14 Mar 2018: UPSC Exam Comprehensive News Analysis

A. GS1 Related

Nothing here for today!!!

B. GS2 Related

• Keeping India’s legal market exclusively for Indians, the Supreme Court ruled that foreign law firms or foreign lawyers cannot practice law in the country either on the litigation or non-litigation side.
• This means overseas lawyers or firms cannot open offices in the country, appear in courts or before any authority or render other legal services, such as giving opinions or drafting documents.
• Any dispute in this issue would be decided by the Bar Council of India.

Arbitration Proceedings

• The court also ruled that foreign law firms and lawyers did not have an “absolute right” to conduct arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration.
• Though they might not be debarred from conducting arbitration in India arising out of international commercial arbitration, they would be governed by the code of conduct applicable to the legal profession in India.

BPO’s

• The court said Business Process Outsourcing (BPO) companies providing a range of services to customers like word processing, secretarial support, transcription and proof reading services, travel desk support services and others would not come under the Advocates Act.

Practice in other countries

• Sections of the legal fraternity have been opposing their entry, contending that Indian advocates are not allowed to practise in the U.K., the U.S., Australia and other nations, except on fulfilling onerous restrictions like qualifying tests, experience and work permit.
• It was also argued that foreign lawyers cannot be allowed to practise in India without reciprocity.

What did Bar Council of India say?

• It contended that even non-litigious practice came under the term ‘practice of law’, and that could be done only by those enrolled under the Advocates Act in the country.
• They should follow the Advocate ACT 1961 and the rules laid down by BCI. If any foreign lawyer commits a professional misconduct, then under BCI rules, we can hold them accountable and initiate disciplinary action,

What was the objection of Indian law firms?

• Indian law firms would not be able to compete with foreign firms and that the latter had greater money power and may control the legal market.

What was the stand of Political Parties?

• Both the NDA and the UPA government were considering a proposal to permit foreign law firms in the country to practice law in matters not involving litigation and on a reciprocal basis.
• As a result Centre may not be able to throw open the legal services sector to overseas players.
• The parties felt barring them in the arbitration sector would scupper India’s ambition to be a global arbitration hub, and only help Singapore, London or Paris take over these arbitration opportunities.

China

• Coming to India’s main adversary, the Chinese PLA constitutes the world’s largest military organisation, with formidable capabilities in the conventional, nuclear, cyber, maritime and space domains.
• Of greater significance is the fact that China is self-sufficient in major weapon systems, and has surpassed Britain, France and Germany as an exporter of arms, 70 per cent of which are supplied to neighbouring Pakistan, Bangladesh and Myanmar.
• Ironically, in 1949, when the People’s Republic of China (PRC) came into being, India was industrially well ahead, because the demands of WW II had led to the establishment of arms, ordnance and aircraft production facilities to support the Allied war effort world-wide.

How did China overtake us?

• In the early 1950s, a fraternal Soviet Union commenced a massive transfer of arms to the PLA, under a Sino-Soviet Treaty of Friendship.
• However, as ideological fissures emerged and the Soviets threatened to stop aid, the Chinese leadership ordered seizure of hardware as well as drawings and technological data relating to Soviet weapons.
• Once the split actually occurred, in the mid-1960s, the Chinese leadership took a far-sighted decision to launch a project for attaining self-reliance in arms, through reverse engineering (“guochanhua” in Mandarin), as a national endeavour.
• This helped China establish, by the mid-1980s, serial production of Soviet-origin tanks, artillery, submarines, jet fighters and bombers, as well as strategic systems like ballistic missiles and nuclear submarines.
• Manufactured without Soviet licences, many of these products had serious flaws and contained imported Western components. But they were “Made in China” and constituted a “great leap forward” towards self-reliance.

China’s Present Status

• China has, subsequently, launched repeated cycles of “guochanhua”, with the aim of acquiring the latest military and dual-use technologies; legitimately, if possible, but through industrial espionage and violation of intellectual property rights, when required.
• At the turn of this century, China had reached a level of technological development surpassing Russia’s.
• Today, China has stunned the world by its ingenuity, exemplified by the world’s fastest super-computer (the Sunway Taihu-light), J-31 fifth generation stealth-fighter, an electro-magnetic aircraft catapult to equip its new aircraft-carrier and huge strides in robotics, artificial-intelligence and drones.

India’s Flawed Policies

• India is in the anomalous situation of being a nuclear-weapons state with the world’s fourth-largest armed forces, but having to support their operational needs through massive arms imports.
• All this, inspite of a vast military-industrial complex, with a large pool of DRDO scientists and a network of sophisticated laboratories, backed by advanced production facilities of the defence PSUs.

Lessons to be learnt

• The Bangladesh War was won only because General Manekshaw sought a grace of nine months to equip his troops.
• The brief Kargil War required desperate replenishment of ammunition, midway through the operation.
• India’s continuing dependence on foreign arms, coupled with a dysfunctional acquisition process has eroded the combat readiness of our armed forces. Our myopic failure to learn from experience, and to acknowledge the deleterious impact of this void on India’s national security, may cost us dearly vis-a-vis future machinations of the China-Pak axis. I
• What we need is a 50-year vision for self-reliance in weaponry and a clear-cut strategy, for its implementation by an empowered “czar”.

Creating a robust defence industrial base in India will require several attitudinal shifts.

• Our target should be the global market and not just domestic. We have done that in the space sector, with ISRO routinely launching satellites for the UK, France, Germany and Singapore. It’s tough but not impossible.
• The armed forces leadership should identify 8-10 technologies critical to India. The rest can come off-the-shelf. China is pragmatic enough to use imported engines for its fighter jets, while working hard to develop its own. Their strategy of ‘import, innovate and export’ has worked wonders.
• Allocate at least 10% of the defence budget to R&D. Every R&D project and manufacturing contract should be bid out, with nothing going to state entities on a nomination basis.
• Consolidate orders instead of each service headquarter doing its own thing. Going for a common platform along with customisation for different end-users makes better commercial sense.
• Create 4-5 world-class defence and aerospace manufacturing hubs. Provide 10-year tax holidays. Establish a Defence Industry Promotion Fund (DIPF) for seed-funding of MSMEs.
• Lastly, the defence ministry should engage better with the private sector.

C. GS3 Related

Context

• The reported operating ratio of 96.5% in 2016-17 does not reflect the true financial performance of Indian Railways, as this would have deteriorated to 99.54% if the actual expenditure on pension payments was taken into account, according to the CAG report tabled in Parliament.
• An operating ratio of 99.54% means that Railways is spending 99.54 paise to earn 100 paise.

Revisiting the passenger and other tariffs to reduce losses in core activities

• The practice of issuing of free and concessional fare passes [or] tickets to various beneficiaries needs to be scaled down
• The CAG said passenger fares and freight charges should be based on the cost involved so that it brings both rationality and flexibility in pricing, considering the financial health of Railways and the current market scenario.
• The huge backlog of renewal and replacement of over aged assets in railway system needs to be addressed for safe running of trains.
• There is a need to strengthen internal control mechanisms to reduce instances of misclassification of expenditure
• The Indian Railways should follow the system of disclosing significant accounting policies forming the basis of preparation of financial statements such as accounting of fixed assets, depreciation and investments.

Why now?

• A CAG report published in 2016 found that the 80:20 scheme had resulted in a loss of Rs 1 lakh crore to the exchequer.
• Indian Bullion and Jewellers Association (IBJA) had forewarned the Reserve Bank of India
• A sub-committee of the Public Accounts Committee headed by BJP MP Nishikant Dubey has reportedly sought details from the Revenue Department and any alleged link with the PNB fraud
  • the Directorate of Revenue Intelligence (DRI) was not in favour of the 80:20 gold import scheme launched in 2013
  • To support the earning of one US dollar (around Rs 60 then) for jewellers, the government had to bear the expenditure in the form of duty foregone of Rs 221.75. Through the process known as round-tripping, black money that goes out of the country returns as white money.
• Used for round tripping of black money and money laundering

What prompted the scheme?

• In response to a stressed current account deficit in 2012-13 due to a surge in gold imports, the government at the time introduced an import scheme in 2013, which mandated that 20% of all gold imports would have to be exported.
• Under the scheme, up to 80% of gold imports could be sold in the country and while at least 20% of imports hadto be exported before bringing in new consignments
• The scheme was designed to restrict the import of gold, conserve foreign exchange by imposing export obligations, and ensure that the premium from purchase and sale of gold resided in the hands of public agencies

Who could import gold under the scheme?

• At the time of its implementation, the 20:80 scheme was open only to banks and to public sector companies such as the Metals and Minerals Trading Corporation and the State Trading Corporation of India.
• In May 2014, the RBI in consultation with the government widened the scheme to also allow Premium Trading Houses (PTH) and Star Trading Houses (STH), both private sector entities, to import gold.

Why were the rules eased in May 2014?

• The 80:20 scheme was relaxed in May 2014 by the RBI at the behest of the Finance Ministry. Jewellers, bullion dealers, authorised dealer banks and trade bodies had approached the Ministry requesting a relaxation of the policy.
• The curbs were eased after crude oil prices dropped to a four-year low. The easing of rules allowed more agencies to import gold.

How did the scheme fare?

• According to the Commerce Ministry, a review of the scheme found that since liberalisation in May 2014, gold imports had increased substantially, averaging about 140-150 tonnes a month.
• Within this, the government found that gold imported by STHs and PTHs increased 320% following the May 2014 decision compared with the earlier period.
• The share of these entities in the total gold imported into the country also increased from 20% before May to 60% after, according to the government.

What was the impact of the abolition?

• Gold imports averaged 33.6 million tonnes per month before STHs and PTHs were allowed to import under the 20:80 scheme

D. GS4 Related

E. Editorials

India’s investment in science

• As per data provided by the UNESCO Institute for Statistics, India invests about 0.8% of its GDP on research and development, and supports 156 researchers per million of population
• The figures for China are 2%, and 1,113, respectively. China’s investment is now comparable to any developed country, with Germany standing at 2.9% and 4,363 researchers and the U.S. at 2.8% and 4,231
• In 2000, China had invested only about 0.9% of its GDP on research and development, but this was steadily ramped up and in 2010 stood at 1.71%
• India invested 0.74% in 2000, and increased this to 0.82% in 2010. While China took it up to 2.1% in 2016, in India it came down to 0.63% in 2015
• These figures ignore the reality of what science has become in the last two decades

Science in History vis a vis Today’s scenario

• The Raman effect, discovered by C.V. Raman, the only Indian Nobel Laureate in Physics, is a widely used tool of analysis in chemistry and physics
• It was discovered on February 28, 1928 with relatively meagre resources available in the labs set up by Raman
• Today, while there is theoretical and even experimental work that can be done by small groups with a low budget
• But many pressing problems in science demand larger investments, including resources, funding and human capital
• The Indian Space Research Organisation has quietly and efficiently carried out large projects, but such projects have not been exactly welcomed in basic sciences
• Bigger projects involve coordination of the work of several hundred people and international collaborations; they need physical space and funding
• They challenge the mindset of doing science in isolation, within labs, and as unnoticed by society as possible
• To develop a meaningful and scientific handle over impending crises, India needs to invest more widely and deeply in scientific enterprise

• Growth of Indian Pharmaceutical Sector took place after India opted for process patenting over product patenting in 1970
• This changed to a product patent regime in 2005, providing sufficient time for growth of the generic drug industry in the private sector
• Public sector capacity for manufacture of essential drugs and vaccines is very much needed to ensure that our population is not denied access to drugs
• Those drugs which Indian private sector is unable to produce or supply at affordable cost
• These include drugs where compulsory licences may need to be issued by the government for patent protected drugs or even off-patent drugs which are commercially unattractive to private manufacturers

Compulsory licensing

• CL is a mechanism permitted by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement
• The agreement enables countries to issue licences to domestic drug manufacturers to produce and market affordable generic versions of life-saving drugs needed for meeting serious public health challenges that are of extreme urgency
• This allows countries to overcome patent restrictions to assure availability of such drugs when the situation demands
• India has used the CL route previously to permit two Indian companies, Natco and Cipla, to produce a potent anti-cancer drug nexavar
• This enabled a 32-fold reduction in the cost of the drug
• Public sector capacity for manufacturing life saving drugs under a CL is the much needed
• If the domestic private sector drug manufacturers are not ready to apply for CL, for whatever reason, public sector capacity to seek and utilise such licences becomes indispensable
• With the acquisition of Indian drug companies by foreign manufacturers, or ‘strategic alliances’ which place shackles on the Indian partners, public sector capacity becomes more important
• Also, the High Level Expert Group Report on Universal Health Coverage for India (2011) clearly articulated the need for strengthening PSUs which have drug manufacturing capability
• APIs needed for drug manufacture (formulation), are now mostly imported from China
• This makes India highly vulnerable to disruptions in supply and cost escalations in import
• National security demands that we develop both public and private sector capacity within the country, with suitable government support and incentives, to ensure uninterrupted and inexpensive availability of APIs

UN’s suggestion for the pharmaceutical sector

• A report of the UN High Level Panel Access to Medicines (2016) called upon countries to safeguard and fully utilise the rights conferred by the TRIPS flexibilities as confirmed by the Doha Declaration of the WTO
• India should take the lead in ensuring universal access to affordable drugs through such measures
• Investment in public sector capacity is essential to ensure that the country can exercise that leadership even on occasions when the private pharmaceutical sector does not fully align with that objective

F. Prelims Fact

G. Practice Questions for UPSC Prelims Exam

Question 1. Consider the following statements about Geological Survey of India:

1. It is under Ministry of Mines.
2. The main functions of GSI relate to creation and updation of national geoscientific information and mineral resource assessment.

Which of the statements are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. None of the above

See

H. UPSC Mains Practice Questions