Comprehensive News Analysis - 26 July 2016

A. GS1 Related

Nothing here today folks!

B. GS2 Related

Topic: Rights Issues

Category: Polity

Key points:

• The Supreme Court on Thursday allowed a rape victim based in Mumbai to abort her 24-week-old abnormal foetus after the Centre clarified that a 20-week cap on termination of pregnancy is not applicable if the pregnant woman’s life is found to be in grave danger
• The Attorney General clarified that though The Medical Termination of Pregnancy Act, 1971 mandates against abortion after pregnancy crosses the 20-week threshold, there are exceptions. Section 5 of the Act holds that none of the restrictions mentioned in Section 3 would apply if “termination of pregnancy is immediately necessary to save the life of the pregnant woman.”

Topic: Legislature

Category: Polity

Key points:

• Lok Sabha Speaker Sumitra Mahajan constituted a nine-member committee of parliamentarians on Monday to probe whether or not Aam Aadmi Party (AAP) MP Bhagwant Mann’s videography of the Parliament House complex, including the room where parliamentary questions were being sorted, had jeopardised its security. The panel has been asked to submit a report by August 3
• Enquiries will mostly look at whether the rule book, which disallows any premature viewing of parliamentary notices, was violated and also violation of rule 354 that forbids videography of Parliament without proper permission
• The inquiry committee shall inquire into the serious security implications and related aspects, suggest suitable remedial measures to avoid recurrence of such incidents in future and recommend appropriate action in the matter,” Ms. Mahajan said, reading out her ruling

Topic: Rights Issues

Category: Polity

Key points:

• In a relief to India’s young who engage in agitations against the establishment, the Supreme Court held that employers may forgive youngsters who suppress or submit false information in their job verification forms if their criminal past involves only a “trivial” offence like “shouting slogans at a young age or stealing bread.”
• “McCarthyism is antithesis to constitutional goal, chance of reformation has to be afforded to young offenders in suitable cases,” a three-judge Bench observed in a recent judgment

Topic: Telecom

Category: Governance

Key points:

• The Telecom Commission on Monday stuck to its position in favour of using a weighted average formula to calculate the annual fee that telecom companies pay for using airwaves
• It was also decided that for the auctions to be held later this year, the SUC will be imposed at three per cent

C. GS3 Related

Topic: Renewables

Category: S&T

Key points:

• The Solar Impulse 2 was on Monday approaching the end of its epic bid to become the first sun-powered airplane to circle the globe without a drop of fuel to promote renewable energy
• When the experimental aircraft touches down in Abu Dhabi in the early hours of Tuesday it will cap a remarkable 42,000-km journey across four continents, two oceans and three seas
• With Swiss explorer and project director Bertrand Piccard in the cockpit, the plane is due to land at Al-Bateen Executive Airport in the UAE capital where it launched its tour on March 9, 2015
• Mr. Borschberg, 63, co-founder of the project smashed the record for the longest uninterrupted journey in aviation history with the 8,924-km flight between Nagoya, Japan and Hawaii that lasted nearly 118 hours
• No heavier than a car but with the wingspan of a Boeing 747, the four-engine battery-powered aircraft relies on around 17,000 solar cells embedded in its wings. Its broad wings and light weight make it particularly sensitive to turbulence. The plane has clocked an average speed of 80 km per hour

Topic: Trade

Category: Economy

Key points:

• The U.S. has asked India to eliminate customs duties on Information and Communications Technology (ICT) items, a top official said
• The demand comes ahead of the bilateral Strategic and Commercial Dialogue slated for next month
• The U.S. also urged India to do away with the requirement that ICT products — including those imported — must be “tested” at Bureau of Indian Standards (BIS)-approved labs and later obtain a registration number from the BIS before they can be sold in India
• The U.S. wants to work with India to eliminate localisation policies – including norms that require companies to store their data in a particular country (in this case India) — because many of the major IT industry firms have established R&D initiatives in India and they would like to have free flow of data across borders

D. GS4 Related

Nothing here today folks!

E. Important Editorials: A Quick Glance

The Hindu

1. Islamic State in Afghanistan

Topic: Terrorism

Category: Security

Key points:

• Saturday’s twin blasts in Kabul, in which at least 80 people died and over 260 were injured, is a clear escalation of the Afghan conflict by the Islamic State. Over the past two years, the IS has built some presence in eastern Afghanistan, operating largely from the chaotic Nangarhar province. But by carrying out one of the worst mass attacks in Kabul in 15 years, it has flaunted its growing footprint. It has sent a message that it is now a force to reckon with in Afghanistan
• In turn, the attack once again exposes the chinks in the country’s security armour. Despite support from U.S. troops and its superior air cover, the Afghan military hasn’t been able to do much to prevent Taliban attacks in recent months
• Now, with the IS also joining the fray, the security situation could become much worse. For the IS, Afghanistan is a potential area of expansion. It is under increasing pressure in Iraq and Syria in the wake of sustained attacks by, variously, the U.S., Kurdish groups and the Iraqi and Syrian national armies. Over the past year it has lost territory and thousands of fighters, forcing the leadership to look for other countries, especially Libya and Afghanistan. Groups such as the IS are most comfortable amidst chaos. The IS has exploited the post-war chaos in Iraq and the civil war uncertainty in Syria. Afghanistan falls into the same category. The civil war has substantially weakened post-Taliban state-building in Afghanistan, leaving several regions, particularly the mountainous areas along the Pakistan border, beyond the control of the government. Unsurprisingly, it is in one such district that the IS has found a foothold
• The Kabul attack also fits into the IS’s sectarian narrative. The targets of the blasts were the Hazaras, the third largest ethnic group in Afghanistan, which is mainly Shia. In both Iraq and Syria the IS has exploited the Shia-Sunni rivalry to win the support of Sunnis, particularly disaffected youth from the community. By directly attacking the Hazaras, the IS is clearly trying to whip up sectarian passions. This is a dangerous game that even the Taliban has largely stayed away from in Afghanistan
• Though the Hazaras were persecuted under the Taliban in the 1990s, the Afghan civil war did not turn sectarian like the conflicts in Syria and Iraq. The IS is trying to change this equation, because only then can it hope to spread its Sunni fundamentalist ideology to the Afghans. The question is how the Afghan government and the international coalition will respond to these twin challenges. If they indeed let the IS gain ground, as happened with the Taliban in the 1990s, the consequences will be far more disastrous

Topic: Monetary Policy

Category: Economy

Key points:

• The present regime at the RBI is foisting an inflation-targeting framework for the conduct of monetary policy without much debate
• What should the goals of the monetary authorities be? Some obvious desirable candidates are full employment (or a high growth path), low inflation, financial stability, budget balance and external balance (what used to be called equilibrium in the balance of payments). And inevitably there are serious trade-offs between these objectives. High growth can come accompanied by stress in the banking system (as happened in the U.S. in the run-up to the financial crisis), or with a huge current account (of the balance of payments) deficit (this implies growth is funded by international borrowing)
• In the advanced capitalist countries, the professional consensus has moved towards inflation targeting as the objective of monetary policy (after the Lehman Brothers crisis of 2008, the importance of financial stability is not debated). The broad argument in favour of inflation targeting runs as follows (also repeated in the report): monetary policy cannot significantly alter the level of employment (or not for any length of time) — this is determined by “real factors” such as productivity, labour market rigidities, and possibly the fiscal stance of the government. Monetary policy should target nominal variables, such as rate of inflation
• Targeting inflation comes from a belief that policy should be simple and transparent, so that the private sector can factor this into their decision-making. The question that this poses is: are there more “complicated” policies which are better? One such policy is called “nominal income targeting”. But it is more complicated and the private sector is deemed to be intellectually challenged
• In these countries, inflation targeting could be the desirable policy because there is no restriction on the movement of (financial) capital; the issue of balance of payments needing policy intervention is not even on the menu. Their interest rates equal the interest rate in the rest of the world (interest parity holds) and the country concerned can borrow abroad to finance the deficit — for example, the U.K. has been running a current account deficit close to 8 per cent of GDP that no developing country could get away with
• But more relevant here is that there is no pressure on the Bank of England to intervene to correct this. As a matter of fact, the macroeconomic distinction between a developed and a developing economy is that the latter needs to settle its debt in an internationally accepted currency. Being in possession of real estate or natural resources is not enough, since foreign lenders will not accept rupees. Thus, at the very least, a developing economy also needs to have some notion of external balance
• On the external front, the report says the RBI should intervene to smooth exchange rate volatility. It also discusses what the RBI should do in the face of large foreign capital inflows and outflows. To insure against outflows, it says, India needs a war chest of foreign exchange reserves. And this is generated by intervening in foreign exchange markets during periods of foreign inflows, via something called “sterilised intervention”. But the takeaway from the report is that the external sector needs attention in emergencies, not on an ongoing basis
• So is India like a developed country that can disregard the external constraint? India is a fairly open economy, reliant on foreign capital flows. Gone are the days when we could think of ourselves as a closed economy not really worried about foreign trade and payments. Even when this was true (before liberalisation), we had two major balance of payments crises that altered the subsequent trajectory of the economy — the first one contributing to the “socialism” of Indira Gandhi, and the second one leading to liberalisation. Thus, trade and capital flows have to be woven into the proposed policy fabric
• To go back to the report, the very discussion of sterilised intervention implies that India’s financial markets are not integrated with world markets. So what is sterilised intervention? When capital inflows occur, the RBI could do nothing and let the rupee appreciate. If it chooses to intervene, it could buy foreign exchange. This would increase the supply of money, and possibly cause inflation. So it may buy back the rupees by offering government bonds. This is “sterilised intervention” — sterilised because the policy leaves money supply unchanged. But since this policy increases the supply of government bonds, the yield on them must rise in order to make the public hold them. And this is possible only if the domestic interest rate can differ from the international one. The whole notion of having adequate foreign exchange reserves, and acquiring them via sterilised intervention, means that we must pay attention to the details of the external sector. How much foreign exchange to buy? How much sterilisation? Similarly for an outflow, the choice involves a depreciation of the currency versus loss of reserves
• You may get the details of the intervention right, you may be a good boy with inflation and budget deficits under control, and yet face chaos. This is what happened to Latin America after Russia defaulted in 1998. There was a reversal of capital flows that left the more open economies stranded. To not even consider such an eventuality in the design of the architecture of monetary policy is surely being foolhardy. Other developing economies that have adopted inflation targeting often say “inflation-targeting plus” — the “plus” suggesting that there are possible complications
• East Asia has grown out of poverty by using the exchange rate as a tool to generate demand for domestic goods. The RBI Governor has said that today there is no space for such a strategy. But India’s trade balance has been in deficit (around 8 per cent of GDP till recently); a depreciated exchange rate could surely claw back some of this demand by making Indian products slightly more competitive in world markets
• Not addressing the external constraint is the biggest shortcoming of the report. There are also other examples of cut-and-paste. In an economy like India’s, why does monetary policy have nothing to say directly on supply shocks, for example, a failure of the monsoon or a rise in oil prices? A narrow focus on consumer price index targeting means that adverse output shock like El Nino is relevant only if and when it feeds into inflationary expectations. And what will inflation targeting do? After a failed monsoon, and high food prices that have led people to expect high prices, policy would increase interest rates and have a prolonged period of demand compression from a one-off monsoon failure. Nominal income targeting has been shown to be vastly superior in dealing with this kind of a shock
• Similarly, if oil prices were to rise, one way of minimising the inflationary impact of that is to let the exchange rate appreciate. If you were half-conscious of the external balance, it is obvious you do so at your peril (because then the pressure on the current account is being compounded)
• Another example of cut-and-paste is the box item on the so-called New Keynesian Phillips Curve. Whatever its usefulness in industrialised countries, to lift this and use it to illustrate one’s preferred policy set-up in India is a bit rich. The example in the report assumes no supply shocks. Also, is the price stickiness assumed there at all a decent representation of how goods prices are determined in the Indian economy?
• The RBI is about to embark on a new policy framework based on poor economics

Topic: Reforms

Category: Economy

Key points:

• Central to the “reforms” introduced in 1991 was not a “retreat of the state” in favour of the “market” as is commonly supposed, but a change in the nature of the state. This change was not necessarily a conscious decision; it was more a “spontaneous” outcome of the introduction of the “reforms” themselves
• Since the “reforms” entailed the opening of the economy to freer cross-border flows of goods and capital, including of finance which is highly mobile and whose sudden outflow can precipitate a financial crisis, the state under a “reform regime” necessarily has to ensure that the “confidence” of the international financiers in the economy remains intact. State policy therefore must always be to their liking
• The “reform regime” creates a state that becomes exclusively concerned with the interests of globalised capital, and the domestic corporate-financial oligarchy aligned with it
• A fallout of this is the withdrawal of support by the state from traditional petty production, and hence the unleashing of a crisis in this sector, including in peasant agriculture. The increase in the prices of agricultural inputs because of reduced subsidies (as the government, to placate finance capital, has to keep down the fiscal deficit while not raising taxes on the rich); the withdrawal of government price support for several crops by ending the market-intervention role of the Commodity Boards; allowing even nationalised banks to renege on providing agricultural credit, so that the peasantry is forced to rely increasingly on a new class of private moneylenders charging exorbitantly high interest rates; the winding up of public extension services; the removal of the insulation from world market price fluctuations that had been provided earlier to the agrarian economy through tariffs and quantitative restrictions; the cuts in public investment in agriculture and irrigation; the running down of agricultural research and development in public institutions; the permission to agribusiness to enter the countryside for a direct, unmediated and unregulated relationship with the peasantry; and the retreat of the government from providing essential services like quality education and health care are some of the obvious ways in which state support has been withdrawn from this sector
• This has adversely affected the income flow of the peasantry, impaired the profitability of peasant agriculture, reduced its rate of growth, and brought acute distress to the countryside. For large sections of the peasantry, even simple reproduction of their economy has become impossible, causing a spate of peasant suicides. What is true of peasants is also true of traditional petty producers in general: fishermen, artisans, craftsmen, weavers and others. A simple calculation some years ago showed that if the statutory minimum daily wage was imputed to Kerala’s traditional fishermen, then their entire economy would be in deficit
• The income squeeze on the peasants has been accompanied by a taking over of their land for “infrastructure” and “industrial” projects, often at throwaway prices and against their wishes. When consent has been obtained, not everyone dependent on the land has been consulted. “Primitive accumulation of capital”, to use Karl Marx’s phrase, is rampant not only in “flow” terms (income squeeze) but also in “stock” terms (asset dispossession). The latter is set to gather further momentum with the “Smart City” project of this government
• All this need not make one shed tears if the peasants and petty producers, who are either dispossessed or unable to cope with the income squeeze and therefore migrate to cities, could find proper employment there. But the scale of job creation has been minuscule despite high GDP growth
• Joblessness does not announce itself as such. The employment rationing it entails takes diverse forms: casual employment, intermittent employment, part-time employment, and disguised unemployment (camouflaged often as “petty entrepreneurship”). These give a misleading picture of the unemployment scenario. But if we take what the National Sample Survey calls “usual status employment”, then between 2004-05 and 2009-10, a period of high GDP growth, such employment grew at 0.8 per cent per annum. This was below the natural rate of growth of the workforce itself, even if we ignore the job-seeking displaced peasants
• This has led to a proliferation of precarious and insecure employment, a burgeoning lumpenproletariat( uninterested in revolutionary advancement), an immense weakening of the bargaining position even of the unionised workers, and hence to a compression of the per capita real income of the “working people” as a whole, consisting of agricultural labourers, traditional petty producers, and non-white-collar workers
• A simple statistic confirms this. The percentage of the rural population with food intake below 2,200 calories per person per day (the benchmark for defining rural poverty) was 58.5 in 1993-94; it increased to 68 in 2011-12. Likewise the percentage of the urban population below 2,100 calories per person per day (the benchmark for defining urban poverty) was 57 in 1993-94; it increased to 65 in 2011-12
• It is often claimed that growing calorie deprivation does not indicate worsening economic status, since it could arise for other reasons, such as changing tastes, greater health consciousness, reduced physical work effort, or greater emphasis on children’s education and health care. But if reduced calorie intake occurred for these reasons even when real incomes of the working people were (for argument’s sake) rising, then it would be difficult to explain an increase in calorie intake when real incomes were also rising, such as between 2009-10 (a poor crop year) and 2011-12 (a good crop year)
• Indeed, one invariably finds a positive association between the two variables. The more reasonable explanation for declining calorie intake therefore is a decline in real income of the working people — that is, money income deflated by a price index that takes into account the effect of privatisation of essential services (which the usual price indices do not)
• What the “reforms” have brought therefore is a process of “primitive accumulation of capital” without the creation of adequate employment opportunities to absorb those who are displaced by it. This has caused a worsening of the conditions of the “working people” as a whole
• There is, however, another side to “reforms”: the growth of the financial sector, or what is called “financialisation”; and the location domestically of certain service-sector activities outsourced from developed countries owing to the comparatively lower wages prevalent here. These have benefited an emerging middle class, not so much through an expansion in its relative numbers as through an increase in its relative incomes. This class has emerged as a votary of the “development” paradigm of the “reform regime” and thrown its weight behind the corporate-financial oligarchy whose share of wealth and income has increased phenomenally under this regime
• But the world capitalist crisis, which is nowhere near ending, is likely to bring disappointment to the middle class. This class will then provide support for an alternative development strategy which would be in the interests of the working people and transcend “neo-liberal” capitalism, though attempts to prevent such a denouement through the formation of a corporate-”communal” alliance that seeks to divide the people will also gather momentum

Topic: Law and Order

Category: Executive

Key points:

• Ever since the evolution of the police as an organised apparatus of the modern state, one fundamental issue has come to be intertwined with their field operations: how much force can they use to serve the ends of public order? Associated with this are other questions: is it possible to define limits to the police’s overall authority and, if yes, how do we ensure that the exercise of such authority does not transgress the set boundaries? Unfortunately, these are subjective issues and hence difficult to resolve
• What we are now witnessing in the Kashmir Valley is a part of this debate on how to oversee the police so that they are conscious of the risk of overstepping their powers and committing human rights violations
• Misgivings about the police are not about whether they can use force while discharging duties; there is near consensus that they can and should use sufficient force to make sure that law-abiding citizens are not obstructed from going about their daily tasks. What, however, divides opinion is whether the techniques of such force should be so regulated that they achieve the objective of maintaining public order without transgressing human rights. It is in this context that the use of pellets to disperse mobs in Kashmir has triggered protests as well as demands for the withdrawal of this mode of handling violent mobs. This is not just a routine human rights discussion; it has unmistakably assumed some political overtones too
• Pellets as ammunition were introduced recently in Jammu and Kashmir (J&K) in reaction to complaints of excesses in 2010 by the security forces, who were using rubber bullets to disperse stone-pelting mobs. Contrary to popular belief, even the rubber bullets caused a few deaths, and so began the current experiment with pellets
• It was hoped that pellets, which are lead balls resembling ball bearings, would be less lethal than rubber bullets and conventional bullets but would carry no less deterrence to anti-social elements. The truth, unfortunately, is that while pellets may not kill the person they hit, they penetrate skin tissues and cause serious injuries. Further, they travel from the cartridge at high speed and disperse in unpredictable trajectories
• The complaint from J&K is that pellets have not only caused bodily harm, but have also injured the eyes of many demonstrators, leading to loss of sight. Also, according to some specialists who had examined the eyes of the injured persons, the pellets used in the State by security forces were not all round. Some were irregular and sharp-edged, capable of causing serious injuries. Having said this, it is also important to examine the credibility of the complaint before taking any decision to give up pellets in favour of less injurious ammunition. Any abrupt discontinuance of pellets has serious implications for the effectiveness of law enforcement in handling mobs
• The Home Ministry has responded swiftly to these complaints by rushing eye specialists to J&K. This gesture needs to be applauded. The Home Minister also visited Srinagar a few days ago and reportedly advised against excesses while dispersing mobs. A committee, he said, would be set up to examine other non-lethal alternatives to pellets
• There are two important aspects to this controversy, which have relevance to the criminal justice system. First, since it is difficult to quantify the amount of force that the police can legitimately employ when order is threatened, the state has a huge responsibility to quickly assess police action and punish policemen in cases of wanton violence. Many governments fight shy of this duty and invite odium upon themselves. Such failure to fix responsibility is invariably attributed to the need to preserve police morale. We have seen this happening over and over again in J&K. This is why opposition to the use of pellets is symbolic of the overall dislike of the police in the Valley
• Second, any action to whittle down the operational autonomy of the police in disturbed areas should be taken only after great deliberation on the likely impact on police effectiveness and the morale of the forces. Otherwise there could be problems that may adversely affect the image of the government itself. No government can afford to be soft on lawbreakers nor can it permit arbitrary police conduct in the field
• Criminal justice scholars across the world, especially in U.S. universities, have conducted serious research in this area. Their broad conclusions converge on the inevitability of the police resorting to force and the need to simultaneously bridle police hands so that there are no excesses. In the U.S., the police have also been accused in the recent past of biases while using force
• While it is fortunate that in J&K there are only mild overtones of prejudice, a controversy over pellet use could always degenerate into accusations of prejudice and political motivation. This is why we need serious introspection and quick corrective action
• The objective should be to find out whether there is any other non-lethal method to handle demonstrations. Indian police use tear gas, lathis, and sometimes water cannons before resorting to the use of firearms to break up violent crowds. Police firing was a rare occurrence until about two decades ago, but with growing violence in India it has become distressingly frequent. Judicial probes into such action have seldom ended in adverse findings against the police
• The administrative response to mob violence will need to blend firmness with moderation. A trained force under professional police leadership combined with an understanding ruling class can do a lot to steer through the dilemma. This is possible only if our polity succeeds in insulating the police from constant political pressures. As things stand now, this seems a pipe dream

Category: Data

• Rising labour earnings have been the main force behind India’s remarkable decline in poverty. The gains arise partly from the demographic transition, which increases the share of working members in the average family
• But trends in female labour force participation veer in the opposite direction. Today, India has one of the lowest female participation rates in the world, ranking 120th among the 131 countries for which data are available. Even among countries with similar income levels, India is at the bottom, together with Yemen, Pakistan and Egypt (Figure 1). Worse still, the rate has been declining since 2005
• This is a matter of concern as women’s paid employment is known to increase their ability to influence decision-making within the household, and empower them more broadly in society as a whole
• This declining trend has been particularly pronounced in rural areas, where female labour force participation among women aged 15 years and above fell from 49% in 2005 to 36% in 2012. This is the most recent period for which data are available. The numbers are based on the National Sample Survey’s (NSS) definition of ‘usual status’ of work, but the trend remains similar with other definitions too
• The explanation for this disturbing trend is the lack of suitable job opportunities for women. In a traditional society like India, where women bear the bulk of the responsibility for domestic chores and child care, their work outside the home is acceptable if it takes place in an environment that is perceived as safe, and allows the flexibility of multi-tasking. Indeed, three-quarters of women who were willing to work, if work was made available, favoured part-time salaried jobs
• From this perspective, female labour force participation can be expected to depend on the availability of ‘suitable jobs’ such as farming, which are both flexible and close to home. However, the number of farming jobs has been shrinking, without a commensurate increase in other employment opportunities. Research suggests that more than half of the decline in female labour force participation is due to the scarcity of suitable jobs at the local level
• A large body of academic work in India has focused on a different explanation, the so-called “income effect”. It is argued that higher household incomes have gradually allowed more rural women to stay at home, and that this is a preferred household choice in a predominantly patriarchal society. Other frequently-mentioned explanations are that the share of working women is declining because girls are staying longer in school. It is also said that with shrinking family sizes, and without the back-up of institutional child support, women have no option but to stay out of the work force
• We are sceptical. Staying longer in school and being less able to rely on family support for child-rearing could justify a decline in participation rates among younger women, but not the equally important drop among middle-aged cohorts. There are also reasons to downplay the income effect. Between 2005 and 2012 India experienced roughly a doubling of wages in real terms. But across districts, a doubling of real wages is associated with a 3 percentage point decline in female participation rates, not with the much larger 13 percentage point fall that actually occurred. Our research shows that these factors explain less than a quarter of the recent decline in India’s female labour force participation
• Evidence also points to a less ‘voluntary’ withdrawal of women from the labour force than the income effect explanation implies. The NSS, which is the main source of labour market data, tends to underestimate women’s work. What most working women do in India does not match the image of a regular, salaried, 9-to-5 job. Many women have marginal jobs or are engaged in multiple activities, including home production, which is often hard to measure well. Female unemployment may be underestimated as well. If one were to relax the stringent criteria used by the NSS to define labour force participation, and include the women who participated under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), or were registered with a placement agency, then the female labour force participation rate would be between 3 and 5 percentage points higher. This measurement problem is further evidenced by the population census data that report much higher rates of female unemployment than the NSS



• Beyond the income effect and measurement issues, the main driver of the decline in female labour force participation rates is the transformation of job opportunities at the local level. After 2005, farming jobs collapsed, especially in small villages, and alternative job opportunities considered suitable for women failed to replace them



• Regular, non-farm employment only expanded in large cities. As a result, there is a ‘valley’ of suitable jobs along the rural-urban gradation. Fortunately, the decline in female labour force participation is not irreversible. The trend can be turned around through a more vibrant creation of local salaried jobs — including part-time jobs — in the intermediate range of the rural-urban gradation where an increasingly large share of the Indian population now resides

Category: Polity

• The Supreme Court allowed a rape victim to abort her “abnormal” 24-week-old foetus on the ground that the pregnancy would endanger her physical and mental health. The victim got relief under an exception in section 5 of the Medical Termination of Pregnancy Act, 1971, which allows abortion after the permissible 20 weeks in case it “is immediately necessary to save the life of the pregnant woman”. That the case reached the Supreme Court, posing complicated and uncomfortable questions of law and morality, underscores the tardiness of India’s lawmaking process, and its failure to keep up with rapid change in science and society. A brief look at what began with the Haresh and Niketa Mehta case in 2008, and remains barely half done 9 years later
  When were the limitations of the “legal limit” of abortion revealed?
• In 2008, Haresh and Niketa Mehta petitioned Bombay High Court to allow them to abort their 26-week-old foetus who had been diagnosed with a heart defect. For the first time, the national medical narrative took note of the fact that with the advent of medical technology, pre-natal diagnosis of defects had come a long way — and some defects could be revealed after 20 weeks has passed. The Mehtas’ plea was turned down on expert advice. But the court’s observation that only the legislature could address the demand for change in the legal limit meant that India started the process of re-evaluating provisions of the Medical Termination of Pregnancy Act, 1971. Niketa, incidentally, had a miscarriage soon after the verdict
• Was the law challenged on any other occasion?
• Yes. Last year, a 14-year-old rape victim from Gujarat sought and received permission from the Supreme Court to abort after the 20 weeks deadline had passed. Her petition was treated as a “special case”, meaning it could not be used as a precedent to grant permission in another case. Which is why the woman in whose favour the SC decided on Monday — identified in her petition as “Miss X” — needed to knock on the doors of the apex court afresh
• So, what are the provisions of the new MTP law that is in the works?
• The draft Medical Termination of Pregnancy (Amendment) Bill, 2014, on which the Health Ministry has sought and received comments, provides for abortion beyond 20 weeks under defined conditions. As per the draft law, a healthcare provider may, “in good faith”, decide to allow abortion between 20 and 24 weeks if, among other conditions, the pregnancy involves substantial risks to the mother or child, or if it is “alleged by the pregnant woman to have been caused by rape”
• The draft law also takes into account the reality of a massive shortage of both doctors and trained midwives, and seeks to allow Ayurveda, Unani and Siddha practitioners to carry out abortions, albeit only through medical means, and not surgical ones
• The draft legislation recognises that the anguish caused by pregnancy resulting from rape “may be presumed to constitute a grave injury to the mental health of the pregnant woman”, and that such an injury could be a ground for allowing abortion
• Why is it essential to change the MTP law?
• Legal and medical experts feel that a revision of the legal limit for abortion is long overdue. Foetal abnormalities show up only by 18 weeks, so just a two-week window after that is too small for the would-be parents to take the difficult call on whether to keep their baby. Even for the medical practitioner, this window is too small to exhaust all possible options before advising the patient to take the extreme step
• Again, the 45 years since the enactment of the law has seen technology break new grounds — from ultrasound to magnetic resonance imaging to a range of highend foetal monitoring devices that have taken prenatal diagnosis far beyond the illegal sex determination tests that have refused to die out completely
• The rising incidence of sex crimes, and the urgent need to empower women with sexual rights and choices both in their own interest and for the sake of reducing the fertility rate as a whole, have made it imperative that the law be changed. In any case — and what is far more worrying — is the fact that the lack of legal approval does not prevent abortions from being carried out beyond 20 weeks. And they are done in shady, unhygienic conditions by untrained, unqualified quacks, putting thousands of women at risk probably every day

The import policy of Genetically Modified Food, Feed, Genetically Modified Organism (GMOs) and Living Modified Organisms (LMOs) has been notified by Directorate General of Foreign Trade under General Notes regarding Import Policy in ITC (HS) 2012, Schedule-1 (Import Policy). As per the policy, import of GM food requires prior approval of the Genetic Engineering Approval Committee (GEAC) constituted by the Ministry of Environment Forest and Climate Change.

The Centre for United Nations Peacekeeping in India (CUNPK) commenced the first United Nations Peacekeeping Course for African Partners (UNPCAP-01) for a duration of three weeks commencing from July 25 at New Delhi. The course is being conducted jointly with the USA.

Government is committed to reducing out of pocket expenses on healthcare: Smt Anupriya Patel

HTA will lead India to have a robust Universal Health Coverage programme: Shri Faggan Singh Kulaste

The three-day workshop is being jointly organized by the Department of Health Research (DHR), ICMR, National Institute for Health and Care Excellence (NICE)-UK and Health Intervention and Technology Assessment Program (HiTAP)-Thailand.

The Agreement on Social Security between India and Japan shall come into force with effect from 1st October 2016. With this addition number of Social Security Agreement (SSA) that would become operational would be sixteen. The Ministry of External Affairs, along with Employees’ Provident Fund Organisation (EPFO) – the competent authority for negotiating and concluding SSAs have completed the formalities for the Agreement to enter into force. The Social Security Agreement between India and Japan was signed in Tokyo on November 16, 2012.

Bilateral Social Security Agreements (SSA) are made with other countries to protect the interests of Indian professionals, skilled workers working abroad. The Government of India till date has signed SSA with 19 countries. The SSAs have been in operation with 15 countries so far.

Salient Features of draft National Plan of Action for Children 2016 are as follows:

• The draft NPAC 2016 is being developed through a consultative process with different Ministries/Departments, Government of states/UTs, Civil Society Organisations as well as children.
• It is based on analysis of status of children and attempts to address key issues and concerns identified in each key priority area
• The draft NPAC defines objectives, sub-objectives, strategies, action points and indicators for measuring progress under the four key priority areas and also identifies key stakeholders for the implementation of different strategies.
• The strategies and action points largely draw upon the existing programmes and schemes of various Ministries/Departments. However, for certain key outcome it also suggests formulation of new programmes and strategies, as required.
• The plan specifically identifies areas where there is a lack of adequate data and information for measuring progress for children in terms of their survival, health, nutrition, education, development, protection and participation and suggest research and knowledge development to address the same.
• The National Policy for Children (2013) provides for formation of a National Coordination and Action Group (NCAG) under the Minister, Ministry of Women and Child development to implement the plan and monitor the progress with other Ministries concerned as its members.

The draft NPAC 2016 takes into account data disaggregated by rural and urban areas for key indicators. Reducing maternal and neonatal mortality rates are key outcomes envisaged under Key Priority Area: Survival, Health and Nutrition.

The first draft is already in the public domain; i.e.; on the website of the Ministry http://wcd.nic.in/acts/national-plan-action-children-2016. The Ministry is currently finalizing the draft based on comments and suggestions received from other Ministries/Departments/Governments of States/UTs/Individuals and civil society organizations.

Topic: Pollution

Category: Environment

Key points:

• We have done quite a bit of fire-fighting in Delhi in the name of cleaner air over the past two decades. Over 15 years ago, we shifted some of the major industries out of Delhi to ensure a cleaner environment. This resulted in tens of thousands of families losing their jobs and their children being thrown out of school, probably for ever. It also reduced formal job opportunities in Delhi so that today less than 10% of Delhi citizens have formal jobs. We never really discussed the possibilities of cleaning up the operation of those factories. Nor did we consider the possibility that those factories may harm populations at their new locations
• The second major Delhi-based initiative was to mandate CNG as a fuel for public vehicles in the face of an international practice that it is better to mandate performance standards (in this case, exhaust standards) and not technologies (in this case, CNG). This is because technology-based standards discourage innovation and competition and encourage monopolies. While the move gave us temporary relief from visible smoke, it also had some unintended effects. For example, buses became more expensive; so, a large number of students had to be shifted from bus transport to overloaded vans and many office-goers from contract buses to motorcycles. The CNG solution could be implemented in Delhi, but it did not help dozens of other polluted cities where CNG will not be available
• Health problems stemming from high pollution levels are serious in dozens of cities in India and not only in Delhi. As of today, there are only three reliable scientific studies that inform us about the sources of particulate pollution (PM2.5) in Delhi (Guttikiunda, S. et al 2013; Pant, P. et al 2015; Sharma, M. and Dikshit, O. 2015) and none for the less important cities around the country. According to all these studies, the contribution of vehicular emissions to PM2.5 is certainly less than 30%. Studies commissioned by CSIR and UNEP also show that actual number of personal vehicles operating on the roads of Delhi is less than 60% of the total number as old vehicles that are scrapped do not get deregistered
• Scientific samples of vehicles on the road in Delhi (data published in international journals) show that cars more than 15 years old and 11-15 years old comprise only 1% and 6% of the total. Therefore, even if all cars more than 10 years old were junked we may reduce total PM2.5 emissions by 0.2% in Delhi (30% X 10% X 7%). Even if we consider old cars to be grossly polluting, the benefit cannot be more than 1% as old cars are driven much less than new cars. It is quite clear that banning old cars will cause major bureaucratic and social headaches without any discernible health benefit
• These experiences should convince us that serious societal problems need thoughtful well-researched responses and not do-gooder ‘drastic’ actions that may not work in time. Putting people to hardship again and again without adequate rewards in terms of health benefits or livelihood gains makes governance even more difficult. We have reached this impasse because we are investing very little in academic institutions to conduct serious studies on issues of importance on a continuing basis. Our studies show that knowledge production in India today on a per capita basis is much less than that in China and even less than that in countries like Iran, South Africa, Brazil, etc
• To solve the problems of pollution in Indian cities we have to think of short-term and long-term solutions. The most objective short-term solution to vehicular pollution would be to strengthen ‘pollution under control’ (PUC) testing systems. The government can announce that within a year, the PUC test will become much more stringent and will test for PM2.5 and NOx emissions annually. Vehicles not conforming to the new tests will not be allowed on the road. Not only will everyone see such a ruling as fair, but also there will be no discrimination between CNG, petrol and diesel vehicles. Grossly polluting CNG vehicles will also go off the road
• For long-term action, we have no choice but to fund 10 or more research centres which work on these issues around the country for years to come. We need some dedicated researchers and thinkers who compete to provide us the most workable solutions. If we don’t do this, we will keep discussing our problems for years without any clean air

Topic: Nepal

Category: India’s Neighbourhood

Key points:

• For a country that saw eight prime ministers come and go in 10 years, the collapse of Khadga Prasad Sharma Oli’s nine-month-old government in Kathmandu shouldn’t make big news. But it did
• Many in India saw Oli’s departure as vindication of Delhi’s foreign policy and, the return of Indian dominance over Nepal’s political affairs. For Beijing it was the loss of a trusted ally.The truth, however, lies somewhere in between and doesn’t call for any celebration in Delhi
• For the Chinese who recently changed their Nepal strategy, from being passive actors to engaging in direct intervention as was evident in the case of Maoist leader Prachanda’s volte-face in May, there is surely a lesson to be learnt
• Prachanda, who eventually ended Oli’s stay in power by withdrawing key support to the coalition government, wanted to pull out the rug as early as May but changed his mind, reportedly upon insistence by the Chinese
• The way the matter ended, shows that Beijing was wrong in following the Indian practice of micro-managing affairs in Kathmandu. It paid the price for depending a bit too much on Nepal’s opportunistic political core
• But the country that needs to take the maximum lessons from the whole episode is India. It is true that Nepal’s politics often dragged India into the political games. But the question is how Delhi responded to the situation, and whether its actions followed a consistent pattern. Were the actions in line with the national interest, both economic and strategic? To what extent was the Indian strategy nuanced, if at all?
• Unlike in any of the neighbouring economies, India is omnipresent in Nepal.Indian politicians cutting across party lines are stakeholders in Nepal’s political affairs
• There is a historical perspective to this. A country that not merely shares open border but enjoys complete access to the Indian job market cannot be insulated from Indian politics. But the problem is, India’s Nepal strategy falls prey to swings in the domestic political climate
• The vacillating Indian strategy can be easily understood from the treatment it meted out to the Maoists
• India labelled the erstwhile king as pro-China and turned a blind eye to Maoists using Indian territories to dislodge the monarchy. This stance changed after Islamists hijacked an Indian Airlines flight in 1999 from Kathmandu to Delhi
• The Atal Bihari Vajpayee government took the Maoists here to task, owing to their rising influence in India. As an extension of its domestic policies, India is believed to have played a role in bringing down the nine-month-old Prachanda government in 2009 because he was seen as being pro-China. Significantly, Oli was then in the good books of Delhi! In contrast to these flip-flops, China has had a stable relationship with Nepal. It didn’t compromise its national security (read Tibet); it allowed India to remain in the driver’s seat (read micro-manage) while seeking to control the levers of power
• The most pitiable feature of India’s Nepal strategy was the manner in which it neglected to promote trade and commerce
• True, India has offered a plethora of fiscal concessions to Nepal and it is the ultra-nationalists in Kathmandu who are to blame for creating stumbling blocks in increasing
• Indian investments in Nepal. But what is less reported is India’s monopolistic approach to Nepal’s trade interests
• Travel along the border, and immediately the appalling lack of infrastructure on the Indian side presents itself. A 2002 scheme for trade facilitation has just started seeing the light of day
• There was no reason why India, located next door, couldn’t offer Nepal better and cheaper port, road and rail connectivity for third country imports. But we didn’t
• India is the sole supplier of fuel to Nepal. Can anyone explain what stopped us from laying pipelines to ensure smooth supplies? Can anyone explain why India allowed the Madhesis to hold to ransom trade through the main trading point at Birgunj for five long months till February?
• True, India had a genuine interest in seeing Nepal address the Madhesi demand for equal political rights. India was a stakeholder in the 2007 and 2008 agreements wherein the first democratically elected government in Nepal had agreed to address their concerns.
• It is also true that the ruling politics in Kathmandu finally ended up promulgating a constitution that failed to address the concerns of ethnic minorities. But was it in India’s interest to allow them to block the main trading gate for so long?
• The world read this as a blatant attempt on the part of Delhi to arm-twist Kathmandu and handed over Oli a golden opportunity to shame India on the global platform and invite China to free Nepal from Indian dominance
• China utilised the opportunity and Oli became a national hero. Oli, one must remember, is still the darling of the nation and could have emerged a winner had the Nepalese Constitution had a provision for mid-term elections
• So where are India-Nepal relations headed now? First of all, Oli’s departure will not resolve the constitutional crisis in Nepal as the next-in-line coalition of the National Congress and Maoists does not have a two-thirds majority.
• What is more important is that the people’s verdict does not support this coalition. And Oli’s Communist party of Nepal (United Marxist-Leninist) has adequate hold on the bureaucracy to scuttle every move of the new government to earn popular support.
• Meanwhile, India has to fight the public wrath for its perceived role in the collapse of the Oli government

Topic: Banking

Category: Governance

Key points:

• Amidst the reams of discussion and data put out in the public domain on non-performing assets (NPAs), there has been almost no serious attempt to understand its root causes
• To the uninitiated, a bank loan becomes an NPA if the borrower doesn’t pay the interest or instalment even after 90 days from the due date. NPAs are a double whammy — banks no longer can earn interest income from such accounts, and they have to make a certain amount of provision from their profit for those accounts
• The NPAs are defined and classified under the Reserve Bank’s Income Recognition and Asset Classification (IRAC) norms
• While examining the surging bad debts of public sector banks in particular, what is generally overlooked are the range of internal and external factors causing it
• Once this is appreciated, it would become evident that a more multi-pronged approach is called for
• The solutions arising out of the IRAC norms are not equal to the complexity of the problem at hand
• The internal reasons for loan default may include: serious illness or death of the promoter, managing partner or key persons in management; mismanagement of funds or inventory; siphoning off funds; and, importantly, diversion of working capital funds.
• Again, the diversion of funds may be external or internal. External diversion refers to ‘misuse’ of the working capital provided by the bank to invest in associate firms or to buy properties not relevant to the business concerned
• This is deemed a case of fraud. There is a tendency to view all big-ticket NPAs as results of wilful default or deliberate diversion of funds. This may not be the case
• Internal diversion refers to the working capital funds being used to buy capital goods such as machinery
• The external reasons for a loan to become an NPA include: an unexpected delay in getting raw materials; unexpected fall in the order book; natural calamities; damage to due fire; and, importantly, very subdued growth in the economy
• While a close monitoring of loan books can provide signals on loans slipping into NPAs if they are on account of internal reasons, it would be beyond the control of banks in the case of NPAs arising due to external factors. Again, external factors sometimes produce systemic effects
• For example, several small-scale units work on sub-contracts and make supplies to big companies. If these giants fail to pay these small firms or even prolong payments, it will hit the loan accounts of dependent firms
• So, banks may be permitted to restructure or reschedule its payment terms at least once during the currency of the loan, if it is stressed on account of any of these reasons
• Unfortunately, the RBI does not buy this logic; it permits rescheduling of such a loan ‘only if’ the bank declares the loan an NPA. There could be a multitude of reasons at work for a loan slipping into an NPA
• Therefore, addressing this menace is not a simple affair, and no single solution will resolve this knotty issue
• To identify and mark an account as NPA, which is a system-driven process in all banks, there is a standard formula. The yardstick is the same for all loans — big or small; personal or trade; or a loan to a manufacturer; all loans, except farm loans, are equal in the eyes of the IRAC norms
• That’s one of the problems. The IRAC norms are similar to the earlier versions of the Basel rules. In 1992, the Basel Accord was introduced to strengthen the capital base of banks. Later in 2003, the improved version of the same was brought into force, namely Basel II
• Now Basel III is in vogue. In Basel I, the risk weights were predetermined or fixed for the credit portfolio of banks. In other words, the view under Basel I — ‘one cap fits for all’ — was no longer felt workable and hence Basel II came into being
• Strikingly, the IRAC norms are also similar in nature and they are uniformly applicable to all loans and advances. To make them more relevant, they need to be modified
• The RBI or the Government must constitute a core committee to re-examine the IRAC norms see and how best they could be made more dynamic, workable and realistic. The committee must have at least two or three senior bankers who have rich, varied and hands-on experience in the area of credit dispensation.
• The terms of reference of the committee could be to review and revise the existing NPA norms and make them flexible; to suggest how and where restructuring could be allowed without lowering the status of the asset; to suggest how and where haircuts could be done while making provisions; and, to look into the level of freedom top management of banks can enjoy while managing stressed assets without resorting to “ever-greening” of accounts
• Such a strategy would provide a great relief to banks in the matter of handling stressed assets. More importantly, they will shift their focus to credit growth by shedding their abhorrence towards lending to new projects. As a result, we may all be able to witness a clear boom in the economy

1. Merger of oil PSUs: The focus should be on productivity, not size

Topic: Energy sector

Category: Economy

Key points:

• The reported proposal to merge several public sector oil companies to form one behemoth is a terrible idea. Far from unlocking synergy and shoring up innovation, the move to aggrandize monopoly in the hugely voluminous oil sector is more likely to lead to inefficiencies and scuttle productivity gains across the board
• There is certainly a case for oil companies to rationalise investments across the value chain, right from exploration and production (E&P) of hydrocarbons, and on to refining and marketing of petroleum products. Indeed, oil refiners and marketers like IOC, BPCL and HPCL have in recent years acquired several E&P blocks both at home and abroad, and upstream specialist ONGC has also revved up its presence in refining and petrochemicals
• However, it is also very much in the national interest to boost productivity, efficiency and innovativeness across oil segments and a single behemoth entity would simply be too huge a disincentive to rationalise expenses and seek synergy
• We are set to become the third-largest consumer of petro-products – most of it imported – and instead of promoting a wholly questionable monopoly, it make makes perfect sense to step-up competitiveness and openness so as to improve throughput and logistics in our vast oil economy
• It is also a fact that there is pathbreaking paradigm shift underway in energy and transportation, and oil products are not expected to remain the main automotive fuel in the foreseeable future. The government needs to read the writing on the wall and overhaul market design in oil. It actually needs to unlock shareholder value and gainfully divest in the oil sector for a more competitive marketplace
• In parallel, instead of effectively ringfencing the lucrative oil marketing and retailing segment only for the oil companies, we need to open it up for independent retailers, as in the mature markets abroad. The state-owned oil majors seem very smug about the future and spend precious little on research and development and renewable energy. A far greater monopoly would only make matters worse

Despite the unprecedented crackdown by the Bar Council of India, which suspended 126 Tamil Nadu lawyers, more than 3,000 advocates from across the State thronged the city on Monday to lay siege to the Madras High Court, demanding the immediate withdrawal of the recent amendments to the statutory rules of the court. For nearly two months, the advocates have been protesting against the amendments made to the 46-year-old statutory Rules of the High Court

The new provisions included to Rule 14 empower judges to debar advocates who browbeat or abuse judges, lay siege to court halls, tamper with court records, appear in court under the influence of liquor, spread unsubstantiated allegations against judges or accept money either in the name of a judge or on the pretext of influencing him.

So far, a court could debar advocates only on the grounds of contempt of court.

In a post-Godhra 2002 riots case in which three persons belonging to the minority community were killed in Viramgam town of Ahmedabad district, the Gujarat High Court on Monday sentenced seven persons to life imprisonment, including three accused who were earlier acquitted by the trial court in 2011. This is the second such case which saw the High Court reversing the trial court verdict. Earlier last week, the High Court convicted 10 of the 27 accused in another post-Godhra case involving murder of two Muslims in village Meta Adraj in Mehsana district.

The Reserve Bank of India (RBI) has imposed a penalty of Rs.27 crore on 13 banks, including HDFC Bank, Bank of Baroda and Punjab National Bank, for violating several norms such as those for know your customer (KYC) and anti-money laundering (AML)

The government’s move to roll out the Pradhan Mantri Fasal Bima Yojana (PMFBY) from the ongoing kharif season has got a boost with 18 agriculturally critical states, including Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Uttar Pradesh, Karnataka, Odisha and Maharashtra, having floated tenders to identify insurers who will offer the scheme to farmers. The mega crop insurance scheme had reduced the premium to be paid by the farmers to 2% of the insured value for the more rain-dependent kharif crops like paddy, pulses and oilseeds and 1.5% for the rabi season, compared with 3.5-8% under the previous schemes. The premium for annual commercial and horticultural crops will be capped at 5%.

Starting September, passengers booking tickets through the IRCTC website can avail of a travel accident cover for a premium as low as Re 1 for an insurance cover of Rs. 10 lakh.

The insurance cover is besides the compensation given by the Railways in case of accidents to valid ticket holders. The insurance would provide coverage against death, injury and disabilities caused due to accidents. Three insurers — Shriram General, Royal Sundaram and ICICI Lombard — which will provide the cover

India has proposed to renegotiate all its bilateral investment pacts and to replace them with new treaties, Parliament was informed today. Out of the total 83 treaties signed by India so far, 58 are being terminated. The notices have been sent to the respective governments through the diplomatic channels. The new Indian Model Bilateral Investment Treaty text is aimed at providing appropriate protection to foreign investors in India and domestic investors in the foreign country, in the light of relevant international precedents and practices while maintaining a balance between the investor’s right and the government obligations.

F. Concepts-in-News: Related Concepts to Revise/Learn:

• The Medical Termination of Pregnancy Act, 1971
• Spectrum Usage Charge
• Solar Impulse-2
• Urjit Patel Committee
• GEAC
• IS
• Bilateral Investment Treaty
• PM Fasal Bhima Yojana
• Income Recognition and Asset Classification (IRAC) Norms

G. Fun with Practice Questions 🙂

Question1: Which of the following is/are key priority areas listed under the National Plan of Action for Children-2013?

Question 2: Which of the following statements is/are correct?

Question 3: Which of the following is/are recommendations of the Urjit Patel committee report?

Question 4: Which of the following statements is/are correct about Solar Impulse-2?

Question 5: Which of the following is/are correct about the PM Fasal Bhnima Yojana?

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