the China-India border.



[3] Prepare for ‘slow down India’

Indian Express



The only engine that appeared to be running was government expenditure. In this scenario, what can be expected regarding the growth rate in 2016-17?


Engines of growth

Author states that there are 4 engines of growth

  • Government expenditure
  • Private consumption
  • Private investment
  • Exports


Private investment & exports have been slow for many months. Private consumption was strong but post-demonetization it has taken a hit too. So, the only engine that appeared to be running was government expenditure. In this scenario, what can be expected regarding the growth rate in 2016-17?


Loss of 1.5 lakh crore

As per the advance estimates of GDP for 2016-17 (data till October 2016), released by CSO,

  • Decline in GDP: Projections show decline in GDP from 7.56 per cent in 2015-16 to 7.09 in 2016-17. That is a hit of 0.5 per cent. There is sufficient evidence that, post-demonetisation, the economy will slow down further. Author says that his prediction of at least 1 per cent decline in GDP post-demonetization will come true.That is a loss to the economy of Rs 1,50,000 crore


What CSO’s estimate tell us about the engine of Investment?

The critical number is Gross Fixed Capital Formation (GFCF), which is a measure of investments in the economy

  • CSO estimate: The CSO estimates that GFCF will decline by 0.2 per cent in 2016-17. The decline will be steeper because it is unlikely that any investment would have taken place post-demonetization
  • Consecutive shrinkage in GFCF: Author states that a close look at the CSO’s estimates reveals that for three consecutive quarters the GFCF has shrunk compared to the corresponding quarter of the previous year, and the rate of shrinkage has accelerated:

Jan-March 5.35 -1.90
Apr-June 7.11 -3.10
July-Sep 9.70 -5.59


Other dismal indicators

  • Decline in government & private sector investment: Both the government sector and the private sector announce new projects and the projected investments in those projects are tallied every quarter. Between Oct-Dec 2015 quarter and Oct-Dec 2016 quarter, the value of government sector projects that were announced declined from Rs 256,669 crore to Rs 42,128 crore and the value of private sector projects declined from Rs 119,475 crore to Rs 86,645 crore
  • Decline in Foreign Portfolio Investment: FPI investment has turned negative at the end of December 2016


Summing the data

Author states that above data showing a declining investment in the country will cause a decline in the growth rate of the economy. It further means fewer jobs, more layoffs or retrenchment, low growth in incomes, and fewer people lifted out of poverty

Live Mint

[1] Demonetisation debates, redux

Live Mint



A sharper temporary liquidity crunch, inflicting higher short-term costs, will likely induce, in the end, greater medium- to long-term gains in the form of digitization and formalization.


Give it a go-through



[2] Reconsidering the 4% inflation target

Live Mint



In determining the inflation target, there appears to be a trade-off between overcoming the zero lower bound problem and improving welfare.


Give it a go-through



[3] Water as a force for peace

Live Mint



The growing recognition of water’s strategic relevance reflects global developments.

Author’s contention

Author states that on a global level, role of resources especially water has begun garnering attention that it deserves. He states that,

  • Both Kofi Annan and Ban-ki Moon have argued for some two decades that protecting and sharing natural resources, particularly water, is critical to peace and security but it was not until November 2015 that the issue gained widespread acknowledgement, with Senegalholding the UN’s first-ever official debate on water, peace and security
  • The growing recognition of water’s strategic relevance reflects global developments


Debate on water, peace and security

The debate brought together representatives of 69 governments, which together called for water to be transformed from a potential source of crisis into an instrument of peace and cooperation


Global developments indicating water’s strategic relevance


Utilization by Extremist groups

  • IS: In the last three years, the Islamic State (IS) captured the Tabqa, Tishrin, Mosul, and Fallujah dams on the Tigris and Euphrates Rivers. IS subsequently lost control of all of them, but not before using them to flood or starve downstream populations, to pressure them to surrender
  • Extremist groups in South Asia have also threatened to attack water infrastructure


Importance of water is comparable to oil

The importance of water in the 21st century—comparable to that of oil in the 20th—can hardly be overstated.

  • No alternative to waterunlike oil: The reality is that oil has alternatives like natural gas, wind, solar, and nuclear energy. By contrast, for industry and agriculture as much as for drinking and sanitation, the only alternative to water, as former Slovenian president Danilo Türk once put it, is water
  • River Chagres: Author cites the example of River Chagres which feeds Panama Canal through which 50 per cent of the trade between Asia and Americas flows. There is no risk of the natural depletion of the river flow for the next 100 years, but in the event of a security crisis in Central America, it could be taken over by rogue forces. The impact on the global economy would be enormous


What can be done to protect water resources and installations in conflict zones?

Presently Red Cross negotiates safe passage for technicians to inspect and repair damage to water pipes and storage systems in Iraq, Syria and Ukraine; but each passage needs to be negotiated with governments in conflict and rebel commanders—a long and cumbersome process.

A better approach: A better approach would be for great powers, with their considerable influence, to negotiate short-term ceasefires in areas experiencing protracted conflict, specifically to repair and restore water systems. What needs to happen for this approach to fructify?


Declaring water a ‘strategic resource of humanity’

Author states that to pave the way for such an approach, however, the UN Security Council will have to declare water a “strategic resource of humanity” and adopt a resolution to protect water resources and installations, similar to Resolution 2286, adopted in May 2016 to protect medical facilities in armed conflicts


What can be done in the long term?

In the longer term, countries that share riparian systems will need to establish regional security arrangements to preserve and protect their resources.


Blue fund for Congo Basin

Denis Sassou-Nguesso, president of the Republic of the Congo, is at the forefront of this movement for shared arrangements, leading a group of eight governments towards the establishment of the Blue Fund for the Congo Basin.

  • If successful, the Fund will help to mitigate climate change, create new avenues of river-based employment, and promote collective security in an unstable region
  • The Africa Action Summit in Marrakech November 2016described the fund as one of the four key ideas that can transform the continent



Author concludes by stating that we need similar funds like Blue Fund for Congo Basin to emerge to protect all of the world’s 263 shared river basins and lakes. It is a huge challenge; but, given the power of water to sow conflict and support peace, we must confront it head on.




Mains Marathon

Answered : Mains Marathon – UPSC Mains Current Affairs Questions – January 12

9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – 12 January 2017

  • Front Page / NATIONAL [The Hindu]
  1. Air pollution a national problem
  2. Green tribunal orders test of cosmetics containing microbeads
  3. Talaq certificates issued by Chief Kazi has no legal sanctity, says Madras HC
  4. SC may hear plea on tax relief for political parties
  1. Kenya for enhanced ties with India
  • Editorial/OPINION [The Hindu]
  1. Elections are not a referendum
  2. Fifty days later
  3. Missing the Asian tailwind?
  • ECONOMY [The Hindu]
  1. World Bank cuts India’s FY17 growth forecast
  2. NITI Aayog projects 8% growth rate
  • Indian Express
  1. The ordinance overreach
  2. What we need to guard
  3. Should Hear Them
  4. Rain shadow south
  • Live Mint
  1. Demonetisation and monetary policy

Click here to Download 9 PM Daily Brief PDF (12th Jan. 2017)

Front Page / NATIONAL [The Hindu]

[1] Air pollution a national problem

Air pollution is at alarming levels in India.
A Greenpeace Report shows that 90% of the cities studied have pollution levels higher than prescribed standards.
Quick Bits:
• According to the analysis by Greenpeace for 2015 data, 154 out of 168 were found to have an average Particulate Matter(PM)level higher than the national standards.
• The analysis is made by Greenpeace by comparing PM10 levels.
• Air pollution problems are more aggravated in North and Central India than compared to South India.
• This is because of geographical facts like Himalayas, cool weather and big industrial clusters whereas South India has the benefit of mixing sea breeze.
• Fossil fuels were the biggest contributors to the particulate matter.
• Delhi has the most polluted air among all cities in India.
In Depth:
In North India:
• The 4 worst cities are Ghaziabad, Allahabad and Bareilly in Uttar Pradesh and Faridabad in Haryana.
• The average annual concentrations in these cities were found to be 4 times more than the standard.
In South India:
• All 10 of the least polluted cities were in the South and the East, 8 in Karnataka, one each in Odisha and Tamil Nadu.
• Hasan in Karnataka came close to the air quality standards prescribed by the World Health Organization.
• Chennai on the contrary despite being in the coast is found to have a very high PM10. A diesel powered public transport system and a power plant were the major factors behind this.
However Pollution should be treated as a national level problem says one of the authors of the report.

[2] Green tribunal orders test of cosmetics containing microbeads


Cosmetics containing microbeads can be dangerous for aquatic life and environment.

What are microbeads?

  • Microbeads are tiny plastic substances measuring less than 5mm
  • They are used in soaps, toothpastes and beauty products.

Why Microbeads are used in Cosmetics?

  • They act as exfoliators i.e. agents which remove the dead cells on skin and teeth.


  • A plea in National Green Tribunal (NGT) has sought a ban on the usage of microbeads.
  • Consequently the NGT has directed the Central Drugs Standard Control Organization to test cosmetics containing microbeads.


  • Triple Talaq is a Muslim social practice by which a man divorces his wife.
  • A Public Interest Litigation (PIL) petition is moved by a senior advocate in Madras High Court to declare the certificates of Kazis as illegal


  • The certificates issued by Kazis are done in an arbitrary manner without reconciliation and even without the knowledge of women concerned.


  • Kazis were once considered judicial authorities under Muslim Personal Law.
  • Their legal sanctity was abolished when the British regime established the courts.
  • The Kazi act of 1880 did not vest any powers of adjudication with Kazis.


By the petitioner:

  • It creates confusion in the matrimonial proceedings
  • The facts that persuade a Kazi to issue a certificate has not been set out.

[4] Supreme Court may hear plea on tax relief for political parties


  • A writ petition has been filed to declaresome provisions in the Income-Tax Actof 1961 and the Representation of the People Actof 1951 as unconstitutional

What are those sections?

  • Section 13A of the Income-Tax Act of Section 29 of the Representation of the People Act.

What they do?

  • These sections give 100 per cent tax exemption to political parties.


  • The petition has questioned the logic behind the fact that ordinary citizens are taxed while the political parties enjoyed tax exemption.
  • In the recent demonetization move, the Finance secretary has exempted the political parties from any inquiry for deposit of old notes. The petition contended this move.
  • The petition also asked whether the Constitution recognizes the need for a political party membership for membership in Parliament and State Legislative Council and Assembly

The petitioner also complained that the parties does not do social and moral service but are only at the root of corruption.


[1] Kenya for enhanced ties with India


President Uhuru Kenyatta visited India for Vibrant Gujarat summit and he arrived in Delhi to meet our Prime Minister Narendra Modi.

In Depth:

Kenyatta has asked India to deepen its multilateral cooperation and invest in Kenya in Agriculture, Security and Health sectors.


  • Kenya invited India to engage more actively in the COMESA (Common Market for Eastern and Southern Africa).
  • Both the countries arrived at an agreement on a Line of Credit of 100 million for agricultural mechanization
  • Both the leaders also reviewed progress on the commitments they agreed upon during our Prime Minister’s 2015 visit to Kenya. One example is Rift Valley Textiles Factory (RIVATEX) which is being upgraded at present with a fund of USD 30 million


India invited Kenya to join the International Solar Alliance (ISA)

United Nations Reforms:

Both the countries agreed to work for reforms in United Nations Security council

  • A seat for Africa has been sought by Kenya and it supported India’s attempt to secure a seat in the Security Council
  • Africa despite its huge size and complexity does not have a seat in Security Council


  • Kenya sought India to work for a unified strategy to combat international security threats and money laundering
  • Both the sides agreed to work for an enhanced cooperation in areas of maritime security

India has also invited Kenya to participate in exhibitions like Aero-India and DEFEXPO.

Editorial/OPINION [The Hindu]

[1] Elections are not a referendum


Context – The reduction of Assembly elections to a referendum diminishes the political competence of voters to decide what sort of a government they wish to be ruled by.


  • Many political parties are propagating the wins and losses in the upcoming electionsas the referendum over the demonetization policy.
  • Comparing elections with referendum is not viable.
  • And motive of the referendum should be to assess whether citizens are with r against policy.
  • Referendum doesn’t make sense after the policy has been implemented.
  • The United Kingdom held a referendum last year on whether citizens wish to leave or stay in the European Union.
  • The measure enabled citizens to influence subsequent policies of the government. They exercised political choice.
  • Ex-post facto referendums are in this sense meaningless.
  • If the BJP does not win in politically significant States, the policy of demonetisation will hardly be rolled back.

Implications of depicting elections as referendum

  • Reduction of State Assembly elections to a referendum diminishes the political competence of voters to decide what sort of a government they wish to be ruled by.
  • Elections, unlike referendums, are not an isolated instance.
  • They represent a decisive moment in long-term civic engagement with structures, institutions, and holders of power.
  • Voters have to decide whether the government has improved the conditions in which they eke out a livelihood, or worsened them.

Role of civil society

  • Citizens have right to know how government arrived at informed and reflective decisions on what should be done.
  • The site for the acquisition of political wisdom and competence is civil society
  • A non-partisan and non-hysterical media has a crucial role to play in the making of enlightened public opinion.
  • Social audits and report cards issued by civil society organisations, which keep anxious watch on acts of omission and commission by the government, are of equal importance.
  • The identification of crucial issues, analyses and recommendations by committed activists contribute greatly to the making of political judgment.
  • Hence the votes should not be treated as a yes to the policies implemented by the government.

[2] Fifty days later


IssueAfter completion of 50 days Prime Minister Modi announced relief rather than achievements.


On the New Year’s Eve, after completion of 50 days post demonetization, PM Modi announced a relief package for senior citizens, women, farmers and small businesses, essentially those the demonetisation has hit hard.

Usually relief is provided against calamities, accidents, disasters or economic slowdown.

It indicates that the demonetization plan didn’t go as per plan.

What was the process followed in the process of demonetization:-

  • On November 7,RBI received a letter from the government containing advice from the government for the RBI to withdraw the legal tender of Rs. 500 and 1000 notes.
  • The stated objectives weremitigation of:-
  1. Counterfeiting,
  2. Terror financing
  3. And black money
  • According to the government advice to RBI to place the matter before board urgently, board met the subsequent afternoon.
  • The meeting was attended by 3 of the 10 independent members.
  • After considering the proposal, RBI provided its approval.
  • Hours later, on the same evening, Mr. Modi obtained his Cabinet’s approval.
  • By the mid night, demonetization was brought into effect by the government.

Has it curbed the black money?

  • Raiding authorities discovered crores in the rationed new 2,000 notes across the country.
  • Suspension of at least four RBI employees and arrests of various bank officials show, the demonetisation has spawned new black markets.
  • In the short term it seems that black money market has not been effected by demonetization.

[3] Missing the Asian tailwind?


Context – How India can surpass China in growth and development

Some historical facts

Till 1757, India was the richest country with its wealth based on textile export.

The loot by British oiled the Industrial Revolution (textile production), and brought about colonization and impoverishment.

In 1950, India was richer than China; now it is a fifth the size of the Chinese economy.

Status of India in Asia

  • “Look East Policy” enunciated in 1992 was not been successful.
  • While India has invested $500 million in chabahar port of Iran, China has invested $46 billion in the China-Pakistan Economic Corridor (CPEC).
  • Despite investments in Afganistan, India has not been an important country for them.
  • Only Bhutan can be considered to be in our “sphere of influence”.

Influence of China’s One Belt, One Road (OBOR) initiative

  • Russia and the Central Asian countries are linking their infrastructure to China’s One Belt, One Road (OBOR).
  • Chinese investment is also attractive to Europe, Malaysia, Thailand, Myanmar.
  • India alone in continental Asia does not support the OBOR, which spans:-
  • More than 65 countries, three-quarters of known energy resources,
  • Envisages an investment of $4 trillion
  • And is estimated to cover two-thirds of the global population and GDP.

US vs China

  • The re-emergence of China has limited the ability of the U.S. in setting the global agenda as usual.
  • US initiatives like ‘Trans-Pacific Trade Partnership’ and opposing in South China sea to deter China have been failed.
  • But there is lesser chances of trade war between both countries due to their structures, with China’s low labor cost manufacturing and US’s using high-efficiency robotics.
  • As the U.S., Russia and China have strengths in individual sectors, their relations may well get better.

Power realignment

  • New US president is moving away from military alliances to ramping up military superiority based on technological leadership making UN redundant.
  • A deal with Russia recognising spheres of influence in Europe and West Asia would make NATO redundant.
  • New US president is focusing more on the trade deals rather than the security concerns.

Should India Consider joining OBOR?

  • With the changes in the global scenario and importance of the world powers, India should also consider changing its strategies.
  • China’s national goal is to double its 2010 GDP and per capita income by 2020 for which the OBOR is considered essential.
  • China is keen that India join that initiative, providing the opportunity to reset relations.
  • We should become a partner in the OBOR adding a “Digital Sustainable Asia” component.

Participation in the OBOR and treating the Line of Control as a “soft border” will be the bold vision needed to exorcise the ghosts of 1757.

ECONOMY [The Hindu]

[1] World Bank cuts India’s FY17 growth forecast


Context – The World Bank has lowered its growth forecast for India to 7 per cent from 7.6 per cent in 2016-17.

Reasons of slowdown

  • Slowdown in consumption and manufacturing due to demonetisation
  • An ongoing decline in private investment
  • And credit constraints due to impaired bank balance sheets.
  • Weak industrial production and manufacturing

Reforms that can help growth rebound

  1. Bankruptcy and insolvency code,
  2. The liberalization of FDI norms across sectors,
  3. The passage of the Goods and Services Tax (GST) Amendment Bill,
  4. And the agreement between the government and the Reserve Bank of India on a monetary policy framework
  5. Infrastructure spending should improve the business climate and attract investment in the near-term.
  6. The ‘Make in India’ campaign may support India’s manufacturing sector, backed by domestic demand and further regulatory reforms.”

Short term problems of demonetization

Demonetization could cause major problems in the short term, like:-

  • Slowing reforms
  • And affecting smaller economies dependent on the Indian economy
  • Disrupting business and household economic activities.
  • Effect on trade and remittance channels could also affect growth rates in smaller economies such as Nepal and Bhutan.

[2] NITI Aayog projects 8% growth rate


Context – NITI Aayog has estimated a growth rate of 8% for 2016-17.


  • The 12th Plan is the last five-year Plan
  • From 2017-18, the Centre would adopt a three-year action plan and a fifteen-year vision document.

Positives for the economy

  • A large number of reforms by the present government over the past two years created a ‘strong foundation’ for such a growth trajectory

Areas to be considered

  • NITI Aayog stated that much needed to be done to spell out tax laws clearly so that future investors can assess their liabilities with reasonable certainty.
  • “Urgent attention” was needed for simplification of regulatory cum administrative procedures.
  • A key lacuna in the Indian growth story has been slow growth of manufacturers in general and labour-intensive manufacturing in particular.
  • Sectors in which India lags behind are electronics, food processing, leather, and textiles and garments.

Indian Express

[1] The ordinance overreach


Context – Supreme Court in Krishna Kumar Singh’s case, has reiterated the principle that re-promulgation of ordinances is a fraud on the Constitution and a subversion of the democratic legislative processes.

The reason given for that is that re-promulgation represents an effort to overreach the legislative process.

What was the issue?

  • The Enemy Property (Amendment and Validation) Ordinance was first promulgated on January 7, 2016, with the ostensible objective of:-
    • o Plugging loopholes in the principal act
    • o And to ensure that the enemy properties worth thousands of crore do not revert to the legal heirs.
  • And this Enemy Property ordinance has been re-promulgated 5th time in the last of 2016.
  • The ordinance was issued to frustrate the judgment of the Supreme Court in the case of Raja Amir Mohammad Khan of Mahmudabadwho won a long and arduous legal battle for his properties.

Rules related to ordinances

  • An ordinance under Article 123 of the Constitution shall cease to operate at the expiry of six weeks from the reassembly of the Parliament.
  • It may also cease to operate before the expiry of the period of six weeks if a resolution disapproving it is passed by Parliament.

Effect of the ordinance

  • Government has attempted to nullify the judgment, decree or order of any Court by inserting Section 8A (1) in the ordinance.
  • Section 8A (1) empowers the custodian to dispose of “enemy properties” whether by sale or otherwise notwithstanding any judgment, decree or order of any court, tribunal or authority.
  • The government, by re-promulgating the Enemy Property ordinance for a record fifth time, has converted the emergent power under Article 123 into a source of parallel law-making

What was the SC judgement?

  • Supreme Court, in Union of India and Anr. v. Raja Mohd. Amir Mohd. Khan had held that:-
  • “The Respondent who was born in India and his Indian citizenship not being in question cannot by any stretch of imagination be held to be an enemy or enemy subject”.
  • The ordinance removes the substratum of the judgment of the Supreme Court which is binding law under Article 141 of the Constitution.

Why this attempt was wrong?

  • This attempt by the government to re-promulgate ordinances in the absence of parliamentary approval, is contrary to the intent of our founding fathers and the mandate of the Constitution.
  • Constituent Assembly (CA) during the debates was of the opinion that the said power ought not to be exercised merely to circumvent a failure to muster support in the legislature.
  • Situations where ordinance route may be taken:-
    • o Article 123 and 213 of the Constitution will be taken in emergent circumstances when the legislature is not in session
    • o and extraordinary circumstances warrant the exercise of authority
  • The satisfaction of the president at the time of the promulgation of an ordinance is within the purview of judicial review.
  • Parliamentary supremacy and the power of judicial review are the cornerstone of our democratic republic.
  • And these types of re-promulgations are threat to the sovereignty of the parliament.

[2] What we need to guard



The US Supreme Court has deduced rights of privacy and parenthood.

A similar approach has been adopted by Irish courts in the Republic of Ireland

Approach by Indian SC

India’s SC has also deduced fundamental rights which are not specifically mentioned in theconstitution.

This step of SC was based on the principle that certain unarticulated rights are implicit in the enumerated guarantees.


Freedom of the press has been deduced on the ground that it is implicit in the guarantee of freedom of speech and expression.

The right to travel abroad and return to one’s country has been spelt out from the expression “personal liberty” in Article 21 of the Constitution.

The Court has also ruled that right to education until the age of 14 is a fundamental right emanating from the all-pervasive Article 21.

What our constitution makers believed?

Our Constituent Assembly believed that:-

  • Fundamental rights are not merely a gift from the state to its citizens.
  • Individuals possess basic human rights independently of any Constitution.
  • A Constitution does not “confer” fundamental rights. It confirms their existence and accords them protection.

Restrictions on the fundamental rights:-

  • No fundamental right is absolute.
  • Every Constitution provides for restriction of fundamental rights in general public interest.
  • However, the restriction imposed should not be excessive or disproportionate.

Supreme Court judgement

State of Madras v. V.G. Rao in March 1952 emphasized that:-

If the impugned legislation violated a fundamental right it would have to be struck down because as regards “fundamental rights”, the Court has been assigned the role of a protector.

Attacks on the fundamental rights and

Fundamental right of freedom of expression and personal liberty are the favorite targets of authoritarian regimes.

Serious violations of fundamental rights occur during emergencies.

Excuse given is that fundamental rights are required to be suspended temporarily in order that the nation may survive.

Achievements of PIL

A notable step towards protecting the fundamental rights of the individuals is the instrument of PIL.

  • Numerous prisoners languishing in jails inordinately awaiting trial have been released;
  • Persons treated like “serfs” and held in bondage have secured freedom and have been rehabilitated;
  • Conditions of inmates in care homes and in asylums for the insane; and of workers in stone quarries and brick kilns, have been ameliorated.

PIL has a salutary effect on administration which knows that it has to conform to the discipline of fundamental rights.

[3] Should Hear Them


Context:-Governor of RBI will soon be briefing the committee on finance on the impact of demonetization and giving evidence to the public accounts committee on the monetary policy of the country.

In the past too, in June 2016, RaghuramRajan had briefed the finance committee on the state of the economy, the role of RBI and the banking sector in the country.

Structure and responsibilities of the committees:-

  • The public accounts committee of Parliament has been in existence since 1921, while the departmentally related committeeswere given final shape in the early nineties.
  • Members of Parliament from both houses are part of these committees.
  • They scrutinize:-
  • Legislative proposals initiated by a ministry,
  • Government demands for grants, annual reports,
  • Long-term policy documents presented to Parliament

These committees do the heavy lifting of parliamentary oversight of government functioning.

Committees are empowered to call witnesses to give evidence and produce required documents.

Proceedings behind closed doors:-

  • These committees meet in the private.
  • Their meetings are only open to the members or anyone who is invited.
  • The deliberations of the committee are confidential.
  • Evidence tendered before it is usually kept secret and made public only after the committee presents its report.

Benefits of privacy

  • It promotes the free exchange of ideas between participating MPs.
  • The absence of cameras live telecasting its proceedings discourages political grandstanding.

Open proceedings in western countries

  • This logic of free exchange of ideas does not apply for keeping the testimony of individuals before committees’ secret.

For example

  • In the US, statements made before committees of Congress are open to the public and are also telecast live.
  • The chairman of the Federal Reserve, Janet Yellen, routinely testifies before committees of the House of Representatives.
  • In the United Kingdom, the House of Commons publishes a calendar of select committee meetings which are open to the public.

Examples of open proceedings in India

Last year, a committee of the Delhi Vidhan Sabha looking at irregularities in sports administration bodies of cricket and hockey allowed the press to view its proceedings.

In 2008, the Goa Vidhan Sabha had also opened up its committee meetings to both the public and press.

In the 13th Lok Sabha, the chairman of the joint committee examining the Stock Market Scam briefed the press at the end of each committee meeting.

How it should be done?

The proceedings of the committees can be opened in multiples ways:-

  • Lok Sabha and Rajya Sabha television to telecast the testimony of witnesses.
  • Publication of the transcript of testimony.
  • Allowing the general public to view evidence proceedings of committees.

Rules of parliament

  • Rule 269 of the rules of procedure of the Lok Sabha gives the chairman of a committee the discretion to allow evidence presented before it to either be treated as confidential or made public.

Way ahead

  • It takes a minimum of three months to finalise the report of a parliamentary committee.
  • The current rules can be amended to enable uploading of the evidence given before the committees before the final report is published.
  • These changes will have to be tempered to assure individuals that they can testify freely before committees.

[4] Rain shadow south


Issue:-Recently, Tamil Nadu declared a drought.

North-East monsoon failure

  • North East monsoon with 45.2 percent below normal rainfall has failed in southern peninsula, including Tamil Nadu.
  • This is the worst since the 48.3 per cent deficit recorded in 2011.
  • South India’s combined reservoir levels were 22 percentage points less than the average water availability over the past 10 years, in the end of 2016.

Double blow

  • Tamil Nadu, Kerala and south interior Karnataka and coastal Karnataka had already reported respective shortfalls of 19 per cent, 34 per cent, 21 per cent and 21 per cent during the southwest monsoon.
  • Corresponding deficits of 62 per cent, 61 per cent, 70 per cent and 63 per cent reported for the northeast season makes matters worse for these regions.


  • There are serious implications of this failure for crops like paddy and coconut and will impact milk and sugar production, especially in Karnataka.
  • It may also accentuate inter-state river disputes, especially the sharing of Cauvery waters.
  • Tamil Nadu had targeted 14.5 lakh hectares under rice in 2016-17, but barely seven lakh hectares was under the plough by January 5.
  • The shortfall will also impact livelihoods and have repercussions on the mechanisms to deal with crop failure.

Live Mint

[1] Demonetisation and monetary policy


The reasons for demonitisation are non-economic. The recent demonetisation in India can be viewed as part of experiments with monetary policy around the world. It undermines the independence of Central Banks

In Depth:

The Global Growth:

  • Global growth has remained largely uneven before the Industrial Revolution and without technological innovations the average growth rate is less than 1% per annum
  • The periods of growth were not continuous. They had sharp declines in between as well
  • Global growth rose dramatically to average 3.8% between 1950 and 2014.

The following factors are responsible for this growth in world economy

  • Initially America came out of Great Depression during world war economic efforts
  • Later Europe and Japan during Post war economic reconstruction and boom
  • The growth was sustained by the development of East Asia,
  • More recently China and India contributed to the growth

The remarkable fact that the global economy has not seen a single year of negative growth after 1950 can be ascribed to advances in monetary policy.

Changes in Economic Policies:

  • The macroeconomic policy was initially limited by the gold standard. But in 1970, the world dropped the gold standard and added currencies as a new tool for expanding and contracting money supply at will. This resulted in Hyperinflation.
  • As financial markets developed, advanced economies moved away from monetary aggregates to the overnight policy interest rate as the chief instrument to modulate the demand and supply of money

Three separate developments exposed the vulnerability of central banks

  • Globalization
  • Ageing and declining productivity growth
  • Monetary Policy overreach

Quantitative Easing:

The Bank of Japan deployed quantitative easing (QE) to stimulate growth when policy interest rates became zero. QE helped stabilize financial markets in 2008-09, but later they became less effective


Unconventional monetary policies have produced the best results but it had negative consequences. Macroeconomic policies must be combined with structural policy and reform to make them effective. Central banks must return to a time when monetary policy did not have much role and was focused on financial markets and growth stability.




9 PM Daily NEWS Brief

9 PM Daily Current Affairs Brief – 11 January 2017

  • Front Page / NATIONAL [The Hindu]
  1. SC orders audit of 30 lakh NGOs
  2. NGT panel to inspect major waste generators
  3. Make solar rooftops mandatory
  4. Cash for land is just not done: SC
  5. Effects of Endosulfan devastating: SC
  • Editorial/OPINION [The Hindu]
  1. Taking ‘Cold Start’ out of the freezer?
  2. Mind the gender gap
  3. Reaching out to Africa
  • ECONOMY [The Hindu]
  1. India opposed to inclusion of ‘new issues’ in WTO
  2. Benefits of demonetisation uncertain in long run
  3. H1B visa reform to increase IT firms’ margin pressure
  • Indian Express
  1. Central To The Market
  2. An autonomy policy
  • Live Mint
  1. Time to revamp the tax administration
  2. Demonetisation and budgets

Click here to Download 9 PM Daily Brief PDF (11th Jan. 2017)

Front Page / NATIONAL [The Hindu]

[1] SC orders audit of 30 lakh NGOs

The Hindu


SC issues directions to the government regarding funding of NGOs

What has happened?

SC has issued directions to the government to audit nearly 30 lakh NGOs which received public funds but consistently failed to explain how they spent the money.

Only few NGOs file returns

Though public funds to the tune of thousands of crores are spent on NGOs and voluntary organisations annually, the CBI submitted that only about three lakh of about 32 lakh NGOs file their balance sheets with the government.

 SC’s observations

  • Mere blacklisting: SC said that the only action so far against those who have failed to file their balance sheets is blacklisting. It is necessary to start criminal and civil action by the Central government and CAPART (Council for Advancement of People’s Action and Rural Technology)
  • Unaware of General financial rules: At one point, the court was taken aback when it found that despite the large amounts drawn from State coffers and given to NGOs, the government seemed to be unaware that General Financial Rules, 2005 mandate a regulatory mechanism for them. “This is your [government] money and you have no record of how they [NGOs] use it?” Chief Justice Khehar asked the government

SC ordered that

  • Prosecution: It ordered that any NGO found to have cooked its books or indulged in misappropriation should be subject to immediate criminal prosecution. Besides, the government should initiate civil recovery proceedings against such rogue organisations
  • Frame guidelines: By next hearing, the government should have framed guidelines for their accreditation, the manner in which these organisations should maintain their accounts and the procedure for recovery in case they fail to submit their balance sheets.

 Compliance report

The Supreme Court demanded that the government file a compliance report by March 31, 2017.

[2] NGT panel to inspect major waste generators

The Hindu


The NGT expressed concern that public authorities lacked infrastructure and appropriate technical capacity to handle such huge quantity of waste

What has happened?

The National Green Tribunal (NGT) has constituted a committee to inspect major waste generators in the Capital, including five-star hotels, malls, hospitals, educational institutions with hostels and housing societies.

Members of the committee

The panel will include

  • Representatives of the ministries of Environment and Urban Development, Director General of Health Services, MCI, the DDA, the civic bodies, the Delhi government, the CPCB, the Railways and the DPCC
  • The committee also comprises four independent experts

NGT’s concern

The NGT expressed concern that public authorities lacked infrastructure and appropriate technical capacity to handle such huge quantity of waste

NGT Bench observed that

  • Mass generators of waste cannot be equated to households generating trash: Generators of mass municipal solid waste and sewage must ensure strict enforcement of the municipal solid wastes (Management and Handling) Rules, 2000.

[3] Make solar rooftops mandatory

The Hindu


CSE: Solar panels on rooftops should be made mandatory for new residential societies.

 What has happened?

Solar panels on rooftops should be made mandatory for new residential societies, recommended the Centre for Science and Environment (CSE) in a policy brief

CSE’s findings

  • After studying the electricity consumption of five residential societies in Delhi, Jaipur and Ghaziabad, the CSE found that by switching from diesel generator (DG) sets to solar power for backup, the facilities would be saving lakhs of rupees every year
  • Discoms were aiding rooftop solar systems to meet the obligations for renewable energy,but most of these were being installed on institutional and commercial buildings
  • Need for awareness& giving financial incentives: RWAs did not appear to be interested in investing in the solar infrastructure despite potential savings. There was a need for greater awareness of solar power options among Resident Welfare Associations (RWAs). Fiscal incentives, including rebate on building tax, could be considered in order to encourage the switch to solar power

CSE recommended

  • Make solar rooftops a norm: Solar rooftops should become a part of the applications for construction approvals, with the builders keeping a certain portion of the plinth area “shadow-free” to aid solar panels
  • Complete ban on DG sets: A total ban on DG sets in new multi-storied houses should be considered. This would not apply to the essential common areas
  • Financial support to Discoms: Solar rooftop can cut discoms revenue since their most profitable customers may partly or fully migrate to solar. Therefore, it is vital that discoms be financially supported to encourage them to push solar rooftop
  • Incentivizing the shift from DG sets: Though there is a capital subsidy of 30 per cent for solar rooftop systems that are connected to the grid, there is a need to give incentives for switching from DG sets to solar systems with battery backup.

[4] Cash for land is just not done: SC

The Hindu


SC agrees to hear the plight of the landless victims of the SardarSarovar Project

 What has happened?

Agreeing to hear the plight of the landless victims of the SardarSarovar Project in detail, the Supreme Court on Tuesday observed that giving cash instead of land to farmers who lost their fertile lands to the mega dam project is “tentatively” not acceptable

Petitioner’s contention: Land for land

Appearing for Narmada BachaoAndolan, advocate Sanjay Parikh said that the farmers are left with neither land nor livelihood despite there being binding orders from the Supreme Court upholding their right to land.

  • Mr. Parikh had submitted that as per the Narmada Tribunal Award and the Supreme Court verdicts, all adult sons were indisputably entitled to five acres of cultivable and irrigable land, and any discrimination would lead to the violation of the constitutional rights of the oustees.

Detailed hearing

CJI agreed for a detailed hearing on January 19thafter government sought authorities sought time for preparation


It should be noted that earlier the apex court had dismissed an application by the Madhya Pradesh government and the Narmada Valley Development Authority for a modification of the apex court judgments of 2000 and 2005 upholding land rights for adult sons of the SardarSarovar Project-affected farmers

  • SC Bench said that the State’s application suffered from gross delay, after having been filed several years since the Supreme Court gave its verdict on the issue.

[5] Effects of Endosulfan devastating: SC

 The Hindu


Important decision on Endosulfan by SC

What has happened?

Describing the effects of Endosulfan as “devastating,” the Supreme Court has directed the Kerala government to release the entire compensation to over 5,000 victims, mostly newborns, and their families in 3 months

Bench’s directions

A three-judge Bench led by Chief Justice of India J.S. Khehar said

  • The State of Kerala can initiate legal proceedings to recover the compensation money from pesticide companies responsible for the production and sale of the highly controversial but cheap agrochemical
  • The State government can also approach the Central government

Previous SC directions

In 2011, the Supreme Court ordered the immediate ban of Endosulfan while disregarding pleas of over 150 private export companies.

  • It had said “any decision affecting human life, or which may put an individual’s life at risk, must call for the most anxious scrutiny

 What has Kerala government done so far?

Kerala has earmarked over ₹ 180 crore for the payment of compensation to victims, some of whom are terminally ill from the effects of the pesticide which was aerially sprayed on cashew plantations adjoining habitats where the victims are located

  • Compensation paid: The State has paid cash compensation ranging from ₹ 2 lakh to ₹ 5 lakh to the victims. It said the entire rehabilitation scheme, including a multi-speciality hospital, would cost over ₹ 500 crore
  • Kerala government has requested centre to spare Rs 486 crore

Read More: The Hindu article on devastation caused by Endosulfan

Editorial/OPINION [The Hindu]

[1] Taking ‘Cold Start’ out of the freezer?

The Hindu


General BipinRawat’s reference to Cold Start raises vital questions about what he means by the phrase and whether he was authorized to speak on the matter by the government.

What has happened?

Gen Rawat, the new army chief, in an interview given to India Today, has acknowledged the existence of army’s Cold Start strategy or doctrine

 Military doctrine

A military doctrine helps standardize operations, facilitating readiness by establishing common ways of accomplishing military tasks. Its objective is to foster initiative and creative thinking and links theory, history, experimentation and practice.

 What is Cold Start doctrine?

Cold Start is a military doctrine developed by the Indian Armed Forces for use in a possible war with Pakistan.

  • The main objective of the Cold Start Doctrine is to launch a retaliatory conventional strike against Pakistan inflicting significant harm on the Pakistan Army before any international community could intercede, but not in way Pakistan would be provoked to make a nuclear attack
  • Cold Start Doctrine was developed as the limitations of the earlier doctrine – Sundarji Doctrine – was exposed after the attack on the Indian Parliament

Crux of cold start

  • Pakistan must not enjoy the luxury of time. Cold Start aims for eight “Battle Groups”, comprising independent armoured and mechanised brigades that would launch counterattacks within hours.
  • These Battle Groups will be fully integrated with the Indian Air Force and naval aviation, and launch multiple strikes round the clock into Pakistan.
  • Each Battle Group will be the size of a division (30,000-50,000 troops) and highly mobile unlike the strike corps.
  • Ominously for Pakistan, the Battle Groups will be well forward from existing garrisons. India’s elite strike forces will no longer sit idle waiting for the opportune moment, which never came in the last wars
  • Although its operational details remain classified, it appears that the goal would be to have three to five Battle Groups entering Pakistani territory within 72 to 96 hours from the time the order to mobilise is issued
  • Also, rather than seek to deliver a catastrophic blow to Pakistan (i.e., cutting the country in two), the goal of Indian military operations would be to make shallow territorial gains, 50-80 km deep, that could be used in post-conflict negotiations to extract concessions from Islamabad
  • Cold Start also works to undermine the much smaller Pakistani economy. According to the Pakistani media, the threat of the Indian Cold Start doctrine and increase in India’s defence budget has prompted the Pakistan government to sharply increase its defence budget, further increasing the strain on that country’s fragile economy.

Beauty of cold start

The beauty of Cold Start is it may never have to be used. It screws with the Pakistani military’s mind and forces the generals to spend time and scarce resources on finding ways to stop an Indian blitzkrieg

What if Pakistan uses tactical nuclear warheads on Indian armed columns progressing towards its cities under Cold Start?

If at all Pakistan uses tactical nuclear warheads on Indian armored columns thundering towards its cities, it would end up devastating its own Punjabi heartland. Most Pakistani cities are close to the border and would become uninhabitable while India would lose only a small part of its army

Gist of Cold start

In simple terms, Cold Start aims at finishing off with Pakistan before our political leadership loses its nerve and starts thinking of a truce or before international mediation stops war midway.

  • In normal times the mobilization time of Indian army’s strike corps takes time as it is located in central India. Cold Start aims to reduce the time to few hours

 Genesis of Cold Start

The perceived failure to mobilise the army’s Strike Corps in a timely fashion after the December 2001 attacks on Parliament was the impetus for Cold Start

Stance of Indian government

Official stance on Cold start has been the subject of extensive debate and controversy since it was first discussed in 2004. The idea has never been formally accepted by the Indian government

How Cold Start prompts Pakistan to build upon its nuclear arsenal?

The “threat” posed by Cold Start has been repeatedly cited by Pakistani authorities as proof of India’s hostile intentions which in turn has provided a justification for Pakistan to build up its nuclear forces, both increasing the sheer size of its nuclear arsenal (which carries its own risks of theft and nuclear terrorism) and developing lower-yield nuclear warheads and short range missiles, so-called tactical nuclear weapons, which are aimed at deterring — or in the worst case, defeating — a limited Indian military incursion

Can Indian Army pull it off?

Author states that there is no public evidence that India remotely has the capability to adopt or execute such a doctrine.

  • The army simply lacks the materiel and organisation to implement the more aggressive versions of Cold Start
  • It is not at all clear, for example, that the Indian Army at present possesses sufficient superiority in numbers of troops and armored vehicles in the vicinity of the International Border to be able to overcome the Pakistan Army’s defensive and geographic advantages in a short conflict
  • Obsolete equipment and critical shortages of ammunition and air-defence assets raises serious questions about the army’s ability to implement a Cold Start-style operation at all
  • Sustaining offensive operations in Pakistan requires joint operations with the air force. Not only does the Indian Air Force lack the kind of close air support capability Cold Start would require, but army-air force cooperation is marred by inter-service dysfunction.

 Author’s contention

Author points out that,

  • Reviving cold start may markedly escalate tensions in bilateral relations with Pakistan without necessarily delivering a clear benefit, since there is still no evidence that India has the required capabilities to implement anything resembling Cold Start.


Author concludes by saying that it is time for both the army and the government to clarify what precisely its conventional doctrine is by identifying its operational and strategic objectives and how it fits into India’s larger strategy to deter major militant attacks on the homeland.

[2] Mind the gender gap

The Hindu


Despite the successes, better implementation and planning are needed to ensure that these policies percolate right down to the last woman in the most remote parts of the country.

Issue: Addressing gender disparity via Gender Responsive Budgeting (GRB)

Gender equality

Justifying her stance that the world is slowly recognising the importance of gender issues, author directs our attention to the fact that Gender equality is one of the 17 goals amongst the Sustainable Development Goals, to “transform our world”.

  • Moreover, women safety and empowerment were two out of many core issues around which the 2014 LS elections in India were fought

Budgetary concerns

Author states that the lack of targeted resources is often stated to be the biggest reason behind the sluggish progress in furthering the gender agenda. Therefore, it is important that India’s budget priorities reflect its commitment to invest in women and girls.


Here are few of the recognised challenges

  • Women’s declining labour participation
  • Under-representation in Parliament
  • Skewed child sex ratio
  • Prevalent gender-based violence

Scale of the problem in India

  • A poor rank: The World Economic Forum’s annual Global Gender Gap Report ranked India 87 in terms of gender equality in economy, education, health, and political representation

Gender Responsive Budgeting (GRB)

Author points out that to solve the above problems, India adopted the GRB in 2005

  • Rationale: The rationale for gender budgeting arises from recognition of the fact that national budgets impact men and women differently through the pattern of resource allocation. Women, constitute 48% of India’s population, but they lag behind men on many social indicators like health, education, economic opportunities, etc. Hence, they warrant special attention due to their vulnerability and lack of access to resources. The way Government budgets allocate resources, has the potential to transform these gender inequalities.
  • Gender-responsive planning and budgeting ensures that fiscal resources are generated and allocated in a way that affects women and men equitably

Gender Budgeting

Every annual budget since 2005 has included a statement that lists out two parts. Sixteen states have also embraced this exercise. There is

  • Part A, which reflects ‘Women Specific Schemes’, namely, those which have 100 per cent allocation for women
  • Part B, which reflects ‘Pro Women Schemes’, namely, where at least 30 per cent of the allocation is for women

GRB & improvement in indicators

Studies substantiate the positive link between GRB and improved indicators for women.

  • IMF Study: For instance, a recent International Monetary Fund (IMF) study found that States that employ GRB also show better female to male school enrolment ratios. Further, it was observed that GRB also has a positive impact on infrastructure spending


  • Declining & Stagnant allocations: Author states that in recent years the allocations have either remained stagnant or have been declining

Budget 2016-17: Author cites the 2016-17 Budget to prove her above point.

  • While the Ministry of Women and Child Development and National Commission for Women saw nominal increases, the scheme meant for implementing the Domestic Violence Act did not receive any allocation
  • Decline in ministries and departments under GRB: There was a decline in the number of ministries and departments that fall under GRB
  • Decentralization of funding under GRB: The budget also initiated the decentralization of funding in GRB, thus shifting the onus for budgeting and implementation from the Central Ministry to State counterparts. While this did empower the States to come up with women-specific policies as per their respective challenges, the obvious downside was the risk that States could choose to not prioritise gender in their budgeting

What more needs to be done?

Author states that despite successes, better implementation and planning are needed to ensure that these policies reach right down to the last woman in the most remote parts of the country.

  • More than mere symbolism: GRB must be viewed as an essential tool to tackle societal inequality that hinders progress instead of a symbolic exercise for pleasing the emerging women constituency
  • A more expansive approach: Author states that currently GRB identifies schemes that are exclusively dedicated to women. This approach has restricted the benefits of GRB to a select few schemes. A much better approach would be to look at all the existing schemes via GRB perspective.

For example:Sectors such as energy, urban development, food security, water supply and sanitation continue to operate in isolation, despite having causal interrelationships with women’s empowerment.

Way ahead

Author states that gender budgeting alone is not sufficient to tackle deep-rooted gender disparities.However, policies can be more effective if budgeting takes a broader, gendered approach which includes planning targeted interventionsand monitoring and evaluation mechanisms to ensure implementation.

  • Flexible policies: Policies should also be flexible to change based on feedback from the intended recipients
  • Incentivizing states: It would also help if the Central government could, through an incentive mechanism, encourage State governments to take up GBR as a priority in their budget layouts.

[3] Reaching out to Africa

 The Hindu


Conclusion of India-Africa Forum summit

Issue: India-Africa Forum Summit

Significance of the summit

That 41 heads of state and government from 54 countries in Africa were present at the India-Africa Forum Summit in New Delhi, itself demonstrates the importance both sides attach to mutual ties.

  • The summit, which concluded on Thursday, was the largest gathering of foreign dignitaries in New Delhi since the 1983 Non-Aligned Summit.

Africa: important trade partner

Africa is an important trade partner for India.

  • Indian energy companies have assets in African countries, and New Delhi exports consumer and capital goods and medicines to the continent
  • India-Africa trade was worth almost $70 billion in 2014-15, and Indian companies invested some $30-35 billion in the continent over the past decade
    • Higher trade: Chinese trade with Africa is much higher, to the tune of, $200 billion in 2014-15.
    • Huge Chinese investment: Besides, China has invested more than $180 billion in Sub-Saharan Africa alone in areas ranging from energy to infrastructure during the period 2005-2015.

Author suggests

  • Perfecting the policy: India may not have the resources to beat the level of Chinese investments, but it can certainly do a lot more with proper policy approaches, faster project execution and improved bilateral relations.
    • Recent announcement of the $10 billion concessional credit to Africa by India is a right step in this direction
  • UNSC reforms: Author states that there’s a convergence of interest for reforming the Security Council. India’s claim is that as the second most populated country and the largest democracy in the world, it deserves a permanent seat in a reformed Security Council. India has also noted that Africa, with more than a quarter of the members of the UN, is not represented in the powerful UN body. Against this background, it is imperative for both sides to speak in “one voice” for Security Council reforms
  • Cashing in on the goodwill: Stronger ties with Africa fit into India’s traditional foreign policy setting. The goodwill India enjoys in the continent is a result of the principled anti-colonial positions the country took in the post-Independence era. India should cash in on that goodwill to build a stronger economic and political partnership with Africa in the new century.

Read More: India-Africa Forum Summit

ECONOMY [The Hindu]

[1] India opposed to inclusion of ‘new issues’ in WTO

The Hindu


Ahead of a special meeting of trade ministers on the sidelines of the forthcoming World Economic Forum at Davos, India opposed attempts by some developed nations to introduce ‘new issues’ into the formal agenda of the World Trade Organisation (WTO)-level negotiations

World Economic Forum

The World Economic Forum (WEF) is a Swiss nonprofit foundation, based in Geneva

  • Brief history: The forum was founded in 1971 by Klaus Schwab, a German-born business professor at the University of Geneva. First named the “European Management Forum”, it changed its name to the World Economic Forum in 1987 and sought to broaden its vision to include providing a platform for resolving international conflicts.
  • Mission: Recognized by the Swiss authorities as an international body,its mission is cited as “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas”
  • Annual meet at Davos: The Forum is best known for its annual meeting at the end of January in Davos, a mountain resort in the eastern Alps region of Switzerland. The meeting brings together some 2,500 top business leaders, international political leaders, selected intellectuals, and journalists for up to four days to discuss the most pressing issues facing the world

Note: WEF brings out the yearly Global Competitiveness report

What has happened?

Ahead of the annual meet at the Davos, that is scheduled to take place between January 17 and 20, India has opposed attempts by some developed nations to introduce ‘new issues’ including e-commerce and investment into the formal agenda of the World Trade Organisation (WTO)-level negotiations on liberalisation of global trade.


India had on earlier occasions too rejected the attempts of the developed world to make such ‘new issues’ part of the ongoing Doha Round talks saying it will ‘dilute’ the ‘development agenda’ of the negotiations.

[2] Benefits of demonetisation uncertain in long run

The Hindu


Short-term pain of the government’s demonetisation exercise could outweigh long-term gains that it said were still ‘uncertain.

What has happened?

Fitch, a rating agency, in a report titled, “Benefits of demonetisation are highly uncertain”, has said that the short term pain of the demonetization might outweigh the uncertain long-term gains of the move

Observations made in the report

In its report, the rating agency has said that,

  • Since demonetisation was a one-off event, people in the informal sector would still be able to use the new high-denomination notes and other options, like gold, to store their wealth
  • There are no new incentives for people to avoid cash transactions. The informal sector could soon go back to business as usual
  • There were uncertainties over the impact on the banking sector as demonetisation could also affect the ability of some borrowers, especially SMEs, to service their loans, with negative effects on bank asset quality
  • The positive impact on funding conditions will depend on deposits remaining in banks beyond the next few months. There is nothing to prevent them being withdrawn again
  • The intentions behind demonetisation were positive and in keeping with broader reform efforts, but the short-term pain might outweigh the uncertain long-term gains.

[3] H1B visa reform to increase IT firms’ margin pressure

 The Hindu


IT firms’ margins will come under more pressure if the US government clears the H1B visa reform Bill — ‘Protect and Grow American Jobs Act’


The key proposal in the Bill is to

  • Increase the salary of H1B visa holder to USD 100,000 (Rs 66 lakh) from USD 60,000 per annum The salary level that has been proposed is significantly higher than the average employee cost of Indian IT companies of under Rs 1 million (ranges between Rs 3 lakh to Rs 5 million)
  • The removal of an exemption of having a master’s degree: The removal of the exemption of possessing a master’s degree to qualify for a H1B visa if implemented will reduce the talent pool qualifying for such visas and in turn result in either increased employee cost for hiring employees with higher qualification or subcontract work, both of which would increase the cost of operations and result in lower profit margins


Indian IT companies generate around 55-60 per cent of the revenue from the US. The onsite proportion of revenue exceeds the offshore portion.

Indian Express

[1] Central To The Market

Indian Express


Long-term investments in social sector are essential for growth, political stability.

Give it a go-through once.

[2] An autonomy policy

 Indian Express


Demonetisation process raises troubling questions over the way government has treated RBI. Central bank needs to assert

A fairly simple article. It throws light on one of the many aspects of demonetization move by the government. One of those is the damage done to the autonomy of the RBI and the perceived impact on its credibility.

Why is credibility of the central bank critical?

It is critical because the stability of the economy is hinged on it and not just in the eyes of global investors and rating agencies, but also from the perspective of the entities the RBI regulates.


Author concludes by saying that RBI needs to reclaim the space vital to health of the institution.

Live Mint

[1] Time to revamp the tax administration

Live Mint


The tax department will now have to mine a vast volume of data to zero in on accounts that have been used to deposit unaccounted cash.

Issue: Demonetization’s aftereffects

Costs & benefits

Author states that the cost and benefits of the demonetization are still being debated

  • Costs: In terms of costs, economic indicators such as auto sales and purchasing managers’ indices indicate that economic activity has been hit by the cash crunch. However, the data on tax collection suggests that the impact could be limited
  • Benefits:When it comes to benefits, assessing the real gains in terms of original intended purpose of the move i.e. to attack the black money stored in cash, would be a tricky process. And the burden of it will fall on a tax administration that is ill-equipped for it
    • Success of the move: Author states that the success of demonetization in terms of arresting black money would depend on the number of old notes not returned to the banking system because,
      • Such notes reflect the black money that couldn’t be laundered or couldn’t be deposited into banking system on account of it being illegal

Note: It should be noted here that above fact doesn’t mean that all the notes that have returned to banking system are not a part of black money

Difficulties before ta administration

Author states that it will now be the responsibility of the tax administration to sift through volumes of data to detect unaccounted deposits made in the bank accounts during the demonetization exercise. This will not be easy because,

  • Increase in workload and prospective litigation: It will substantially increase the workload and can lead to litigation
  • Pressure on tax infrastructure: The department will have to handle the entire exercise with care and avoid causing discomfort to honest taxpayers. This will put enormous pressure on the existing capability and infrastructure of the tax department

Existing situation

A recent Mint report noted that

  • Pending cases: About 390,000 direct tax cases are pending across various forums and an internal committee has suggested that the department should reduce scrutiny to give more attention to litigation management

Addressing tax evasion

Author state that without addressing the problem of tax evasion, any attempt to broaden the tax base will be futile. He suggests,

  • Enhancing tax administration’s capability: Government must work on a medium-term strategy to enhance the capability of the tax administration
  • Big Data analytics: Author suggests using big data analytics like using data generated by the consumption patterns of individuals to identify tax evasion
  • Boosting compliance: Simplifying the tax structure and lowering tax rates would help boost compliance.

Reducing generation of black money

  • Reforming laws: The government will simultaneously need to work on laws and regulations to reduce the generation of black money in the system. For instance, as has been noted by several experts, high stamp duty in real estate encourages under-reporting, which results in the creation of black money
  • Political finance: Bringing transparency to political funding and financing will also help in reducing the generation of black money.


Author states that government has taken the various steps to deal with black money but if it is to build on any of the benefits that have accrued so far, it must make the structural changes to the tax administration needed to minimize the generation of black money and make detection of tax evasion an ongoing process.

[2] Demonetisation and budgets

Live Mint


All in the mind: ArunJaitley will soon be presenting the 2017-18 budget and his well-laid plans may have to incorporate demonetisation-induced changes.

Article speaks about the prospective announcements that could be made during the annual budget

Give it a go-through.


9 PM Daily NEWS Brief

9 PM Daily Brief – 15th December 2016

  • Front Page / NATIONAL
  1. RS passes Disabilities Bill with more benefits
  1. NSG waiver has attendant risks, govt. tells Lok Sabha
  • Editorial/OPINION
  1. Demonetisation’s deflationary shock
  2. Rights for the rightful owners
  1. Cabinet clears Bill to give autonomy to 12 major ports
  • Indian Express
  1. 1971 in 2016: India’s relations with Bangladesh
  • Live Mint
  1. The challenges to free movement of labour
  2. Examining the funding deficit of the judiciary
  3. Demonetisation push to labour reforms

Click here to Download 9 PM Daily Editorial PDF (15th Dec. 2016)

Front Page / NATIONAL

RS passes Disabilities Bill with more benefits

 The Hindu


The Rajya Sabha has passed the Disabilities Bill with the list of ‘disabilities’ expanded from seven to 21 and the quantum of reservation increased for people suffering from disabilities from three per cent to four per cent in government jobs.

Disability: A state list subject

Can Parliament legislate on a state subject?

Parliament’s jurisdiction to enact this Bill flows from Article 253 of the Constitution which allows Parliament to enact legislation to give effect to international agreements. Parliament has the power to enact this Bill despite the fact that relief of the disabled comes under Entry no. 9 of the State List.

New benefits included

  • List of disabilities expanded: The list now includes 21 disabilities than previous 7. It recognises that persons with psychosocial and intellectual disabilities like autism and Down’s Syndrome also have a right to education and employment. The types of disabilities now include mental illness, autism spectrum disorder, cerebral palsy, muscular dystrophy, chronic neurological conditions.
  • Quantum of reservation increased: The quantum of reservation increased for people suffering from disabilities from three per cent to four per cent in government jobs
  • Higher education quota: In higher education institutions, the quota has been increased from three per cent to five percent
  • In line with UN convention: The Bill also gives effect to the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) and related matters.
    • In 2007, India became a signatory to the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD). The UNCRPD requires signatory states to make appropriate changes in law and policy to give effect to rights of disabled persons
  • Imprisonment provisions: It provides for imprisonment ranging from six months to two years, along with a fine ranging from Rs. 10,000 to Rs. 5 lakh, for discriminating against differently abled persons.

Definition of disability

In the Bill, disability has been defined based on an evolving and dynamic concept.

Strengthening of regulatory offices

It also strengthens the office of chief commissioner and state commissioners for Persons with Disabilities, which will act as regulatory bodies.

Read more: Disabilities Bill (The Hindu Article)


NSG waiver has attendant risks, govt. tells Lok Sabha

 The Hindu


India wants full membership of the Nuclear Suppliers Group (NSG) as the current arrangement with the elite club carries “attendant risks”, the government told the Lok Sabha


The NSG took a consensus decision in September 2008 to permit its members to engage in civil nuclear cooperation with India despite India not being a party to the Nuclear Non-Proliferation Treaty (NPT)

  • India has been trying to upgrade the “waiver” into a full member status and the government accordingly made two attempts this year to become member of the elite organisation.

NSG waiver to India: Element of Unpredictability

India is currently engaged in nuclear trade with international partners based on a waiver from the NSG in 2008. The waiver is in the form of a concession without according India the status of a full member and therefore has an element of unpredictability and attendant risks in the long run for India’s long-term nuclear power programme

Benefits of full membership of NSG

Full membership of the NSG would,

  • Enable India to have enhanced and predictable global access to nuclear technology, fuel, materials and components required for our expanding civil nuclear programme
  • Would advance energy security, contribute to India’s growth strategy based on clean energy to combat climate change, and strengthen global nuclear non-proliferation

Present situation

China is against according India a full membership status. As of now, NSG will take up India’s membership issue at its next plenary session in June 2017.

Read More: NSG, NPT


Demonetisation’s deflationary shock

The Hindu


That the Centre’s decision to withdraw high-denomination banknotes was going to impact economic activity in the short term was never in doubt.

Effects of Demonetization

  • Deflationary effect: Retail inflation has reduced due to a reduction in demand of variety of goods and services
  • Major contributor: The major contributor to the slowdown in price gains was the food and beverages group, where inflation eased to 2.56 per cent largely due to a slowdown in the prices of vegetables, a highly perishable commodity.

Give the article a go through once.

Note: Demonetization has been covered many times in previous briefs. Hence, we are now including only new points wrt this topic in 9pm briefs.

Rights for the rightful owners

 The Hindu


On the tenth anniversary of the historic passage of the Forest Rights Act, tribal resistance to defend their rights is growing even as government after government tries to dilute its provisions.

Issue: 10 years of Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act [FRA for short]

Let us learn a little about this Act

Forest Rights Act

The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 (FRA for short), recognizes the historical injustice meted out to scheduled tribes and other traditional forest dwellers. It seeks to secure traditional rights over forest land and community forest resources, and establish democratic community-based forest governance.

FRA recognizes 14 pre-existing rights of forest dwellers on all categories of forestland, including Protected Areas (PAs). The major rights are:

  • Individual Forest Rights (IFRs) and Community Rights (CRs) of use and access to forest land and resources;
  • Community Forest Resource (CFR) Rights to use, manage and govern forests within the traditional boundaries of villages
  • Empowerment of right-holders, and the Gram Sabha, for the conservation and protection of forests, wildlife and biodiversity, and their natural and cultural heritage (Section 5, FRA)

Rights under the Act

  • Title rights – ownership to land that is being farmed by tribals or forest dwellers subject to a maximum of 4 hectares; ownership is only for land that is actually being cultivated by the concerned family, meaning that no new lands are granted.
  • Use rights –to minor forest produce (also including ownership), to grazing areas, to pastoralist routes, etc.
  • Relief and development rights –to rehabilitation in case of illegal eviction or forced displacement; and to basic amenities, subject to restrictions for forest protection.
  • Forest management rights –to protect forests and wildlife.


Eligibility to get rights under the Act is confined to those who “primarily reside in forests” and who depend on forests and forest land for a livelihood. Further, either the claimant must be a member of the Scheduled Tribes scheduled in that area or must have been residing in the forest for 75 years.

Author states that despite of many inadequacies, FRA is a potent tool but attempts to dilute it are being made by the present government.

Attempts at dilution

  • Legislation to dilute FRA: Government has brought a series of legislation that undermine the rights and protections given to tribals in the FRA, including the condition of “free informed consent” from gram sabhas for any government plans to remove tribals from the forests and for the resettlement or rehabilitation package

Amendments: The amendments to the Mines and Minerals (Development and Regulation) Act, the Compensatory Afforestation Fund Act and a host of amendments to the Rules to the FRA which undermine the FRA have been pushed by the government

  • Public hearing requirement: The requirement of public hearings and gram sabha consent has been done away with for mid-sized coal mines
  • In Telangana, in total violation of the FRA, the government has illegalised traditional methods of forest land cultivation
  • The Jharkhand government has brought amendments to the Chotanagpur and also the Santhal Pargana Tenancy Acts which eliminate rights of gram sabhas and permit tribal land to be taken over by corporates, real estate players, private educational and medical institutions in the name of development, without tribal consent
  • In Maharashtra the government has issued a notification of “Village Rules” which gives all rights of forest management to government-promoted committees as opposed to the gram sabha
  • Policy-based dilution: Author points out instances wherein projects of private sector on forest land have been cleared in the name of ease of doing business. In many of such projects the displaced families have not even received pattas (Land ownership documents) as directed by FRA.
    • Polavaram project: In the multipurpose Polavaram project in Andhra Pradesh alone, now given a national status by the Central government, 2 lakh hectares of forest land will be submerged affecting around 85,000 families, more than half tribals, including 100 habitations of particularly vulnerable tribal communities
  • Deliberate rejection of claims: Author states that there is a deliberate rejection of tribal claims to lands or community’s claim to Community Forest Resources. Neither individual pattas nor pattas for community forest resources are being given. According to one analysis, between May 2015 and April 2016, eight out of every 10 claims were rejected
    • Sharp contrast: Although 98 per cent of the approximately 1.9 lakh tribal claims had been approved by the gram sabhas, the bureaucrats in the sub-divisional committee and above brought the acceptance down to just 38 per cent. This is in sharp contrast to a Left-led State such as Tripura, where 98 per cent of tribal claims have been recorded and titles given.

Role of the judiciary

Author states that the same judiciary which has passed landmark judgements like,

  • Samata judgement
  • Niyamgiri judgement

, has also clubbed together a number of hostile petitions to the FRA and is giving them a sympathetic hearing

Viewing tribal struggle as law & order problem

Till 1985, the department of “Tribal Affairs” was under the Home Ministry. Tribal rights and struggles for justice were viewed as a “law and order issue”. Under the present dispensation this retrograde approach seems to have been resurrected


Author concludes by stating that on 10th anniversary of FRA, tribal resistance is growing all over the country to defend their rights under FRA and other related issues.

Read More: FRA, Niyamgiri case, Samata judgement, Ministry of tribal Affairs


Cabinet clears Bill to give autonomy to 12 major ports

 The Hindu


The Union Cabinet has approved the draft MajorPort Authorities Bill, 2016 to replace the existing Major Port Trusts Act, 1963 in a bid to empower 12 major ports to perform with greater efficiency on account of full autonomy in decision-making

Provisions of the Bill

  • All PPP operators will be free to fix tariffs based on market conditions
  • Powers to fix tariff: The role of Tariff Authority for Major Ports has been redefined. Port Authority has now been given powers to fix tariff which will act as a reference tariff for purposes of bidding for PPP projects
  • Reducing the size of the board: The Bill proposes to reduce the size of the board of the Port

Authority from 17-19 to 11 members. As per ministry, a compact board with professional independent members will strengthen decision-making and strategic planning

  • Members of the board: The Board will include representatives of respective state governments, Railways Ministry, Defence Ministry and Department of Revenue along with a member representing employees of the Major Ports Authority
  • The Board of the Port Authority has been allowed to fix the scale of rates for other port services and assets including land
  • Setting up an independent review board: An independent review Board has been proposed to carry out the “residual function of the erstwhile TAMP (Tariff Authority for Major Ports) for major ports, to look into disputes between ports and PPP concessionaires, to review stressed PPP projects and suggest measures” to revive such projects.
    • It has been proposed to give the Board full powers to enter into contract, over planning and development, fixing of tariff except in national interest, security and emergency arising out of inaction and default.
    • Present situation: The present law requires the Centre’s approval in 22 such cases.

Indian Express

1971 in 2016: India’s relations with Bangladesh

 Indian Express


Article offers an insight into India’s relations with Bangladesh over the years.

Occasion: The occasion is Vijay Diwas where Bangladesh Home Minister accompanied by a delegation of more than 70 muktijoddhas and their families will participate in ensuing celebrations.

What is Vijay diwas?

Vijay Diwas is commemorated every 16 December in India as it marks its military victory over Pakistan in 1971 during the Indo-Pakistani War of 1971, who were alliance of Bangladesh Mukti Bahini. The end of the war also resulted in the unilateral and unconditional surrender of the Pakistan Army and subsequent secession of East Pakistan into Bangladesh

Indo-Bangladesh engagement

  • Settling the LBA: The initial version of LBA was signed in 1974. After 11 years the revised version was signed in June this year thereby settling a long pending dispute between two countries.
  • Unresolved water issues: Author points out that the water issues though remain unsettled but they are not as much of a sticking point as in the past.
  • Progress on economic front: There have been encouraging developments on the economic front. Bilateral trade has risen to more than $7 billion from $2.5 billion in this period
  • Geopolitical collaboration:  Bangladesh features prominently in India’s Act East Policy and both countries are willing to look beyond the SAARC by being part of groupings such as BCIM (Bangladesh-China-India-Myanmar) and BIMSTEC (the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) that extend South Asia’s connectivity with Southeast Asia and China.

Chinese loan to Bangladesh

In October, Chinese President Xi Jinping visited Dhaka and extended loans worth $24 billion to Bangladesh, more than 10 times what India gives Bangladesh


India’s relations with Bangladesh have gone well, but much more needs to be done.

Read More: Mukti Bahini

Live Mint

The challenges to free movement of labour

Live Mint


As populism reigns in Western economies, India must push back against labour protectionism.

Issue: Labor protectionism

Anti-immigrant sentiment

Global events like BREXIT & election of US president Donald Trump have given credence to the theory that there is a global sentiment against globalization and hence immigration of labor, at least in the countries to which the above two events refer to.

So, in the first few paragraphs author has presented the reader with a scenario wherein we could see a prospective tightening of immigration policies in the near future.

Future Uncertainty after Trump’s election

Uncertainty about the future Trump administration’s H-1B visa policy has made Indian IT companies wary

  • The US government increased visa fees for the L1 and H-1B categories last year, which hurt Indian IT professionals.

UK: Tightening immigration norms

Over in the UK, meanwhile, Prime Minister Theresa May has vowed to bring down net migration figures and the easiest way to do this is, of course, to go after international students.

  • As home secretary back in 2012, May had scrapped the UK’s policy of allowing foreign students to work in the country for up to two years after graduation. This seems to have had an adverse impact on the number of Indian students enrolling in UK universities—from 68,238 in 2010, this figure has now fallen to 11,864 in 2016.

Economic Empiricism: What!!!

Economic empiricism refers to principle in economics wherein economists use data to test theories and to determine what is causing things to happen in the world. Author states that this principle seems to have been thrown out the window

  • Actual contribution of immigrants to Britain’s economy: Christian Dustmann of University College London and TommasoFrattini of the University of Milan, for instance, have shown that contrary to the popular perception of immigrants being a drain on public resources, they have made a positive contribution of more than £4 billion to Britain between 1995 and 2011

Concessions to India by UK

In the light of tightening of immigration norms, author states that pressure on Indian government would increase.

  • During recent visit by British PM Theresa May to New Delhi, she did not move from its position but agreed to make concessions for Indian businesspersons visiting the UK.
  • Registered Traveler Scheme: On 13 December, the parliamentary under-secretary of state at the foreign and Commonwealth office with special responsibility for the Asia-Pacific region said that May would like India to be the first country to be offered the “Registered Traveler Scheme” which allows business travellers expedited clearance at the UK border.

Future course of action

In the wake of above situation, what should New Delhi’s stand be?

  • A step in the right direction: India has made a good start at the World Trade Organization (WTO), arguing that the US has violated its obligations under the General Agreement on Trade in Services (GATS) and the GATS Annex on Movement of Natural Persons Supplying Services.
    • This is the first time that a WTO member has challenged the immigration laws of another member as a GATS violation, and if the matter moves to the formal dispute settlement panel phase—it is currently in the first consultation phase —the trade body may recommend that the US amend its policies. The recommendation won’t be binding, but if the US doesn’t comply, it may be subject to WTO-authorized trade retaliation
  • Easing visa policies and norms: Author states that existing Indian regulations not only make it cumbersome for foreign firms to set up shop in the country—as is evident from India’s poor performance in the ease of doing business rankings—but make employment a difficult prospect for skilled foreign nationals as well.
    • Education Sector: Author points out that this is an opportunity for Indian government to fill in the large number of vacancies that lie pending in various universities & colleges across country
    • Defence manufacturing: India’s defence manufacturing sector is lagging behind but with a renewed focus of the present government on improving the current situation, foreign workers can play an important role in developing a new ecosystem by bringing in technical know-how and best practices from around the world.

Examining the funding deficit of the judiciary

Live Mint


More judges, more courts, more computers alone may not do much to improve the efficiency of courts or access to justice.

Issue: Budgetary allocation to judiciary

What has happened?

Few days back CJI made a statement about how the judiciary is not receiving enough funds once again brings to the fore the friction between the judiciary and the government.

Demand is not new

Author states that the demand for more resources to the judiciary is not new

  • Law Commission’s observation: Back in the 1980s, the 127th Law Commission had lamented the poor quality of infrastructure with which the courts have to make do in their functioning. And that administration of justice is not regarded as part of developmental activity

Current situation

India currently spends around 0.01 per cent of GDP in judiciary

What is a sovereign function?

A function which cannot be performed by private parties. Only state performs it.

Comparison with other sovereign functions

Sovereign Function Allocation
National Defence 2.26 % of GDP
Health 4.7% of GDP (in 2014)

The judiciary is funded mostly by the states—who historically haven’t had too much to spend at their discretion given the Centrally-sponsored schemes of the Union government

State Allocation
Maharashtra 2.8%
Gujarat 0.6%


Report of the Task Force on Judicial Impact Assessment

Author states that it was against this background that Report of the Task Force on Judicial Impact Assessment had recommended,

  • Creation of a judicial impact office in Delhi and state capitals to estimate the extra case load and extra expenditure on the courts to be incurred on account of Central and state legislation, respectively
  • Improving data gathering techniques

Unspent funds

Out of the special grant of Rs5000 crore by the 13th Finance Commission for improving judicial infrastructure and services, almost 80% remained unspent

  • Department of Justice after detailed consultations with states submitted its proposal of Rs 9000 crore to 14th Finance commission, which was endorsed by the commission. Consequently, 14th FC report asks states to utilize additional funds provided to them through tax devolution to meet requirements of the courts. 

How much is judiciary costing to India?

Conservative estimates by DAKSH (a Bengaluru-based civil society organization working on solving pendency in courts) are that about 0.5% of the GDP is incurred by litigants only on attending to court hearings, excluding legal fees. It could be as much as 1.5% to 2%.

Author puts forth a question,

Will more budgetary allocations enable the judiciary to achieve its purpose of administering timely justice to all? 

Author doesn’t thinks so as he cites the 2004 paper by Arnab K. Hazra and Maja B. Micevska which shows that the large number of judges per capita is negatively related to congestion rates (pending cases).

You can find the paper here

 Way forward

Author states that efficiency of courts can only be improved by re-engineering, re-imagining court processes, widespread use of technology and reforms in substantive law.

  • A beginning can be made by improving the budgetary process

Demonetisation push to labour reforms

Live Mint


Article presents a critical evaluation of the factors that have contributed to keeping approximately 83% of India’s labour force informal, despite 25 years of modest growth in a seemingly liberalized economy

Size of informal economy

The most authentic estimates of the size of informal labour market in India are from the National Sample Survey Office, which holds employment-unemployment rounds every few years

Organized v unorganized employment Ratio
2004-05 13:87
2011-12 17:83
  • Observation 1: The data shows little has changed over the years in the nature of employment, as size the of the informal labour market remained significantly high and predominant in the economy overall
  • Observation 2: The growth in organized employment was, however, overwhelmingly informal in nature. So, even within the organized sector of the Indian economy, formal employment declined significantly and informal employment rose with time. Most jobs created in the high growth period of the last decade have been informal in nature, even in the organized sector
  • Observation 3: Within the unorganized sector, nearly all the increase was, expectedly, informal in nature

Some more observations


  • Share of agriculture in total employment has fallen from approximately 60% to less than 50%


  • The share of manufacturing remained largely unaffected at approximately 12%


  • The share of the non-manufacturing sector (construction) which has nearly doubled from 6% to 12%,
  • The share of the services sector rose from 23% to 27%
  • Informal employment in the non-agricultural sectorincreased by 27%

 Conclusion based on above data

In the light of above information author concludes that the benefits of Indian economic growth are concentrated among a few, while a growing proportion of the population has been relegated to living as working poor.

What are the reasons for such a situation?


  • Lack of labor reforms: Lack of labour reforms has been identified as the main culprit that has kept employment in India low and informal. Poor labor laws have resulted in India’s manufacturing sector being stunted

 What does lack of labor reforms mean?

Lack of labour reforms has generally meant multiple labour legislation that deter hiring of labour

A puzzling situation

Author states that even in states that have carried out a considerable degree of labor reforms like Gujarat and Andhra Pradesh, the jobs that were created were overwhelmingly informal in nature

So, what is the solution to this puzzling problem?

Author states that there is a need to make serious efforts at facilitating a widespread environment that will develop a formal culture in India’s labour markets. Demonetisation has the potential to become one such serious policy intervention.

How can demonetization help?

Despite high growth, most sectors chose to employ labour informally because it lowered their overall costs. Routing wages and salaries away from cash payments and towards formal channels such as bank accounts, electronic and mobile payments will create a formal culture of employment. Demonetisation is forcing employers in the country to reconsider employment contracts.

  • Push from financial institutions: There needs to be a simultaneous push from the formal financial institutions such as banks, payment interfaces such as National Payments Corporation of India and other private firms to facilitate the adoption of new payment methods. Each firm will have to assess what the short-term costs of going formal entail while achieving efficiency to remain in business in the long run. This can only be great for their employees and the economy overall.
Mains Marathon

Answered Mains Marathon – UPSC Mains Current Affairs Questions – December 6

Mains Marathon

Answered Mains Marathon – UPSC Mains Current Affairs Questions – December 5

9 PM Daily NEWS Brief

9 PM Daily Brief – 8th December 2016

  • Front Page / NATIONAL(The Hindu)

  1. RBI keeps base rate unchanged
  2. SC seeks Parliamentary panel report on Lokpal amendments
  • Editorial/OPINION(The Hindu)

  1. The Reserve Bank of India’s big surprise
  2. Demonetisation is for the long run
  • ECONOMY(The Hindu)

  1. Rural India hit most by cash crunch
  2. Notes withdrawal will not impact RBI balance sheet’
  • Indian Express

  1. The colour of polls
  2. Let the numbers speak
  • Live Mint

  1. India’s gains from lower oil prices at risk
  2. Regulating digital payment industry

Front Page / NATIONAL(The Hindu)

[1] RBI keeps base rate unchanged

 The Hindu


Lowers the Gross Value Added growth projection for 2016-17 to 7.1 per cent from 7.6 per cent.

What is Gross Value Added growth?

It is the measure of the value of goods and services produced in an area, industry or sector of an economy.

  • In national accounts GVA is output minus intermediate consumption

What has happened?

In the 5th bimonthly monetary policy review,

  • Policy rate unchanged: RBI decided to hold the policy rate at 6.25 per cent citing uncertainties emanating from both domestic and global developments
  • CRR requirement removed: RBI has withdrawn the 100 per cent cash reserve ratio requirement that was imposed end of November. The central bank said the decision to withdraw 100 per cent CRR requirement was taken as the government had announced Rs 6 lakh crore of bonds, issued under market stabilization scheme, to clean up excess liquidity

What is Market Stabilization Scheme (MSS)?

The MSS scheme was launched in April 2004 to strengthen the RBI’s ability to conduct exchange rate and monetary management. The bills/bonds issued under MSS have all the attributes of the existing treasury bills and dated securities. These securities will be issued by way of auctions to be conducted by the RBI. The timing of issuance, amount and tenure of such securities will be decided by the RBI.

The securities issued under the MSS scheme are matched by an equivalent cash balance held by the government with the RBI. As a result, their issuance has a negligible impact on the fiscal deficit of the government.

Read more: MSS

[3] SC seeks Parliamentary panel report on Lokpal amendments

 The Hindu


The Supreme Court on Wednesday directed the government to place on record a Parliamentary Standing Committee report suggesting amendments to the Lokpal law

SC is pushing for this reform

One of the amendments the Supreme Court has pushed for is to

  • Make the leader of the single largest opposition party in the House a part of the high-profile Search Committee to appoint the Lokpal in case there is no recognised Leader of the Opposition in the Lok Sabha. Currently, the 16th Lok Sabha has no recognised Leader of the Opposition (LoP)


SC was hearing the petition filed by NGO Common Cause seeking implementation of Lokpal law.

  • The Lokpal and Lokayuktas Act has not seen the light of day since it was made law in 2013. Subsequent amendments to the Act are hanging in limbo

Future hearing

A Bench led by Chief Justice of India T.S. Thakur asked the government to detail the changes required to make the Lokpal office functional. It scheduled the petition for hearing on December 14.

Note: This news is in continuation of the news published earlier in the Hindu on 24th November. We have covered that news in Brief dated 24th November 2016. Please go through the previous article first, to better appreciate current news article.

Editorial/OPINION(The Hindu)

 [1] The Reserve Bank of India’s big surprise

 The Hindu


The Reserve Bank of India has surprised markets by opting to keep benchmark interest rates unchanged and cutting the outlook for full-year growth in the wake of last month’s decision to withdraw legal tender status to high denomination currency notes.

News: In the 5th bimonthly monetary policy review, RBI has kept interest rate unchanged

Reasons cited by RBI for doing so are,

  • The imminent tightening of U.S. monetary policy: There are expectations that US Federal Reserve will raise interest rates
  • The rise in oil prices
  • Domestic inflation trends

[2] Demonetisation is for the long run:

 The Hindu


Author, an officer on special duty at NITI Aayog, tries to build a case for visualizing the benefits of demonetisation in the long run rather than focusing on short term adversarial impact.

Terms used: –

Crony Capitalism: It is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.

In the first few paragraphs author has stated that the critics of demonetisation are absolutely right about the adverse short-term impact of the policy but the real impact of demonetisation must be weighed in the medium/long term

Stamping out cronyism

Author states that 25 years of liberalisation of Indian economy have resulted in far greater benefits than 4 and a half decades of socialism but with gradual opening of the markets, a problem was also introduced, that of crony capitalism.

Public perception: For demonetization

Author states that,

  • Public will see any pro-market move or policy as pro-crony unless government is firm on its agenda of weeding out crony capitalism from the economy. Hence, author states, the popularity of the demonetization move amongst public despite the hardships being faced is due to the fact that the move is perceived as a decisive act against those who made their money unscrupulously and then chose to hide it

 Making a case for free market

  • Before making a case for free market, our politicians have to show that they can effectively curb crony capitalism
  • Free markets and capitalism will get mass public support if everyone is on a level playing field and when the rich/well off pay their taxes which can then be used to invest in those left behind so that they too have an opportunity to rise

Way ahead

Author states that it is only a rule-based capitalism without crony capitalists that combined with a clean government can transform India


Author concludes on a positive note by stating that demonetization might not alter the behavior of entire dishonest community out there but it will certainly nudge a part of it in the right direction. Moreover, it will further bridge the trust deficit that prevails between the government and the governed.

ECONOMY(The Hindu)

[1] Rural India hit most by cash crunch

 The Hindu


Article throws a light on the hardships faced by rural banks as they allege that Public sector banks are favoring their own branches in the urban sector vis-à-vis cash supply

Tough times for Rural banks

  • Regional Rural Banks (RRBs) with 25 crore accounts across the country received just about Rs.8000 crore of fresh currency from November 10 to November 30 which works out to a little less than Rs.350 per account holder

Steps taken to ease the situation

  • On November 21, Finance Minister asked bankers to set aside Rs.35,000 crore for rural India by December 30 to provide credit to farmers for the Rabi crop season
  • RBI advisory: RBI had also advised banks to ensure adequate cash supply for all RRBs, rural branches of commercial banks and branches located in Agricultural produce market committees (APMCs) to enable smooth procurement
  • Buying seeds with old notes: The Centre acceded to the rural bank unions’ demands to allow farmers to buy seeds with old Rs.500 notes and is also considering a demand to raise the credit limit under Kisan credit cards in a bid to compress cash demand for now.

[2] Notes withdrawal will not impact RBI balance sheet’

 The Hindu


The currency note withdrawal will have no impact on the balance sheet of the Reserve Bank of India (RBI), asserted Governor Urjit Patel.


There has been speculation that RBI could gain following the demonetisation exercise with its liabilities shrinking, as the black money in the system was not expected to be deposited in bank accounts. Every year, RBI transfers its surplus to the government.

  • It had been widely speculated that with the windfall gain, RBI could pay a special dividend to the Government. Reports have also suggested that the RBI Act may have to be amended if the Government wanted such a dividend.

Read More: Impact of demonetization on RBI’s Balance sheet, No bonanza for the government from cash destruction

Indian Express

[1] The colour of polls

 Indian Express


PM’s move against black money prepares the ground for reforms of electoral finance.

Issue: Electoral reform

Few positive developments having a bearing on electoral reform

Curbing illicit electoral finance

It is a known thing in Indian electoral scene that political parties use money to bribe voters.

  • Earlier, it used to be just a few days before the elections, but ever since the Election Commission of India (ECI) put together expenditure control mechanisms in 2010, followed by a crackdown on unaccounted money as soon as the model code comes into play, political parties changed their strategy and advanced the activity by a few weeks. Since elections to five state assemblies are round the corner, this is the time when the money would have been moving
  • Some experts argue that demonetization was effectively targeted at this money flow and when government withdrew the legal tender on November 8 it turned this money into junk

Remove Exemption

Author points out that one of the subsidiary effect of demonetization has been the move towards digital payment mechanisms. Every citizen is being told to move to e-wallet and e-banking systems.

  • In such a scenario, the exemption allowed to political parties wherein the donations below Rs 20000 are not required to be paid “by-cheque only” should also be done away with as this is the root cause of 80 per cent of illegal political funding which all political parties show as cash donations.

PM’s directive

Author points out that the 3rd positive development has been PM’s directive to his party legislators to disclose all their bank transactions since November 8

Benami Act

Another positive development has been the passing of an Act to curb benami property deals

Law ministry rejects ECI’s proposal

In the context of these developments, one report came as a shock. This was the law ministry rejecting the ECI’s proposal to give it permanent legal powers to cancel polls on credible evidence of the use of black money.

ECI’s efforts to curb black money

Apart from repeatedly writing to government suggesting electoral reforms,

  • ECI set up an expenditure monitoring division in 2010

Suggested reforms

Author suggests electoral reforms,

  1. Ceiling for electoral expense: Prescribe a ceiling for political parties’ expenditure, like that for the candidates
  2. State funding: Consider state funding of political parties (not elections) with independent audit and a complete ban on private donations
  3. Bring political parties under RTI: Enforce internal democracy and transparency in the working of the political parties. Bring them under the RTI
  4. National Election Fund: Set up an independent national election fund where all tax-free donations could be made. It could be operated by the ECI or any other independent body
  5. Legally empowering ECI: Accept the ECI’s proposal to legally empower it to cancel elections where credible evidence of abuse of money has been found
  6. Decriminalization of politics: Debar persons against whom cases of heinous offences are pending in courts from contesting elections
  7. De-registering political parties: Empower the ECI to de-register those political parties which have not contested any election for 10 years and yet benefited from tax exemptions
  8. Making paid news an electoral offence: Make paid news an electoral offence with two years’ imprisonment by declaring it a “corrupt practice” (Sec 100 RP Act) and “undue influence” (Sec 123(2))

New Delhi Declaration

In December 2015, the ECI had organised a conference of SAARC countries in collaboration with the International Institute of Democracy and Electoral Assistance-IDEA on the scourge of money power in elections.

  • Resolution: The conference adopted a historic New Delhi Declaration laying down the guiding principles of transparency of electoral finance

Member countries of the region and IDEA are trying to get this declaration widely accepted. India, considered a gold standard of elections, has a moral responsibility to lead from the front.

[2] Let the numbers speak

 Indian Express


The discussion on the fall in employment after the November 8 demonetisation relies on anecdotal evidence.

In the first two paragraphs author states that policymaking in India suffers from the lack of credible data

  • Policy for 2016 can’t be devised on the basis of a census or survey conducted in 2011-12

Author points out that there are only two surveys at present that can be considered respectable meaning surveys that have a proper sample design and that are spread over all states

  • CMIE in collaboration with the BSE
  • PRICE (People Research of India’s Consumer Economy)

PRICE survey

Author cites data from the survey PRICE did in August 2016interviewing more than 300,000 households. It also did a survey in 2014. Consequently author compares the data from two surveys.

Note: Some of the data cited can be utilized for exam purpose but remembering all of it not possible and not required too.

CMIE surveys

  • Consumer sentiment
  • Unemployment

Unemployment rate: No impact of demonetization

Only anecdotal evidence is being cited to ascribe everything after November 8th to demonetization but that is not the case. Author cites unemployment rate to prove his point.

  • All-India unemployment rate: Author states that the unemployment rate last updated on November 30th is around 5.69 per cent. This rate was 9.84 per cent on August 31, 8.97 per cent on September 30, 6.34 per cent on October 31
  • Rural unemployment rate: Author points out that rural unemployment rate has decreased like the all-India unemployment
  • Urban unemployment rate: For urban, the unemployment rate had declined to 6.89 per cent on October 31; it then rose to 7.05 per cent on November 30.

Hence, till the end of November, this indicator doesn’t reveal a great loss in jobs, either rural or urban


Author concludes by saying that any claim made should be backed by data and not by anecdotes as has been done after Nov 8


Live Mint

[1] India’s gains from lower oil prices at risk

 Live Mint


In this article author talks about the impact of the rise in crude oil price after the OPEC deal on Indian economy

Author begins his article by stating that as public discourse right now is focussed on impact of demonetization move of the government, there is another matter which India should be concerned about, i.e. risk posed by prospective increase in crude oil prices in the coming months.

Why bother?

Because crude oil price increase will severely impact the inflation target of RBI, increase government spending and reduce private consumption

Why an increase in crude oil prices?

Prices have already spiked after the Organization of the Petroleum Exporting Countries (OPEC) on 30 November decided to cut production for the first time in eight years.

  • OPEC will reduce output by about 1.2 million barrels per day from January 2017
  • Non-OPEC members, including Russia, are expected to cut production by another 600,000 barrels per day

High prices not sustainable

Many analysts believe that high oil prices are not sustainable because of the following reasons,

  1. Weakened global demand: Global demand continues to remain weak and growth is unlikely to accelerate in the near term
  2. Shale gas will become attractive: At higher levels, US shale oil production, which suffered because of lower prices, will once again become attractive
  3. Monitoring of Non-OPEC oil producing countries is difficult: OPEC members have a tendency to cheat in order to take advantage of higher prices. Even if OPEC is able to keep a watch on the production levels of its members, it will be difficult to track a non-member country like Russia.

India benefited from low oil prices

Author states that India benefited due to lower prices as it depends on imports to cover over 75% of its requirement. Low prices were beneficial in following ways,

  • Helped contain Current Account Deficit
  • Helped lower inflation
  • Increased government revenues (Govt sensing an opportunity imposed higher taxes on petroleum products) which narrowed down fiscal deficit

An increase in oil price will reverse the gains India made earlier.

 Effects of price rise

If oil prices rise,

  • Government may have to roll back a part of the tax hike on petroleum products which will affect its revenues
  • Private consumption could also get affected because of higher fuel bills
  • Widening of CAD: Higher oil prices will also widen the current account deficit (CAD) while the rupee has been under pressure because of a strengthening dollar
  • Profit erosion: Companies that benefited from lower oil prices may also see lowering of profits as passing higher input cost to the consumer could be difficult at this stage

Read More: OPEC deal, after two years, why an OPEC deal now? 

[2] Regulating digital payment industry

Live Mint


The payments terrain should expand and be enabled by regulations to accommodate new kinds of participants in the system

Author states that in the light of recent demonetization move and the subsequent push for digital banking means that the digital transaction regulatory framework requires a comprehensive legal framework assessment.

Present situation

At present, RBI is the sole regulator for the payments industry space and derives its power to oversee the payments industry from the Payment and Settlement Systems Act (2007) and its accompanying regulations (2008). Several circulars and guidelines have been issued for the regulator to govern prepaid instruments, intermediaries and the payment system operator.

Steps taken by RBI

  • Exemption from KYC hurdles: RBI has exempted e-wallets & mobile banking from KYC compliance for transactions under Rs20000
  • Two factor authentication: RBI has relaxed the security measure of requiring two-factor authorization to only when one loads money from other banking instruments

 What is 2-factor authentication?

Two-factor authentication is a security process in which the user provides two means of identification from separate categories of credentials; one is typically a physical token, such as a card, and the other is typically something memorized, such as a security code

Example: A common example of two-factor authentication is a bank card: the card itself is the physical item and the personal identification number (PIN) is the data that goes with it.

Benefits: Including two elements makes it more difficult for someone to access the user’s bank account because they would have to have the physical item in their possession and also know the PIN.

Steps that RBI should take

  • Singling out important payment systems: Author states that RBI should single out critical payment systems so that in the event of a failure the shock is not transmitted further to the entire financial spectrum
  • Customer protection/guarantee fund: RBI should also set up a customer protection/guarantee fund so that of the largest participant in the payment industry fails, the end customer is protected. This will reduce needless litigation by customers to get their grievances redressed
  • Self-certification: The system participant should be encouraged to submit a self-certification assessing and disclosing the technical risks it faces at an enterprise level that can expand into systemic risks


Author concludes by saying that evolution of payment systems is taking place and regulatory framework should also evolve simultaneously to accommodate these changes

 Read More: RBI relaxes 2-factor authentication norms, Payment Systems