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Editor’s Message

This is not a journalistic venture but an academic one designed to handhold keen and sincere UPSC aspirants. We do not claim this to be yet another surrogate window to the world. We are sure, nevertheless, that you would find this venture novel as well as useful.

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In This Issue

Sl. Topics GS Page No. Paper No. 1 Monsoon Deficit and Water Stress in India GS I 4 Sustainable Development Goal - Gender Index and Equal 2 GS I 9 Measures 2030 3 Significance of BIMSTEC GS II 15 4 Draft National Education Policy 2019 and Issues around GS II 20 5 Sudan Crisis and Ouster of Bashir GS II 25 6 Shanta Kumar Committee GS II 29 7 Hong Kong Protests and related issues GS II 36 8 Code on Wages Bill GS II 41 9 India’s Foreign Policy Challenges and Prospects GS II 47 10 Need for the Simultaneous Election GS II 52 11 A High Powered Committee to be set up for Agriculture GS II 58 Issues with the Civil Service – Selection, Training and Periodical 12 GS II 63 assessment 13 Libyan Crisis and the aftermath GS II 69 14 Acute Encephalitis Syndrome in Bihar and Malnutrition GS II 74 15 NCRB’s Prison Statistics India 2016 GS II 80 16 NITI Aayog’s Health Index 2019 GS II 87 17 National Registry of Citizen and the Mohammad Sanaullah’s Case GS II&III 92 18 Blacklisting Pakistan under FATF GS II&III 98 19 Liquidity Risk Management Framework for NBFCs and CICs - RBI GS III 103 20 Why India needs a Solar Manufacturing Strategy? GS III 109 21 Impact of Air Pollution on Human Health GS III 115 22 St. Petersburg International Economic Forum GS III 121 23 Need for a Legal Framework for Artificial Intelligence in India GS III 126 24 SEBI Norms for Credit Rating Agencies GS III 132 25 Agricultural Credit in India and issues around GS III 138 26 India as an Innovation Economy GS III 144 27 Report Card on Left Wing Extremist Hit States GS III 149 28 U.K. Sinha Committee on MSMEs Sector GS III 153

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1 Monsoon Deficit and Water Stress in India

GS1: Important Geophysical phenomena and changes in critical geographical features

What is the Issue? • Apparently, about 40% of the country is facing an acute paucity of pre-monsoon rain, causing severe water distress in scorching heat.

BACKGROUND • Rain fed agriculture contributes to 60 per cent of the value of agriculture GDP of India. • About 61 per cent of India’s farmers rely on rain-fed agriculture and 55 per cent of the gross cropped area is under rain-fed farming. • Rainfed crops account for 48 percent area under food crops and 68 percent under non-food crops. • India ranks first among the rainfed agricultural countries of the world in terms of both extent and value of produce. • Due to population pressure on agricultural lands, the poverty is concentrated in rainfed regions. • Despite all these, rain-fed areas contributed significantly to the country’s food production. • They account for 89 per cent of millets production, 88 per cent of pulses, 73 per cent of cotton, 69 per cent of oilseeds and 40 per cent rice production in the country.

Water Scarcity Profile of India • India is suffering from the worst water crisis in its history and millions of lives and livelihoods are under threat. • Currently, 600 million Indians face high to extreme water stress

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and about two lakh people die every year due to inadequate access to safe water. • By 2030, the country’s water demand is projected to be twice the available supply, implying severe water scarcity for hundreds of millions of people and an eventual ~6% loss in the country’s GDP.

DISCUSSION Rain Deficit Scenario in India • Though summer droughts are very common, the extent and intensity of aridity witnessed this year are rare. • The rain deficit has been as high as 48% in the southern peninsula, especially Tamil Nadu and coastal Karnataka. • It is nearly 30% in western India, notably Gujarat and large parts of Maharashtra, and 17% and 12% in the Central and north-east region respectively. • Shortfalls of 70 to 80% have also been reported from some places. • The overall countrywide average rainfall between March and May, 2019 remained 23% below normal.

Monsoon Forecasts Indications • The rain deficit conditions across the country are a matter of grave concern. • But the redeeming factor is that the onset of the monsoon is round the corner. • The rain during the 4-month monsoon season (June to September) is anticipated to be well spread out. • It is also expected to be quantitatively normal or somewhat below normal. • The India Meteorological Department (IMD) forecast has suggested rainfall to be likely around 96% of the long-period average (LPA).

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• On the other hand, private weather forecaster Skymet has put it at 91%.

Persisting Concerns • The problem is that both IMD and Skymet have forecast that the monsoon would be sluggish/slow to begin with. • The reason cited for this is the existence of El Nino (warming up of the Pacific Ocean), which often impairs the monsoon performance. • Also, IMD and Skymet differ on the progression of El Nino. • The IMD expects El Nino conditions to turn neutral in the second half of the rainy season. • But Skymet reckons it to last the whole season, even if in a weaker form. • So clearly, there is a possible delay in relief from the current water crisis in some areas.

Government Initiatives Against Erratic Monsoon • NITI Aayog’s composite water management Index (CWMI) is a major step towards creating a culture of database decision- making for water in India, which can encourage ‘competitive and cooperative federalism’ in the country’s water governance and management. • The NDMA guidelines on management of drought are issued in 2010. • National River linking programmes is also give an impetus to the government plan to fight against erratic monsoon. • There was a policy bias against farmers working in rain-fed systems, the latest move of giving income support to farmers, however little it may be, is a progressive step.

Favourable Factors • Of the three main facets of drought (meteorological, hydrological, agricultural), the present conditions conform chiefly to the

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meteorological drought (rainfall inadequacy). • Only in some areas, aridity has accentuated to cause hydrological drought, reflected in exhaustion of the surface and groundwater resources. • The overall hydrological profile of the country is still positive. • The total water stock in 91 major reservoirs monitored by the Central Water Commission is around 14% above the last year’s corresponding level. • It is 3% higher than the long-period average (May, 2019 data). • Agricultural drought has, by and large, been averted as the rabi crops have mostly been harvested and the kharif ones are yet to be planted.

Issues with the Rain Fed Agriculture in India • A clear-cut bias towards irrigated areas when it comes to public investment in agriculture in the country. • Unsuitable programme design has ensured that potential of rain-fed areas remains unrealised. • Rainfall is highly unreliable, both in time and space, with strong risks of dry spells at critical growth stages even during good rainfall years. • Rainfed areas in India are highly diverse, ranging from resource rich areas to resource-constrained areas. • growing farm suicides in rainfed areas. • Green Revolution bypassed the less-favored rainfed areas which were not the partners in this process of agricultural transformation.

Way forward • An enduring solution to the recurring water crisis largely lies in drought-proofing the vulnerable areas. • In-situ conservation of rainwater should be a key priority in this regard.

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• The need is to construct rainwater-harvesting structures at the field, village and watershed levels. • Either digging ponds or putting up check dams at suitable sites on the natural water drainage routes should be taken up. • This is a time-tested water management practice that has helped people survive even in the chronically arid areas. • Piecemeal measures as isolated water conservation works under the rural employment programmes can, at best, offer only limited gains. • So what is needed is a broad-based planning, keeping in view the whole watershed, transgressing village, district or even state boundaries.

#Practice Question 1. Do you think Rain fed farmers are the most neglected in the country? Analyse the reasons for this neglect towards farmers throughout the ages. (200 words)

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Sustainable Development Goal - 2 Gender Index and Equal Measures 2030

GS1: Role of women and women’s organization, population and associated issues

What is the Issue? • The SDG Gender Index, a new index to measure global gender equality, was launched recently.

BACKGROUND • The SDG Gender Index has been developed by Equal Measures 2030, a joint effort of regional and global organisations including: • African Women’s Development and Communication Network • Asian-Pacific Resource and Research Centre for Women • Bill and Melinda Gates Foundation • International Women’s Health Coalition • The index accounts for 14 out of 17 SDGs (sustainable development goals). • The goals cover aspects such as poverty, health, education, literacy, political representation and equality at the workplace. • A score of 100 reflects the achievement of gender equality in relation to the targets set for each indicator. • A score of 50 signifies that a country is about halfway to meeting a goal.

DISCUSSION Need for gender equality • Gender equality has been conclusively shown to stimulate economic growth, which is crucial for so-called developing countries.

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• When women are excluded from working, economies are restricted and poverty continues its cycle. • Women and young girls bear the brunt of poverty. Globally, 60 percent of people suffering from chronic hunger are women states the UN.

Reasons for the Inequality of Gender in India • Cultural institutions in India, particularly those of patrilineality (inheritance through male descendants) and patrilocality (married couples living with or near the husband’s parents), play a crucial role in perpetuating gender inequality. • A culturally ingrained parental preference for sons - emanating from their importance as caregivers for parents in old age - is linked to poorer consequences for daughters. • The dowry system, involving a cash or in-kind payment from the bride’s family to the groom’s at the time of marriage, is another institution that disempowers women. • Patriarchy is a social system of privilege in which men are the primary authority figures, occupying roles of political leadership, moral authority, control of prosperity and authority over women and children. • Extreme poverty and lack of education are also some of the reasons for women’s low status in society.

Legal and Constitutional Safeguards Against Gender Inequality • Indian Constitution provides for positive efforts to eliminate gender inequality. • The Preamble to the Constitution talks about goals of achieving social, economic and political justice to everyone and to provide equality of status and of opportunity to all its citizens. • Article 15 of the Constitution provides for prohibition of discrimination on grounds ofsex also apart from other grounds such as religion, race, caste or place of birth. • Article 15(3) authorizes the Sate to make any special provision

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for women and children. • The Directive Principles of State Policy also provides various provisions which are for the benefit of women and provides safeguards against discrimination. • The Sati (Prevention) Act, 1987 was enacted to abolish and make punishable the inhuman custom of Sati. • The Dowry Prohibition Act, 1961 to eliminate the practice of dowry. • The Special Marriage Act, 1954 to give rightful status to married couples who marry inter-caste or inter-religion. • Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Bill (introduced in Parliament in 1991, passed in 1994 to stop female infanticide and many more such Acts. • Section 304-B was added to the Indian Penal Code, 1860 to make dowry-death or bride-burning a specific offence punishable with maximum punishment of life imprisonment.

Gender Equity and Equality • Gender equality “does not mean that women and men will become the same, but that women’s and men’s rights, responsibilities and opportunities will not depend on whether they are born male or female. • Gender equity means fairness of treatment for women and men, according to their respective needs. • This may include equal treatment or treatment that is different, but which is considered equivalent in terms of rights, benefits, obligations, and opportunities. • World Economic Forum projects it will take 170 years to reach gender equality globally, and 158 years in North America. That means it will take five more generations for us to see gender equality. • It is concerning many as gender equality impacts the economic pie for all.

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Key findings of the Index • The global average score of the 129 countries (with 95% of the world’s girls and women) is 65.7 out of 100 (“poor” in the index). • Nearly 1.4 billion girls and women are living in countries that get a “very poor” grade. • Altogether, 2.8 billion girls and women live in countries that get either a “very poor” (59 and below) or “poor” score (60-69). • Just 8% of the world’s population of girls and women live in countries that received a “good” gender equality score (80-89). • Notably, no country achieved an “excellent” overall score of 90 or above in gender equality. • Besides, not all countries’ scores on the index correlate with national income. • Some countries perform better than what would be expected based on their GDP per capita, and others underperform. • With all these, it was highlighted that the world was far from achieving gender equality.

India’s Performance • India was ranked at 95th among 129 countries. • India’s highest goal scores are on health (79.9), hunger & nutrition (76.2), and energy (71.8). • Its lowest goal scores are on partnerships (18.3, in the bottom 10 countries), industry, infrastructure and innovation (38.1), and climate (43.4). • On indicators that define the goals, India scored 95.3 on the percentage of female students enrolled in primary education who are overage. • In the proportion of seats held by women in national parliament, India scored 23.6; women made up 11.8% of Parliament in 2018. • On seats held by women in the Supreme Court (4%), India has a score of 18.2.

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• On gender-based violence, indicators include - • Proportion of women aged 20-24 years who were married or in a union before age 18 (27.3%) • Women who agreed that a husband/partner is justified in beating his wife/partner under certain circumstances (47.0%) • Women aged 15+ who reported that they feel safe walking alone at night in the city or area where they live (69.1%) • Overall, India largely performs as expected based on its GDP per capita.

UNICEF Gender Action Plan, 2018–2021 • Integrating gender equality in all programme results. • Gender equality in care and support for all children • Adolescent girls’ well-being and empowerment • Gender in programme strategies and institutional systems • Capacity and accountability on gender results

Way forwards • India is still a lagging when it comes to gender equality, and changing this situation is an urgent task. • Need for policy initiatives to empower women as gender disparities in India persist even against the backdrop of economic growth. • Improvements in labour market prospects also have the potential to empower women. This will also lead to increase in marriage age and school enrolment of younger girls. • Feminism could be a powerful tool that lets children shed stereotypes that they may hold and question those of others. • A world free of prejudice and generalisation would be amenable to progress in the truest sense. • The need of the hour is to introduce feminism in schools, both in terms of curriculum and practice.

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• Sessions on principles of mutual respect and equality must be made a regular affair in schools. • Inculcating gender equality in children could go a long way towards ridding society of regressive mindsets, attitudes, and behaviours. • Educating Indian children from an early age about the importance of gender equality could be a meaningful start in that direction.

# Practice Question 1. “If gender equality is the end, gender equity is the means” Elucidate. (200 words)

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3 Significance of BIMSTEC

GS2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

What is the Issue? • Leaders from the BIMSTEC, Kyrgyz Republic and Mauritius are invited for the swearing-in ceremony of new Indian government.

BACKGROUND • BIST-EC (Bangladesh, India, Sri Lanka, and Thailand - Economic Cooperation) was formed at a meeting in Jun 1997 in Bangkok. • MyanMarch was admitted in Dec 1997 and the organization was renamed as BIMST-EC. The grouping expanded when Nepal and Bhutan were admitted in February 2004. • The grouping’s name was changed to BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) at 1st Summit Meeting held in Bangkok in Jul 2004. • Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) comprising Bangladesh, Bhutan, India, MyanMarch, Nepal, Sri Lanka and Thailand. • It brings together 1.5 billion people – 21% of the world population, and a combined GDP of over US$ 2.5 trillion. • BIMSTEC organizes inter-governmental interactions through Summits, Ministerial Meetings, Senior Officials Meetings and Expert Group Meetings and through BIMSTEC Working Group (BWG) based in Bangkok.

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Importance of the Present move • BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) - The invite signals a major outreach to India’s neighbourhood in the Bay of Bengal. • Last time, the PM had invited the SAARC leaders. The then Pakistan Prime Minister Nawaz Sharif’s attendance had raised hopes of a new beginning in the bilateral ties. • This time, SAARC’s exclusion is clearly aimed at keeping Pakistan out of New Delhi’s engagement with its neighbours. • As India became a member in SCO along with Pakistan in 2017, by inviting the Kyrgyz Republic leader, India is displaying an outreach to the Shanghai Cooperation Organisation (SCO). • India thus wants to leverage its membership to advance its strategic objectives in Central Asia. • Further, Mauritius Prime Minister Pravind Jugnauth is one of the

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well-placed People of Indian Origin in the world. • Since Indian PM has invested diplomatic capital in outreach to the Indian Diaspora since 2014, this invite is seen as a natural choice and extension of the foreign policies of the previous government.

DISCUSSION Areas of Cooperation • BIMSTEC has identified 14 priority areas where a member country takes lead. • India is lead country for Transport & Communication, Tourism, Environment & Disaster Management and Counter Terrorism & Transnational Crime. • A BIMSTEC Information Centre has been established in Jul 2007 in New Delhi. Ministry of Tourism organized a meeting on BIMSTEC Information Centre and contribution to Tourism Fund. • Counter-Terrorism and Transnational Crime (CTTC) has been divided into 4 sub-groups with lead shepherds - Intelligence Sharing (Sri Lanka); Combating Financing of Terrorism (Thailand), Legal and Law Enforcement Issues (India) and Prevention of Illicit Trafficking in Narcotics Drugs, sychotropic Substances and Precursors (MyanMarch). • Under the Environment and Disaster Management theme, India is establishing BIMSTEC Weather and Climate Centre at National Weather Forecasting Centre at NOIDA. • A Framework Agreement for BIMSTEC Free Trade Area was signed in Phuket, Thailand in February 2004. • The cultural cooperation: The first BIMSTEC Ministerial meeting on Culture was held in Paro, Bhutan in May 2006. • Cooperation in energy fields, especially at MyanMarch. • Nepal hosted the 2nd Ministerial Meeting in January 2012 in Kathmandu where Plan of Poverty Alleviation was adopted. • Sri Lanka hosted the 3rd meeting on May 9-10, 2011 in Colombo

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on establishment of BIMSTEC Technology Transfer Exchange Facility.

Significance of BIMSTEC • New Delhi’s engagement with BIMSTEC rose from the backlashes at SAARC due to the presence of Pakistan and its demand for the inclusion of China. • In October 2016, following the Uri attack, India gave a renewed functions at BIMSTEC, although it had existed for almost two decades. • India had long felt that the vast potential of SAARC was being under-utilised. Opportunities were being lost due to either a lack of response and/or an obstructionist approach from Pakistan. • Moreover, BIMSTEC had emerged as an alternative regional platform. With 5 five countries from SAARC and two from ASEAN, BIMSTEC is a bridge between South Asia and Southeast Asia. • It thus offers scope for discussions on sub-regional cooperation across different geographies. • Nevertheless, SAARC summit has only been postponed, and not cancelled. • The possibility of revival remains, and so, the success of BIMSTEC does not render SAARC pointless.

Importance of the Region • The Bay of Bengal is the largest bay in the world and one of the busiest of the south Asia. • Over one-fifth (22%) of the world’s population live in the seven countries around it. • These countries have a combined GDP of close to $2.7 trillion. • Despite economic challenges, they have been able to sustain average annual economic growth rates of 3.4% - 7.5% from 2012 to 2016.

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• The Bay also has vast untapped natural resources that can cater the development of the region. • One-fourth of the world’s traded goods cross the Bay every year.

Way forward • As the region’s largest economy, India has a lot at stake in BIMSTEC. • It is a natural platform to fulfil India’s key foreign policy priorities of ‘Neighbourhood First’ and ‘Act East’. • A key reason for India’s engagement is the vast potential that is unlocked with stronger connectivity. • About 45 million people live in landlocked North-eastern states. • They will have the opportunity to connect via the Bay of Bengal to Bangladesh, MyanMarch and Thailand. • This opens up new possibilities in terms of development. • From the strategic perspective, the Bay of Bengal is a funnel to the Malacca straits. • In this context, the Bay has emerged a key theatre for an increasingly assertive China in maintaining its access route to the Indian Ocean. • Given these, it is in India’s interest to consolidate its internal engagement among the BIMSTEC countries. • The BIMSTEC invite is an effort to reach out diplomatically to the neighbourhood, diaspora and the China-Russia-led regional grouping of Central Asian countries. • The future course of the move depends on the progress New Delhi makes with these groupings.

#Practice Question 1. For India’s “neighbourhood first policy”, BIMSTEC is more conducive than SAARC. Critically evaluate. (200 Words)

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4 Draft National Education Policy 2019 and Issues around

GS2: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources. What is the Issue? • Subsequent to the submission of the draft National Education Policy 2019, there were protests against the three language formula. • The controversial provision was thus revised by Dr. Kasturirangan- led committee that submitted it.

BACKGROUND • Education plays a pivotal role in the social life of Indian society since its inception. • In ancient India, religion played a vital role in spreading and decemberemberiding education in the society. • Modern education in India was introduced by British in 18th century. Macaulay minutes and Wood’s Despatch gave further impetus to the modern education in India. • After independence, Radhakrishnan commission, in 1948 appointed to study about the University education. • The D.S. Kothari Education Commission was appointed to deal with all aspects and sectors of education and to advise Government on the evolution of a National System in of Education for the country. • Based on this Commission’s report, the National Policy on Education 1968 was formulated. • Major recommendations such as 10+2+3 Pattern, Use of regional language, Education for the people and The Common School System.

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Major proposals in old and new policies • Earlier provision - Students who wish to change one of the three languages they are studying may do so in Grade 6. • But this is only as long as the study of 3 languages by students in the Hindi-speaking states would continue to include Hindi and English and one of the modern Indian languages from other parts of India. • Likewise, study of languages by students in the non-Hindi- speaking states would include the regional language, Hindi and English. • New change - Students who wish to change one or more of the 3 languages they are studying may do so in Grade 6 or Grade 7. • This is only as long as they are able to still demonstrate proficiency in three languages (one language at the literature level). • This will be as per their modular Board Examinations held sometime during secondary school.

DISCUSSION Issues persisting in the primary education • The draft NEP acknowledges a “severe learning crisis” in India, where children in primary school fail to attain basic math and reading skills. • A large number of children currently in elementary school — perhaps over 5 crore — cannot read and understand basic text and solve simple addition and subtraction problems, the report states. Many of them eventually drop out. • Attributing a major part of this crisis to a “tragic deficiency” in early childhood care and education (ECCE) of children in the age group 3-6 years. • The draft recommends that early childhood care and education (ECCE) be made an integral part of the Right to Education (RTE) Act. • To ensure continuity from pre-primary to primary schools, the

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draft advocates bringing all aspects of ECCE under the purview of the Human Resource Development Ministry.

Major Recommendations of the Draft Policy • While the 1986 education policy push for a uniform 10+2 structure, the 2018 draft pitches for reconfiguration of curriculum and pedagogy in a “5+3+3+4” design. • It also recognises different stages of development of cognitive abilities in children. • This corresponds to the age groups 3-8 years (foundational stage), 8-11 (preparatory stage), 11-14 (middle stage), and 14-18 (secondary stage). • Redesigning of school curriculum for Grades 1 to 5 to include dedicated mathematics and reading hours every day. • In addition to that, activities that relate classroom maths to real- life maths, weekly puzzle-solving sessions to inculcate logical thinking, and language and maths-focused morning assemblies. • A ‘National Tutors Programme’ that will enrol the best performers of each school for up to five hours a week as tutors for students who have fallen behind. • A ‘Remedial Instructional Aides Programme’ to draw instructors from the • Local community to hold remedial classes during schools hours, after school hours and during summer vacations for students who need help. • A school preparation module to be prepared by NCERT for all Grade 1 students to ensure they have the required learning levels (letters, shapes, colours, numbers) before starting the Grade 1 syllabus. • Vacancies to be filled urgently to ensure a pupil-teacher ratio of 30:1. • A nutritious breakfast, in addition to the midday meal, for improved learning.

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Persisting Contentions • As per the earlier version, the committee stipulated the languages that students must choose to study from Grade 6. • In the revised draft, the committee has merely omitted the references to the language that students may choose. • However, the broader recommendation regarding the implementation of a three-language formula remains. • In other words, the revised draft retains the recommendation to introduce a three-language formula from Class 1 onwards. • It simply removes the clause stipulating the specific languages that students must choose in Grade 6. • Also, the revision was not done by the Central government but by the committee that drafted the policy.

Centre’s Rationale on the Issue • The draft policy’s push for Hindi seems to be based on the premise that 54% of Indians speak Hindi. • However, according to the 2001 Census, 52 crore out of 121 crore people identified Hindi as their language. • About 32 crore people december emberlared Hindi as their mother tongue. • This means that Hindi is the language of less than 44% Indians and mother tongue of only little over 25% people in India. • But there has been greater push for making Hindi a pan-India language, which is seen as imposition of Hindi by many states, especially that of the South India.

Evolution of Hindi as an Official Language • Constituent Assembly - The debate over Hindi has been raging since Independence. • The Constituent Assembly witnessed heated exchanges over the use and scope of Hindi. • The Sub-Committee on Fundamental Rights of the Constituent

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Assembly recommended the following: • Hindustani, written either in Devanagari or the Persian script at the option of the citizen, shall, as the national language, be the first official language of the Union. • English shall be the second official language for such period as the Union may, by law, determine. • Constitution - Article 343 of the Constitution prescribes Hindi as written in Devanagari script as the official language of the government along with English for 15 years initially. • However, it has been extended subsequently without any scientific considerations. • Clearly, the Constitution did not decemberemberlare Hindi as the ‘national language’. • It rather accorded Hindi the status of ‘official language’ along with English.

Way forward • Language is primarily a utilitarian tool than a political plank. • While acquisition of additional tools can indeed be beneficial, compulsory learning should be limited to one’s mother tongue. • Besides, English, as the language that provides access to global knowledge and as a link language within India, could be a supportive language. • Given this, not everyone is satisfied by the changes, and the three- language formula itself is seen as an unnecessary imposition.

# Practice Question 1. What are the challenges faced by the education sector in India? Do you think the present educational policies are capable enough to address these challenges? (250 Words)

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5 Sudan Crisis and Ouster of Bashir

GS2: Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora.

What is the Issue? • The power transition crisis in Sudan has led to a violent crackdown on pro-democracy protests.

BACKGROUND • Sudan has been engulfed by violence for more than a century, even while it was under the British-Egyptian colonial rule. • Since independence in 1956, this North African nation has seen sectarian violence, famines and political instability. • The latest coup ousting Bashir is the fifth such forcible takeover. • Minorities’ resentment (in southern parts of the country) since 1983 led to a bitter civil war that lasted for 22 years and claimed over 20 lakh lives. • The region finally seceded in 2011 to form the new country of South Sudan, taking away more than two-thirds of Sudan’s oil reserves. • Bashir also pitilessly cracked down on the insurgency in the gold-rich Darfur region. • Its Muslim but non-Arab people accused Bashir of only favouring Arab Muslims. • A savage militia backed by Bashir used sexual violence, torture, and starvation as methods to suppress dissent. • During his three-decade rule, Bashir had outlawed several organisations opposed to his rule such as trade unions. • He also jailed or murdered political opponents and journalists. • The US designated the repression as ‘genocide’ in 2004.

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• The International Court of Justice in 2009 issued a warrant against Bashir.

DISCUSSION Ongoing Crisis in Sudan • Sudanese dictator Omar al-Bashir was toppled in April, 2019 after a months-long popular uprising. • Military intervention ejected Bashir from power, and in turn, a Transitional Military Council (TMC) took power. • Currently, the protesters are demanding a transfer of power to a transitional civilian government, followed by free and fair elections. • But the military generals used the crisis to concentrate more powers in their own hands. • Angry protesters continued a sit-in in front of the Defence Ministry in Khartoum, Sudanese capital. • The talks between pro-democracy activists and the military rulers collapsed. • So paramilitary group’s unleashed deadly violence to break the sit-in, killing at least 100 people and injuring hundreds. • The Rapid Support Forces (RSF) threw the dead into the River Nile and reportedly, 40 bodies have been pulled from the river in Khartoum. • The RSF are the paramilitary troops notorious for atrocities committed in the impoverished western province of Darfur in the early 2000s.

Future Prospects of Sudan • After the crackdown, Lt. General Abdel Fattah al-Burhan, the military ruler, has offered to hold elections in 9 months, upturning an earlier plan of a 2-year transition. • But there is no immediate plan to transfer power to a civilian transitional government, a key demand of the protesters.

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• So unsurprisingly, protesters have rejected the military’s offer. • At present, Sudan’s generals enjoy regional and international support too. • The UN Security Council could not even condemn the violence as China, backed by Russia, blocked the move. • Saudi Arabia and the United Arab Emirates, which offered financial aid to the people as soon as Mr. Bashir was removed from power, also support the generals now. • This gives the military rulers a sense of impunity even when they unleash murderous paramilitaries on peaceful protesters. • So it is evident that the military will not easily give up power any time soon.

India – Sudan Relations • India-Sudan relations go back in history to the time of the Nilotic and Indus Valley Civilizations (about 5000 years ago). • The first Sudanese Parliamentary elections in 1953 were conducted by Shri Sukumar Sen, India’s Chief Election Commissioner. • The Sudan Block of India’s National Defence Academy was partly funded with a gift of one hundred thousand pounds from the Sudanese Government in recognition of the sacrifices of Indian troops in the liberation of Sudan in the North African Campaign during World War II). • India continuously offered humanitarian assistance to the Sudanees people. • Capacity building programmes includes specialized training courses in Agriculture, Irrigation, Water resources, Renewable energy, Information Technology etc. • India is the third largest exporter to Sudan after China and UAE. It primarily exports food stuffs, manufactured goods, machinery and equipment, chemicals including pharmaceuticals, textiles and transport equipment to Sudan. • India has invested huge sums in the oil fields of Sudan.

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• Further India extended a line of credit for the development of non conventional energy sources.

Way forward • The military rulers must climb down and transfer power to a civilian government. • If the military wants to keep its grip on power, there could be more bloodshed as the protesters are defiant. • It will have to necessarily build a more oppressive regime, as in Egypt after the 2013 coup. • So the other, wiser option is to compromise, resume talks with the protesters and facilitate a quick and orderly transition to civilian rule. • Arab countries as well as the UN should put meaningful pressure on the military council to pay heed to popular demands. • They should also hold those responsible for the recent massacre accountable.

# Practice Question 1. What are the possible challenges for India due to the Sudan crisis? Do you thing the relations with this African country is vital for our energy security? (200 Words)

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6 Shanta Kumar Committee

GS 2: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources, issues relating to poverty and hunger.

What is the Issue? • Union Minister of Consumer Affairs, Food and Public Distribution, Shri Ram Vilas Paswan lays down the future roadmap for Food Corporation of India (FCI). • B He stated that primacy will be given to ensuring that the functioning of FCI is streamlined and fast paced as per recommendations of the Shanta Kumar Committee.

BACKGROUND: • The government, in 2014, had constituted a high level committee chaired by Shanta Kumar, who had given several recommendations as how to make the entire food grain management system more efficient. • The committee suggested the reorienting of the role of FCI in MSP operations, procurement, storage and distribution of grains under Targeted Public Distribution System (TPDS). • The HLC had wide consultations with various stakeholders in its several meetings in different parts of the country. It also invited comments through advertisements in newspapers and electronic media. • HLC would like to gratefully acknowledge that it has benefitted immensely from this consultative process, and many of its recommendations are based on very intensive discussions with stakeholders. • Article 47 of the Constitution of India states that it is the duty of the State to raise the level of nutrition and the standard of living and to improve public health Per capita food availability.

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• As of 2017, the per capita net availability of food grains is 190.5 grams/ day Per capita calorie intake: according to a OECD Report, the per capita calorie intake in India is 2445kcal (2011- 12) – one of the lowest in the world Poverty: • 25. 7 and 13.7 percent of the population were poor in rural and urban India, respectively, in 2011-12. • Poverty-line: 972 INR (Rs 32 per day) in rural areas and 1407 INR (Rs 47 per day) in urban areas- based on monthly minimum consumption expenditure(food and non-food) per person or per household. • According to Multi-dimensional Poverty Index, 2016, nearly 54% of the Indian population is multi-dimensionally poor -indicating extent of deprivation in terms of living standards, health, and education.

DISCUSSION • Leakages in PDS: Leakages refer to food grains not reaching intended beneficiaries. According to 2011 data, leakages in PDS were estimated to be 46.7%. • Quality of food grains: A survey conducted in 2011 had noted that people complained about receiving poor quality food grain which had to be mixed with other grains to be edible.

Need for the Revamp in Food Management in India • To stop the leakages in the PDS system: Leakage and diversion of food grains during transportation. • Open-ended Procurement: All incoming grains accepted even if buffer stock is filled creating a shortage in the open market. The recent implementation of Nation food security act would only increase the quantum of procurement resulting in higher prices for grains. • Identification of poor people- The onus is on the state Government to identify the eligible households in each state. It is still a murky issue. • Inaccurate identification of beneficiaries.

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• Illicit Fair Price shops: The shop owners have created a large number of bogus cards or ghost cards(cards for nonexistent people) to sell food grains in the open market. • In order to augment the human resources, food security is inevitable in India. • Inadequate storage capacity with FCI. Food grains rotting or damaging on the CAP or Cover & Plinth storage.

Measures taken for Food Security • Traditionally, India’s approach to food security was based on the ‘availability’ dimension of food security- looking at only the quantitative aspect • The Green revolution which was launched after two consecutive droughts in mid 1960s increased the production of food grains (mostly rice and wheat) by providing farmers an improved technology package consisting of high yielding seed varieties, modern farm inputs and credit, and assurance of a remunerative and fixed price. • Since 1980’s there was an increasing acknowledgement that physical and financial access to food had a determining role in achieving food security in the country. • In spite of enough food being available in the country people suffered from hunger and starvation because they were physically or financially unable to reach to food. • The approach shifted from food production to access to food and from charity to a rights-based approach. • National Food Security Act, 2013 Objective: To provide for food and nutritional security in human life cycle approach, by ensuring access to adequate quantity of quality food at affordable prices. • National nutrition mission, 2018 aims to acieve nutritional status of children from 0-6 years, Adolosecnt girls , pregnant women and lactating mothers. • Mid Day meal scheme aims to the food accsibility of students from class 1 to 8th.

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Challenges with food Security in India • The NSFA does not guarantee universal right to food: Targeted –Restricts the right to food to only 755 of rural and 50% of urban population in India • Act would not apply in times of “war, flood, drought, fire, cyclone or earthquake”. This a highly problematic clause given that food is becomes utmost necessary during these circumstances • The Act focuses primarily on distribution of rice and wheat and fails to address the ‘utilization’ dimension of food security. Given that a major reason for micronutrient deficiency in India is because of a cereal-based diet; the NSFA does not address the issue of malnutrition and nutrional deficiency adequately • The Act mentions that Central and State governments should realize certain objectives ‘progressively’- agrarian reforms, public health, sanitation etc. It fails to provide a comprehensive framework which undermines food security efforts. • The Act does not address the ‘stability’ dimension of food security- excludes the impact of climate change on Indian agriculture and measures to overcome it. • Inadequate distribution of food through public distribution mechanism, food adulterations in distributed food • Unmonitored, improper implementation of nutritional programmes • Lack of inter sectoral coordination; lack of comprehensive policy • Agrarian crisis, especially in rain fed agriculture areas of the country. • Environmental issues: degradation of soil, water stress and drought- affecting agricultural produce

Best Practices by other Country • Brazil- Fome Zero (Zero hunger) strategy: Brazil had started the Zero Hunger strategy in 2003 • Under this strategy various initiatives have been taken: food

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banks, cash transfer to poor families, national school feeding programme • The strategy has helped to achieve significant reductions in child mortality, levels of malnutrition, and poverty since its inception

Important Recommendations made by the Committee: • Reduce the number of beneficiaries under the Food Security Act—from the current 67 per cent to 40 per cent. • Allow private players to procure and store food grains. • Stop bonuses on minimum support price (MSP) paid by states to farmers, and adopt cash transfer system so that MSP and food subsidy amounts can be directly transferred to the accounts of farmers. • FCI should involve itself in full-fledged grains procurement only in those states which are poor in procurement. • In the case of those states which are performing well, like Haryana, Punjab, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha, the states should do the procurement. • Abolishing levy rice: Under levy rice policy, government buys certain percentage of rice (varies from 25 to 75 per cent in states) from the mills compulsorily, which is called levy rice. • Mills are allowed to sell only the remainder in the open market. • Deregulate fertiliser sector and provide cash fertiliser subsidy of Rs 7,000 per hectare to farmers. • Outsource of stocking of grains: The committee calls for setting up of negotiable warehouse receipt (NWR) system. • In the new system, farmers can deposit their produce in these registered warehouses and get 80 per cent of the advance from bank against their produce on the basis of MSP. • Clear and transparent liquidation policy for buffer stock: FCI should be given greater flexibility in doing business; it should offload surplus stock in open market or export, as per need. • FCI needs to be pro-active, mobilizing state and other agencies

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to provide benefits of MSP and procurement to larger number of farmers, especially small and marginal ones,” the committee had recommended

Loop Holes in the Report • Committee recommends FCI to hire contractual staff, close regional offices and give VRS to employees. Trade union leaders don’t like it. • Report says only 6% farmers benefited from MSP procurement regime and nearly 50% of the foodgrains are siphoned off from PDS system (NSSO, 2011). • It is true that large numbers of farmers are not benefited from public procurement, but FCI has not opened branches outside selected regions. So, instead of privatizing the operations, FCI should open more offices at sub district level. • Committee wants to reduce the coverage of food security act from 67% population to only 40% population. He prescribes that priority households should not be given cheap grains at 1/2/3 rupees. • It seems Shanta Kumar has tailored his numbers to pacify the food-subsidy quota requirements under WTO’s agreement on Agriculture (AoA). • Report recommends central government not to do “open ended procurement” from such states, above buffer stock limits. This will catalyze distress sells and farmer suicides

Way forward • Adhaar Linked and digitized ration cards: This allows online entry and verification of beneficiary data. It also enables online tracking of monthly entitlements and off-take of foodgrains by beneficiaries. • Computerized Fair Price Shops: FPS automated by installing ‘Point of Sale’device to swap the ration card. It authenticates the beneficiaries and records the quantity of subsidized grains given to a family.

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• DBT: Under the Direct Benefit Transfer scheme, cash is transferred to the beneficiaries’ account in lieu of foodgrains subsidy component. They will be free to buy food grains from anywhere in the market. • Use of GPS technology: Use of Global Positioning System (GPS) technology to track the movement of trucks carrying foodgrains from state depots to FPS which can help to prevent diversion. • SMS-based monitoring: Allows monitoring by citizens so they can register their mobile numbers and send/receive SMS alerts during dispatch and arrival of TPDS commodities • Use of web-based citizen’s portal: Public Grievance Redressal Machineries, such as a toll-free number for call centers to register complaints or suggestions.

# Practice Question 1. Explain need for reforms in FCI. Analyse these recommendations of Santa kumar committee in this regard. (250 words)

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7 Hong Kong Protests and related issues

What is the Issue? • Protest erupted after the controversial extradition law push forwarded on Hong Kong. Lakhs of protesters marched the streets of Hong Kong in the biggest protest since the Umbrella Revolution of September-December 2014.

BACKGROUND • Hong Kong used to be a British colony, but since the handover of 1997 it is a city of China. • One Country, Two Systems, the Chinese Communist Government ensured Hong Kong will retain its own currency, legal and parliamentary systems, people’s existing rights and freedoms for fifty years. • However, critical voices have emerged in Hong Kong to protest against actions by the government which have been seen as prioritizing the interests of the Chinese Communist Government • For instance through the spending of public funds for pro-China white elephant projects. • The Umbrella Movement started as a spontaneous social movement for democratic development in Hong Kong in September 2014. • It was a large movement in terms of duration, location and reach and also very much empowered by digital media. • Its name arose from the use of umbrellas as a tool for passive resistance to the Hong Kong Police during a 79-day occupation of the city. The umbrellas were used for defence against police pepper spray. • The present The extradition bill, which would cover Hong Kong’s 7 million residents as well as foreign and Chinese nationals in the city, was seen by many as a threat to the rule of law in the

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former British colony. • Due to the public uproar, the bill postponed indefinitely.

Political Status of Hong Kong • Hong Kong, at roughly 1,100 sq km, is smaller in size than Delhi, and is home to an estimated 7.4 million people. • It was a British colony from 1841 until sovereignty was returned to China in 1997. • Hong Kong is now part of China under the “one country, two systems” principle. • Under this, the city of Hong Kong remains a semi-autonomous region with the Basic Law (the city’s mini-constitution) for 50 years. • This ensures that Hong Kong keeps its own judicial independence, its own legislature and economic system. • It has its own laws and courts, and allows its residents a range of civil liberties. • The Umbrella Revolution/Umbrella Movement/Occupy Movement refers to a series of sit-in street protests in Hong Kong in Sep-Dec 2014. • It was triggered over a decision regarding proposed reforms to the Hong Kong electoral system, and is largely a movement for democracy and autonomy.

Extradition Agreement • Extradition agreement refers to arrangement in regards to surrender of person(s) accused of a crime. • Hong Kong has entered into extradition agreements with 20 countries, including the UK and the US. • When the extradition agreements for Hong Kong was finalised, Taiwan and mainland China were excluded. • This was because of the different criminal justice systems that existed in those regions.

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• China has steadily tried to deepen its influence in this regard, but an extradition agreement with it has never been reached. • Image result for hong kong taiwan macau map • The Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill 2019 was proposed by Hong Kong’s government in February, 2019. • Carrie Lam, who became Chief Executive of Hong Kong in 2017 as the candidate favoured by Beijing, is pushing for the amendments. • The Bill will allow the local government to extradite a suspect to places with which the city has no formal extradition accord. • In effect, this would allow suspects accused of crimes such as murder and rape to be extradited to mainland China to face trial. • Once the law is changed, Hong Kong will also handover to China individuals accused of crimes in Taiwan and Macau. • Macau, like Hong Kong, is a Chinese special administrative region with significant autonomy. • Taiwan is seen as a sovereign state but its sovereignty is highly contended, and it has a tense relationship with China. • The government says that the proposed amendments would plug loopholes in the criminal justice system. • The current shortfalls allow criminals evade trial elsewhere by taking refuge in Hong Kong and allow the city to be used by criminals. • The government has assured that, under the bill, the courts in Hong Kong would make the final decision on extradition. • Courts can specify that only certain categories of suspects would be liable. • They can also lay down that individuals accused of political and religious offences would not be extradited.

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Concerns of the Protesters • Despite government assurances, there is a firm concern that China would use the changed law to target political opponents in Hong Kong. • Protestors highlight China’s flawed justice system and thus there is a fear that extradited suspects would likely face torture. • Also, there is a concern that the provision would deal another blow to Hong Kong’s already declining autonomy. • It would further erode the freedoms people enjoy under the Basic Law. • There are already instances of disqualifying elected lawmakers, banning activists from running for office, prohibiting political parties and expelling foreign journalists. • The recent march included people from the business community, lawyers, students, members of religious groups, and even housewives. • The issue thus brings to light the tensions between the Hong Kong’s Beijing-appointed elite rule, and the expectations of civil society and pro-democracy movement. • In all, the Bill could affect Hong Kong’s reputation as an international finance centre and also its judicial system.

International Reaction on the Issue • The Human Rights Watch and the International Chamber of Commerce have warned against changing the law. • A body of the US Congress has said that the amendment would make Hong Kong vulnerable to Chinese “political coercion”. • The UK and Canada as well have expressed concern over the potential impact on their citizens in Hong Kong. • The EU has also sent a diplomatic note in this regard. • But China has criticised the alleged “politicisation” of the Hong Kong proposal, and the “interference” in China’s internal affairs.

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• Moving forward, Beijing should reach out to the people of Hong Kong, alleviate their fears and concerns, and assure them of their guaranteed rights.

Way forward • The government has said that the proposed amendments would “plug loopholes” that allow the city to be used by criminals. • It has assured that courts in Hong Kong would make the final decision on extradition, that only certain categories of suspects would be liable, and that individuals accused of political and religious offences would not be extradited. • Many accuse Beijing of extensive meddling since then, including obstruction of democratic reforms, interference with elections and of being behind the disappearance of five Hong Kong-based booksellers, starting in 2015, who specialised in works critical of Chinese leaders.

#Practice Question 1. Movements for the protection of the democratic values are invariable. Do you think that the present democratic movement in Hon Kong has got its objectives fulfilled? (200 words)

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8 Code on Wages Bill

GS2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

What is the Issue? • In executing its plans on converting 35-odd labour laws into 4 codes, the government plans to first take up the Code on Wages Bill.

BACKGROUND • The present law mentions 13 most vulnerable categories of employment. • In this, the minimum wages are fixed by both the state governments and the Centre. • The Centre can notify the minimum wage rate for railway, agriculture, mining or central government entities. • The rates vary in accordance with skill sets, sectors and location.

Constitutional Provisions for Employees • Article 21 and 21A ensure right to meaningful life with minimum education for all. • Article 24 No child below the age fourteen years shall be employed in work in any factory or mine or engaged in any other hazardous employment. • Article 38 That the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength. • Article 43A ensures Participation of workers in management of industries.

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DISCUSSION NITI Aayog on Labour Reforms • Codifying labour laws - In 2016, there were 44 labour laws under the statute of the Central government. • Keeping women in the workforce - The government should ensure that employers adhere to the Maternity Benefit (Amendment) Act, 2017, and the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act. • Employment data - Data collection for the Periodic Labour Force Survey (PFLS) of households must be completed on schedule and data is disseminated by 2019. • Workers’ welfare - The government must mandatorily comply with the national floor-level minimum wage. • Social security and working conditions – There must be a compulsory registration of all establishments to ensure better monitoring of occupational safety. • Skills and apprenticeships - According to the India Skill Report 2018, only 47% of those coming out of higher educational institutions are employable.

Major Problems Faced by Indian Labour Market • Labour market in India is suffering from surplus labour force. • There are a growing number of unskilled labourers in the country. • In India the absorption rate of skilled labour force is also very poor. • Labour market in India is also suffering from some imperfections such as lack of adequate information regarding jobs, lack of suitable agency for the proper utilisation of labour force, child labour practices etc. • Work culture among the Indian labour force is not along the international standards. • Labour market in India is also facing the problem of militant unionism.

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• Labour market is also facing a serious problem of unemployment. • Labour market in India is also suffering from lack of adequate labour reforms provision.

Existing Concerns • The existing system has led to over 1,700 minimum wage rates, fixed by both states and the Centre. • The varied rates turn out as a huge compliance burden on industry. • It has the potential of unleashing inspector raj, and largely works against the welfare of workers. • Notably, the Centre started notifying a uniform national floor level minimum wage from 1996, which is non-binding on states. • The national floor level was last revised by 10% to Rs 176 a day in July 2017. • But to date, even business-friendly states such as Andhra Pradesh and Gujarat have fixed their minimum wage below the national floor. • Other states are compliant with the above non-statutory national floor. • So the minimum wage rate varies from Rs 69 to Rs 538 across states (with the lowest in Andhra Pradesh and the highest in Delhi). • It is Rs 321 for the industries falling in the central sphere, as of November 2018. • The variations call for a statutory floor across the country.

Issues with Existing Employment Law • Non-competition restrictions are deemed restraint in trade and therefore unenforceable post termination of employment irrespective of the covenants contained in the employment agreements. • Currently under the Industrial Disputes Act 1947 (“ID Act”), in case

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of termination of workmen by organisations, the organisations are required to follow the last-in first out (“LIFO”) rule. It is out dated. • Challenges in enforcing recovery of training costs and garden leave clauses post termination of employment; as such clauses are again deemed as restraint in trade under the Contract Act. • Present labour laws like the Factories Act 1948 (“Factories Act”) and the shop and establishment laws limited flexibility to employer in managing their workforce to achieve efficiency. • Employees usually receive legal notices from their previous employers regarding alleged violation of non-compete clauses and therefore, need to spend their resources in such legal battles. • Other issues include multiple laws and regulations governing labour matters.

Sectors Facing Crisis • Sectors like IT and projects are prone to various challenges under Indian labour laws, particularly in more difficult times where such companies may need to reduce their excess workforce. • Manufacturing concerns and large corporates usually have trade unions, which are usually backed by political parties and are seldom interested in protection of interests of workers. • Companies that have a presence in several states have the herculean task of complying with several central laws as well as laws of respective states.

Advantages of the Wage Code Bill • The Code on Wages Bill was introduced in the Lok Sabha in August 2017. [Click here to know more on the provisions.] • Under the proposed law, the minimum wage law will be extended to all sectors, instead of the current 13 categories of work. • This move is expected to ensure universal wage protection against exploitation.

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Challenges on the Present Bill • The proposed Bill empowers the Centre to fix a statutory minimum wage. • But notably, this may differ from state to state or from one geographical area to another. • This idea of a differentiated national minimum wage rate was taken forward by a government-appointed committee. • The committee has suggested a national minimum wage level for five different zones. • Four of these were grouped using varied socio-economic and labour market factors. • The fifth group included all North-eastern states except Assam. • Despite the grouping, a regional-level minimum wage rate can lead to disparity among various regions with varying economic profiles. • This is bound to make the system complex and confusing and difficult to enforce.

Various Programmes Under Labour Ministry • National Child Labour Project Scheme: The policy was formulated with the basic objective of suitably rehabilitating the children withdrawn from employment thereby reducing the incidence of child labour in areas of known concentration of child labour. • Government of India has introduced a pension scheme for unorganised workers namely Pradhan Mantri Shram Yogi Maan- dhan (PM-SYM) to ensure old age protection for Unorganised Workers. • Aam Admi Beema Yojana: The workers in the unorganized sector constitute about 93% of the total work force in the country. • Grant in Aid on Child Labour: Funds under Grants-in-Aid Scheme are sanctioned directly to NGO for elimination of Child Labour in districts not covered by NCLP Scheme.

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Way forward • The Centre should fix a single national floor for minimum wages for all workers. • It should let the states fix their own rates, but the states should do so keeping in mind the national floor. • Such a simpler structure would be easy to enforce and implement. • Without addressing these gaps, passing legislation on minimum wages may have a direct bearing on jobs and industrial relations. • Under the LIFO rule increase the requirement of paying retrenchment compensation may become a bottleneck in such a process.

#Practice Question 1. Labour issues in India needs a systemic solution. Critically analyse (200 words)

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9 India’s Foreign Policy Challenges and Prospects

GS2: India’s neighbourhood and bilateral relations.

What is the Issue? • Prime Minister Narendra Modi’s massive electoral mandate should add to India’s muscle as he strides onto the world stage in his second term. • But the world’s a bad-tempered place these days and his — and India’s — diplomatic outreaches face a new set of challenges.

BACKGROUND • The past five years were years of lost opportunity – of India missing the bus; of roads and reforms promised, but not taken. • U.S. President Donald Trump’s election and the unpredictability in U.S. policy pronouncements. • The trade war between the U.S. and China which is becoming a technology war. • Brexit and the European Union’s internal priorities and preoccupations. • Erosion of U.S.-Russia arms control agreements and the likelihood of a new arms race covering nuclear, space and cyber domains. • The U.S.’s withdrawal from the Iran nuclear deal and growing tensions between Saudi Arabia and Iran. • Besides all these is India’s principal foreign policy challenge of dealing with the rise of China. • The internal divisiveness of the last four years affects both our security and our ability to run a successful foreign policy in the neighbourhood. • India’s strategic shrinking influence in South Asia and the Indian Ocean region in the last decade.

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DISCUSSION India’s Imminent Foreign Policy Challenges • In such an unpredictable global environment and with resource constraints, India needs to realign its foreign policy priorities. • India’s in the bad books of the US and as of June 5, Washington’s ending India’s preferential trade status over tariffs on US goods. • Another focus area where the challenges lie in foreign policies is South Asian neighbourhood i.e. the SAARC countries. • Pakistan which is historically a problematic area due to Kashmir conflict and cross-border terrorism. • The energy security is another domain which requires apt attention and fine diplomacy in the wake of Iran-USA escalations. • India’s relations with USA will complicated by its engagements with Turkey, Iran, Russia and China. • India also fears a possible nexus between China, Iran, Pakistan and Russia against the so called USA allies groupings in the region.

Redefine India’s Neighbourhood • As in 2014, in 2019 too Indian PM Modi began his term with a neighbourhood focus, but redefined it. • In 2014, all South Asian Association for Regional Cooperation (SAARC) leaders had been invited for his swearing-in. • After the Uri attack in 2016, India’s stance affected the convening of the SAARC summit in Islamabad. • For the second term, leaders from the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) countries along with Kyrgyzstan were invited. • This shift highlighted a new neighbourhood emphasis.

Approach Towards Pakistan • A terrorist attack (Uri) cannot be ruled out and it would definitely attract retaliation.

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• But despite good planning there is always the risk of unintended escalation after such attacks. • E.g. the recent Balakot strike and the downing of an Indian Air Force (IAF) MiG-21 • In the absence of communication channels between India and Pakistan, the U.S., Saudi Arabia and the UAE played a role in this regard. • They ensured the quick release of the IAF pilot, Wing Commander Abhinandan Varthaman, thereby defusing the situation. • Clearly, the turn of events suggests that it would be better to have some kind of dialogue with Pakistan than outsourcing crisis management to external players. • In other words, it is not a wise option for India to ignore Pakistan altogether.

Probable Priorities for India • Translating India’s natural weight in the region into influence was easier in a pre-globalised world and before China’s assertiveness. • But today, the process is more complex. • Relations with countries in India’s periphery will always be complex and need calculated political management. • This is irrespective of how India defines its neighbourhood. • Given all, it is preferable to work on the basis of generating broad-based consent rather than dominance. • This necessitates using multi-pronged diplomatic efforts and being generous as the larger economy. • India also needs a more confident and coordinated approach in handling neighbourhood organisations including – »» SAARC »» BIMSTEC »» The Bangladesh-China-India-Myanmar Forum for Regional Cooperation

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»» The Bangladesh, Bhutan, India, Nepal Initiative »» The Indian Ocean Rim Association • This strategy should preferably be in tandem with bilateralism, as India’s bilateral relations comes with significant advantages.

India vs China in the Future • India largely followed the old policy since the Rajiv Gandhi period, in the context of relations with China. • This largely focusses on growing economic, commercial and cultural relations. • On the other hand, differences on the boundary dispute are dealt through dialogue and confidence-building measures. • It was believed that such measures would create a more conducive environment for eventual negotiations. • The underlying assumption was that with time, India would be better placed to secure a satisfactory outcome. • But apparently, the reality has proved otherwise and the gap between the two country was widening. • This was evident in the Doklam stand-off where the assumption behind the policy followed for 3 decades could no longer be sustained. • The informal summit in Wuhan seemed to have restored calm but did not address the long-term implications of the growing gap. • Meanwhile, there is the growing strategic rivalry between the U.S. and China. • India no longer has the luxury of distance to be non-aligned. • At the same time, the U.S. is an inconsistent partner and never has it been more unpredictable than at present. • Given these, how India manages its relations with the U.S. will be closely watched by China and Russia.

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Way forward • The harsh reality is that India lacks the ability to shape events around it on account of resource limitations. • So, employing external balancing to create a conducive regional environment will also require building a new domestic consensus. • The new challenges require domestic decisions in terms of expanding the foreign policy establishment. • India needs to ensure far more coordination among the different ministries and agencies than has been the case so far. • The focus on the neighbourhood and shaping events here is certainly desirable for India to look beyond. • However, the facts that China too is part of the neighbourhood add to India’s foreign policy challenges. • Pakistan should only be considered as a strategic distraction but china as a real threat to India’s ambitions. • No established power likes to see potential competitors rising, and there is therefore a limit to what we can expect from other powers. • India cannot rely on any other power – not the US, not China, or anyone else to secure us or to promote our prosperity. True strategic autonomy is our way forward.

#Practice Question 1. Do you think that the possible foreign policy challenges awaits India are capable enough to slow down its economic prospects? Elucidate (250 words)

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10 Need for the Simultaneous Election

GS2: Structure, organization and functioning of the Executive

What is the Issue? • The Centre has decided to form a committee to examine the issue of conducting the simultaneous elections.

BACKGROUND • The “One Nation, One Election” idea envisages a system where elections to all state assemblies and the Lok Sabha will have to be held simultaneously. • This will involve the restructuring of the Indian election cycle in a manner that elections to the states and the centre synchronise. • This would mean that the voters will cast their vote for electing members of the LS and the state assemblies on a single day, at the same time or in a phased manner as the case may be. • Currently, elections to the state assemblies and the Lok Sabha are held separately that is whenever the incumbent government’s five-year term ends or whenever it is dissolved due to various reasons. • This applies to both the state legislatures and the Lok Sabha. • The terms of Legislative Assemblies and the Lok Sabha may not synchronise with one another.

Historical Background • Simultaneous elections were the norm until 1967. • But following dissolution of some Legislative Assemblies in 1968 and 1969 and that of the Lok Sabha in December 1970, elections to State Assemblies and Parliament have been held separately. • The idea of reverting to simultaneous polls was mooted in the annual report of the Election Commission in 1983 and also in the report of Law Commission in the year 1999.

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• The recent push came ahead of the 2014 Lok Sabha polls in the Bhartiya Janata Party (BJP) manifesto. • NITI Aayog prepared a working paper on the subject in January 2017. • In the Law Commission’s working paper that was brought out in April 2018, it said that at least “five Constitutional recommendations” would be required to get this off the ground.

DISCUSSION Constitutional and Statutory Provisions • Article 83(2) of the Constitution provides for a normal term of five years for the House of People (Lok Sabha). • Article 172 (1) provides for a similar tenure for the State Legislative Assembly from the date of its first sitting. Tenure of the House cannot be extended beyond five years except in emergency situations. • Implementing this measure will require multiple constitutional amendments, amendments to the Representation of People’s Act, and other such laws. It will also require a great deal of political support and understanding. • The Election Commission has suggested that the term of Lok Sabha could commence and end on predetermined dates, and to avoid premature dissolution, no-confidence motions should be moved simultaneously with a confidence motion for the individual hoping to be the next PM. • If the House is still dissolved, the President can run the government for the rest of the term — or, if that period is long, fresh elections can be held for a House that would last only for the remaining length of time. • Assemblies can, as a one-time measure, be extended or curtailed to align their elections with the Lok Sabha cycle. • Recent Law Commission recommendations also feature some of these suggestions (see box: How to Restore Simultaneous Elections).

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Recommendations of Standing Committee • The Committee noted that the holding of simultaneous elections to Lok Sabha and state assemblies would reduce: »» the massive expenditure that is currently incurred for the conduct of separate elections; »» the policy paralysis that results from the imposition of the Model Code of Conduct during election time; and »» impact on delivery of essential services and »» Burden on crucial manpower that is deployed during election time. • Holding of elections in two phases: The Committee recommended that elections could be held in two phases. • It stated that elections to some Legislative Assemblies could be held during the midterm of Lok Sabha. • Elections to the remaining legislative assemblies could be held with the end of Lok Sabha’s term. • The elections of legislative assemblies whose term ends six months after the general elections to Lok Sabha can be clubbed together. • However, the results of such elections can be declared at the end of the assembly’s tenure.

Recommendations from Law Commission’s Working Paper • Simultaneous elections may be restored through an amendment of the Constitution, Representation of the People Act, 1951 and Rules of Procedure of Lok Sabha and State Legislative Assemblies. A definition may be added to section 2 of the 1951 Act. • The no-confidence motion may be replaced with a constructive vote of no-confidence through amendments in Lok Sabha and State Assemblies rules of business. • Anti-Defection law may be suitably diluted to prevent stalemate in case of a hung Assembly or Parliament

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• Statutory limit of six months for issuance of notification of general elections may be extended for securing flexibility as a one-time measure.

Advantages of Simultaneous Election • It will reduce enormous costs involved in separate elections. • It will reduce the burden on the manpower deployed. • The system will help ruling parties focus on governance, instead of being constantly in election mode. • It reduces the distractions from long-term planning and policy goals. • It will boost voter turnout, according to the Law Commission.

Disadvantages of Simultaneous Election • Holding simultaneous elections is likely to affect the judgment of voters as the national and state issues are different. • It will reduce the accountability of the government to the people as the elections will be held once in five years. • But repeated elections keep legislators on their toes and increases accountability. • It may curtail or extend the tenure of State legislatures to bring their elections in line with the Lok Sabha poll dates. • There is a serious question of what happens if the government at the Centre falls. • There will be a blow to democracy and federalism when President’s rule will have to be imposed in the interim period in a state. • This may be due to the postponement of election in a State until the synchronised phase arrives. • It will, in all probability, benefit the dominant national party or the incumbent at the Centre while disadvantaging the smaller regional party and issue. • In a parliamentary democracy, the legitimacy of executive is

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responsible to the legislature would be undermined by taking away the legislature’s power to bring down a minority regime by mandating a fixed tenure.

Experience of Other Countries • In South Africa, elections to national as well as provincial legislatures are held simultaneously for five years and municipal elections are held two years later. • In Sweden election to national legislature and provincial legislature/county council and local bodies/municipal Assemblies are held on a fixed date i.e. second Sunday in September for four years. • But most other large democracies do not have any such system of simultaneous elections. • In Britain, the Fixed-term Parliaments Act, 2011 was passed to provide a sense of stability and predictability to the British Parliament and its tenure. • It provided that the first elections would be held on the 7th of May, 2015 and on the first Thursday of May every fifth year thereafter. • Article 67 of Basic law for Federal Republic of Germany proposes a constructive vote of non-confidence (electing a successor while dismissing the incumbent). • In India, the Law Commission in its report (1999) had suggested a simultaneous motion of non-confidence in the incumbent government as well as the confidence in an alternative government by inserting Rule 198A in the Rules of Procedure and Conduct of Business in the Lok Sabha to eliminate the need for midterm election and ensure stability of government.

Way forward • Holding simultaneous elections goes against the spirit of the Constitution and against the spirit of federalism. • National and local issues are different, and holding simultaneous elections is likely to distort the judgment of the people.

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• There is apprehension that whenever there is a majoritarian government at the Centre, any anti-incumbency in the States is likely to get neutralised if simultaneous elections are held. • Implementing simultaneous polls would require a substantial shift from the status quo and would involve amendments to the Constitution and election-related laws. • Decisions taken at the local level are driven by local level considerations. Holding simultaneous elections even for local bodies along with Lok Sabha elections is problematic for the simple reason that every election has its own dynamics and its own issues.

#Practice Question 1. Simultaneous elections for Parliament and state legislatures will ensure consistency, continuity and governance, which are integral to democracy. Critically Analyse. (200 words)

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A High Powered Committee to be 11 set up for Agriculture

GS2: Agriculture reforms, issues and related constraints.

What is the Issue? • Prime Minister announced a high powered committee to recommend structural reforms in agriculture, at the 5th meeting of the Governing Council of NITI Aayog.

BACKGROND • Indian agriculture has been a paradox for sometimes. • While production is growing up and also exports are growing, there is also growing distrust among the farmers. • Farmers are affected by varying weather conditions, droughts and floods. Soil fertility is another issue. • Policies regarding agriculture and investments in it have also been a constant source of concern. • With huge pressure from various sources to shift to GM crops, it has also remained as an unresolved issue. • Agriculture accounts for 54.6% of total employment. • Agriculture production has consistently been rising. From 51 million tons in 1951 it has today reached 271 million tons. India has also been an exporting country. • Agricultural production in India is diverse. • The most notable among panels in this regard are - »» the M S Swaminathan-headed National Commission on Farmers »» the Shanta Kumar-chaired committee on food sector reforms »» the Ashok Dalwai-led empowered committee on doubling farmers’ income

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• The Swaminathan commission’s report (2006) had sought a paradigm shift in the focus of agricultural development programmes. • It called for shift in focus from increasing production to raising farmers’ income. • But this took over a decade for the government to realize the importance of this counsel and begin acting on it. • However, many other equally sensible recommendations of this commission still remain unattended. • The Dalwai committee’s report (2018) had a key focus on the structural reforms and governance framework for agriculture. • Being the latest, its recommendation were most relevant to the prevailing agrarian situation marked by widespread farmers’ distress. • Besides, there is the government’s own think tank, the National Institution for Transforming India (NITI) Aayog. • The three-year action plan for agriculture crafted by NITI Aayog also addressed current challenges in the agriculture sector.

Reforms Needed in Agriculture • Overhauling of marketing system is also necessary. • For decades, Indian governments have largely failed in their attempt to improve agricultural productivity and provide alternative occupational paths for rural households. • With his electoral mandate, Modi can focus on structural fixes that include access to better seeds and technology, drip irrigation and crop planning for the farmer, an easier path from farms to markets for products, a steadier off take of farm products and a reduction in middleman costs. • As already envisaged, a direct cash transfer to the marginal farmer can and should cushion this reform process.

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DISCUSSION Dimensions of Agrarian Distress • Input costs have gone up significantly recently while the farm gate prices of agricultural produce have continued to remain subdued. • The bulk of farming activities in India is undertaken by marginal farmers, share-croppers or landless agricultural labourers with limited access to institutional finance. • The value chain in the agricultural sector has been exploitative as only one-third of the retail prices paid by final consumers reach the producers, unlike two-thirds in case of milk. • The public distribution system does not have the capacity to undertake procurement operations for 24 crops for which minimum support price (MSP) is announced. • Although PDS is inefficient, an alternative mechanism is yet to emerge, which can ensure MSP to farmers during a period of bumper harvest. • Post-harvest technology is underdeveloped and farmers’ participation in such activities is limited. • Monsoon dependency is very high, limiting crop diversification to a great extent.

Objective of the Committee • The proposed committee would include some Chief Ministers. • It would take a holistic approach on the subject, including allied activities of agriculture. • The key issues marked out for reference to the proposed committee include - »» private investment in agriculture »» logistics »» value-addition »» marketing support

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»» irrigation, especially drip and other means of micro-irrigation »» legislative changes required to revamp agriculture and its allied activities

Challenges for the New Committee • Most of the issues marked out for reference to the proposed committee have been dealt comprehensively before by the above panels. • They have come out with some well-judged inputs for reforming the key segments of the farm sector. • But invariably, many of the workable and wise recommendations in these reports remain unimplemented. • Given this, the real need for the new committee is highly contentious.

Challenges Before • In recent years, the Centre has taken several initiatives such as the Pradhan Mantri Fasal Bima Yojana (PMFBY), electronic National Agricultural Market (e-NAM), soil health card, neem- coated urea and so on to reduce agrarian distress. • However, these have not been adequate to yield the desired result in a short span of time. • Agriculture, according to the Constitution, is a state subject. • So the truth is that the Centre has a very limited authority to intervene in matters related to agriculture. • It can do little without the cooperation of the states which, often, is unavailable in adequate measure. • The meager success of some of the Centre’s key initiatives in agriculture stands as proof. • E.g. the efforts at reforming agricultural marketing, legalizing land leasing and regularizing contract farming • The model Bills drafted to serve as the guides for the amendment of the state laws have failed to deliver the desired results.

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Way forward • The key to doubling farmers’ income is to involve them in post- harvest technology through innovative programmes. • The Swaminathan commission chose to recommend shifting of agriculture from the State List to the Concurrent List. • This could be firmly considered as this would allow the Centre to play a more meaningful role in the agricultural sector. • At the same time, it would not significantly dilute the powers of the state governments. • If the government is truly serious in reforming the farm sector, it can just examine the earlier reports and pick up the appropriate suggestions. • Significantly, concerted efforts at implementing them in a time- bound manner should be taken up. • The Centre’s ability to take the states on board through statutory means or persuasion is essential for meaningful reformation of the farm sector.

#Practice Question 1. 1. Structural reforms in agriculture can rejuvenate agriculture sector in India. Critically examine (150 words)

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Issues with the Civil Service – 12 Selection, Training and Periodical assessment GS2: Role of civil services in a democracy.

What is the Issue? • Senior civil servants assume leadership positions right after they join, but the testing criteria is far from assessing the skill required for the role. • In this context, here is an assessment of the priorities and challenges in the civil services at the selection and training phases.

BACKGROUND • There has so far been no concerted or sustained effort to manage senior civil service in a comprehensive manner. • The steps have been only ad hoc in nature; the lateral recruitment is also one such effort. • What really needs to be done is to look at - »» the manner in which recruitment takes place »» the in-service training, transfers, assessment of officers »» incentives and disincentives

Administrative Reform Since Independence • The A.D. Gorwala Committee appointed in 1951 by the Planning Commission and in 1953 the Appleby Commission was set up as well to analyse the administrative machinery for implementing planned development submitted its report with the recommendation to introduce O & M procedures in govt. departments as well as setting up of IIPA for advancement of administrative knowledge. • In 1956, the Planning Commission again constituted the Committee on Plan Projects to carry out studies in the

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field of projects,with a view of evolving suitable forms of organisation,methods,standards and techniques for avoiding waste and ensuring efficient execution of projects. • The Second Pay Commission in 1959 recommended the pooling of the Secretariat and the attached offices into a single Headquarter organisation. • First Administrative Reforms commission was set up in 1966 - 1970 with Morarji Desai as its Chairman and on his becoming Deputy Prime Minister, K. Hanumanthaiya took over. • The Jha Commission on Economic Administrative reforms advocated the need to move towards accountability in the positive sense so that greater importance was given to performance instead of rules and regulations/procedures. • The arrival of the New Industrial Policy and LPG brought in a lot of major reforms, like the introduction of ICT technology in administration ( E- Governance) and Public-Private partnership, as well as dis investments in PSUs.

DISCUSSION Constitutional provisions • Articles 315 to 323 of the Constitution deal with Public Service Commissions of the Union and the States. • Article 320(1) says: “It shall be the duty of the Union and the State Public Service Commission to conduct examinations for appointments to the services of the Union and the services of the State respectively.” • Article 316 provides for security of their tenure and unchangeable conditions of service and Article 319 bars them from holding further office on ceasing to be members. These constitutional safeguards enable them to function independently without fear or favour.

Recommendations by Various Committees • The Constitution Review Commission (2002), the Second Administrative Reforms Commission (2008) and the NITI

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Aayog’s 3 Year Action Agenda (2017) have all noted that the rising complexity of modern day policymaking is increasingly shifting the pendulum in favor of domain specialization instead of generalized competence. • Each has supported lateral entry into the civil services.

Issues with the Selection of Civil Servants • A widely prevalent criticism is the pushing up of the age limit and the number of times a candidate may take the examination. Recent years have seen older candidates succeed. This has certainly had a negative impact on the utility of training. • Here is a certain lack of sensitivity to the needs of the common man, even among recruits from the lower economic stratum and those who have a rural upbringing. • Corruption is still a harsh reality in urban and rural settings. • There are several structural problems that have crept up in the administrative services, such as disproportionate representation. • Indian civil service is turning into a representative organisation from caste and community point of view, at the same time it is getting confined to a small section of the society.

Issues Associated with the Training of Civil Servants • The fault is more with our vague training inputs and the leadership. • Permanency of cadre of civil servant is liable to result in inefficiency and ineffectiveness in the working of civil services. • The training academy has facilities to handle not more than 400 candidates for the foundation course. • While about 1,000 candidates are selected every year, nearly 60-70% of the candidates qualifying for the IPS and Central Services Group A do not join the foundation course in Mussoorie as they prepare for the civil services (main) examination again to improve their prospects.

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Issues Associated with Assessment of Civil Servants • There are fewer avenues to share best practices along with collusion of professionals with local politicians as their career prospects are in the hand. • Periodical assessment is done as for name sake only. • The bureaucratic machinery was no longer serving its purpose because of a severe lapse in discipline and ethics. • An immediate transfer affects both the working on the ARCs and the effectiveness of job at hand. • New recruits can lose their bearings in a system that places a premium on loyalty, political connections and community/caste clout rather than on merit; in which indecision and inaction are seldom punished.

Required Selection Priorities • Almost all the IAS officers occupy leadership positions right from the beginning of their careers. • Even in the Secretariat jobs, each officer has to lead a team. • Hence, the objective should be to select such persons who have leadership qualities or have the potential to become leaders. • A leader, in this context, has to be able to build a team and carry it along with her/him by motivating those working with him. • S/he has to excel in communication skills beyond the written one. • S/he has to be ethical in behaviour with a positive attitude.

Present Selection • Most of the above requirements are not tested at the time of recruitment. • The entrance exams primarily select brilliant individuals by testing written communication skills, some analytical skills and general awareness. • It tests the examinees capability to “crack” the exam, and various

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coaching institutes assist them in doing so. • But a leader requires much more than that.

Recent Developments • A radical proposal for allocating services and cadres based on the combined marks obtained in the CSE and the foundation course. But the new proposal is legally unsound, administratively unfeasible and has not been thought through properly. • Central government’s apex recruitment agency UPSC Friday cleared the names of nine private sector professionals for induction in the government as joint secretaries through lateral entry for a fixed term of three years.

Way forward • Recruitment - The tools to assess the above discussed skills which are in use in the private sector and elsewhere in the world should be adopted. • Training - The officers have knowledge and they are capable of acquiring more of it. • What is required is the transformation of attitude as an officer, the necessity and utility of ethical behaviour. • Given the high maximum age of entry into the civil service, this process becomes difficult and challenging. • In this line, the training should be centered around inculcating leadership skills. • It has to be focused on imparting skills and attitude that would enable the officer to evolve as a leader. • Periodic upgradation of skills and learning from each other should be the focus of in-service training. • This is imperative in the context of a fast-changing world both in terms of technology and management. • Certainty - The inclination and aptitude of the officer needs to be monitored to determine his/her postings and assignments.

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• Once assigned a task, he/she should be left to deliver. • Frequent transfers interrupt the implementation process and leaves way for politicisation of bureaucracy. • An agency, like the UPSC, can be assigned to prepare a panel from which the government can select an officer. • There should be flexibility in hiring and attracting the best possible talent to governmental positions so that the cause of growth and development is best served. • a mandatory “district immersion” for a stipulated number of years out of the total period of their employment.

#Practice Question 1. Indian civil services require comprehensive reforms in selection, training and periodic assessment rather than cosmetic efforts. Critically Analyse (250 words)

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13 Libyan Crisis and the aftermath

GS2: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

What is the Issue? • The Tripoli based government of Libya has decided to launch a peace initiative. • Prime Minister Fayez al-Sarraj of the Tripoli-based government has proposed setting up a national peace forum with help from the UN, to be followed by simultaneous presidential and parliamentary elections.

BACKGROUND • Libya is mostly desert and oil-rich country in northern Africa. • Libya gained independence in 1951. • Colonel Gaddafi seized power in 1969 and ruled for four decades until he was toppled in 2011 following an armed rebellion assisted by Western military intervention. • The civil war in Libya may lead to a new migrant crisis from Africa. • Libya has the largest oil reserve in Africa and one of the largest oil producers in the world. • Instability in Libya may increase oil prices globally. • Anti-government protests began on February 15, 2011, leading to civil war between opposition forces and Muammar Gaddafi loyalists. • The capital city, Tripoli was captured and the government was overthrown after military intervention by western powers. • In Libya, a UN-backed internationally recognized government was put in place called the Government of National Accord (GNA).

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• Libya has no single government currently, with LNA backing the Tobruk-based parliament which governs the East of Libya, and the GNA which controls Libya’s western parts from Tripoli. • The UN-backed government failed to provide stability to Libya. West Libya which was under GNA control was replete with inter- militia battles and kidnappings. • The GNA commands no security forces, public administration scarcely exists, water, petrol and power shortages abound, and few banks operate. • The rule of the gun prevails in Libya ever since western forces overthrew Qaddafi. • The oil-rich country, now a departure point for thousands of migrants travelling to Europe, once had one of Africa’s highest standards of living, free health care and education, with high female literacy and percentage of women in the workplace. • Its inland waterway to green the eastern desert was called the world’s largest irrigation project.

Present Political Status of Libya • Libya has been torn by violence and political instability since long-time ruler Muammar Gaddafi was toppled and killed by rebels in 2011.. • Today there are two governments in Libya, one based at Tobruk and the other in the capital Tripoli. • The capital city Tripoli was captured by the Prime Minister Fayez al-Sarraj is called the Government of National Accord (GNA). It has international recognition. • The self-styled Libyan National Army (LNA), commanded by Mr. Haftar, backs the Tobruk government. • Egypt, Saudi Arabia and the UAE are backing Mr. Haftar’s forces. • Turkey and Qatar backs the Tripoli based government. • United Nations has issued a plea for a temporary ceasefire to allow the wounded to be evacuated.

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• Many European countries, the US has asked to cease hostilities and de-escalation of tension. • The US has ordered evacuation of its troops stationed in Tripoli. • India also evacuated its contingent of peacekeeping forces comprising of 15 CRPF personnel from Tripoli. • India has also asked its citizens to exercise extreme caution.

Need for the Peace Talk in Libya • The recent tipping point of the crisis was the attempts by Mr Haftar led LNA to oust the government of Mr. al-Sarraj (GNA) and to capture Tripoli. • The U.S. had also taken a favorable view. • Hundreds of people have already been killed, but both sides have refused to agree to a ceasefire despite international calls. • So the UN recognized Tripoli based government (GNA) has decided to launch a peace initiative aimed at stabilizing the war torn country. • The Tripoli based government has proposed setting up a national peace forum with help from the UN, to be followed by simultaneous presidential and parliamentary elections. • Mr. al-Sarraj made the offer at a time when the rebel army of warlord Khalifa Haftar was fighting the Tripoli government troops on the outskirts of the capital. • But an offer for peace alone won’t make any difference in the complex, war-torn polity. The country descended into chaos after protests against Dictator Muammar Qadhafi in 2011. • Mr. Haftar claims he is fighting terror groups and wants to unify Libya under his leadership, while Mr. al-Sarraj says his government is legitimate.

India - Libya Relations • India established its Mission in Tripoli in 1969. The high water mark of Indo-Libya relations was the visit of Late Prime Minister

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Smt. Indira Gandhi to Libya in 1984. • India welcomed the UN Security Council resolution 1506 adopted on September 12, 2003, lifting sanctions imposed on Libya. Since then, there has been a series of high-level visits between India and Libya. • The economic cooperation between the two countries spans the entire spectrum of commercial activities, especially in Hydrocarbon, Power, Construction and IT sector have several ongoing projects in Libya. • While most of them left Libya during the present conflict, a few hundred Indians still remain in Libya, mainly working in various universities and hospitals.

Important Bilateral Treaties and Agreements • Avoidance of Double Taxation and Prevention of Fiscal Evasion (1981), • Agreement for Cooperation in the field of Health and Medical Sciences (1983) • Agreement on Economic Cooperation (1985), • Cultural Agreement (1985) • Bilateral Investment Promotion and Protection Agreement (BIPPA) (2007) • Cultural Cooperation Agreement (2007).

Way forward • Prime Minister al-Sarraj’s peace plan can work only if the big powers help enforce a ceasefire. • The civil war in Libya may lead to a new migrant crisis from Africa into Europe. • Libya has the largest oil reserve in Africa and one of the largest oil producer in the world. Instability in Libya may increase oil prices globally. This will impact India directly. • The world powers, including the U.S., Britain and their Gulf allies

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should look beyond their narrow geopolitical interests and use their influence to establish order in the country. • Prime Minister al-Sarraj’s offer could be a new beginning only if a ceasefire is reached, and respected, by all sides. • Libya illustrates what regime change wars could do to a country. Changing a regime using force could be easy as the examples of Iraq and Libya suggest, but rebuilding a new state is not, and it can’t be done with the aid of military power. • All the countries that invaded the oil-rich North African nation and backed its paramilitary groups, including the U.S., Britain and their Gulf allies, should share some responsibility for Libya’s crisis today.

#Practice Question 1. A calm and settled North Africa is inevitable for the migration embattled Europe. Explain (200 words)

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14 Acute Encephalitis Syndrome in Bihar and Malnutrition

GS2: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

What is the Issue? • The outbreak of acute encephalitis syndrome (AES) in Bihar has led to close to 350 cases and around 100 deaths. • While the causes of AES are still researched, the association with hypoglycaemia and litchi fruit has drawn attention.

BACKGROUND Acute Encephalitis Syndrome (AES) • Acute Encephalitis Syndrome (AES) is a broad term involving several infections, and it affects young children. • AES is not a disease;it is a syndrome. • Under its umbrella comes the hypoglycaemia, Japanese Encephalitis, Herpes meningitis, Race syndrome, cerebral malaria, scrub typhus, etc. • All of them are grouped under AES as they have a classical triad of sudden onset of fever, convulsions and loss of consciousness. • Image result for acute encephalitis syndrome

Spread of the AES in Areas • The first AES case was recorded in 1995 in Muzaffarpur, Bihar. • Eastern Uttar Pradesh too sees frequent outbreaks. • There is no fixed pattern, but a year with high temperature and scanty rain usually witnesses high cases. • Last year, there had been very few cases (in Muzaffarpur) because the general pattern of a few days of high temperature followed by rain showers was there.

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• There were 143 deaths in 2013 and 355 in 2014, which dropped to 11 in 2017 and 7 in 2018. • But this year, the heat has been prolonged with no spells of rain.

Causes AES • The syndrome can be caused by viruses, bacteria or fungi. • In India, the most common cause is the virus that causes Japanese encephalitis (JE). • Health Ministry estimates attribute 5-35% of AES cases to the JE virus. • In Bihar, the Directorate of Health Services claimed that the JE virus had caused only two of the total 342 AES cases this year. • The syndrome is also caused by infections such as scrub typhus, dengue, mumps, measles, and even Nipah or Zika virus. • In the latest outbreak in Muzaffarpur, the cause is yet to be clinically identified in most of the children.

DISCUSSION Hypoglycaemia and AES • Hypoglycaemia (low blood sugar) is a commonly seen sign among AES patients, and the link has been the subject of research for long. • The combination of AES with hypoglycaemia is unique to Muzaffarpur, Vietnam and Bangladesh. • A 2014 study in Muzaffarpur suggested that hypoglycaemia was the trigger that led to diagnosis of encephalitis. • So, Hypoglycaemia is not a symptom but a sign of AES. • With 98% of AES patients in Bihar also suffering hypoglycaemia, doctors are attributing deaths to the latter. • In Bihar, convulsions in children (which is AES) are found in combination with hypoglycaemia.

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Issues with Litchi fruit • Early researches have drawn parallel between cases in Bihar’s Muzaffarpur and in Vietnam’s Bac Giang province. • In both places, there were litchi orchards in the neighbourhood. • Methylene cyclopropyl glycine (MCPG), also known as hypoglycin A, is known to be a content of litchi fruit. • Undernourished children who ate litchi during the day and went to bed on an empty stomach presented with serious illness early the next morning. • When litchi harvesting starts in May, several workers spend time in the fields. • There, it is common for children to feed on fallen litchis and sleep without food. • The toxin in litchi (MPCG) lowers blood sugar level during night, and these children are found unconscious in the morning. • Blood glucose falls sharply causing severe brain malfunction (encephalopathy), leading to seizures and coma, and death in many cases. • However, this remains a subject of debate, and the possible association needs to be documented.

Role of Malnutrition in these Deaths • If toxins from litchi were causing hypoglycaemia, then these cases should have remained consistent each year. • Also, it should have affected children of all socio-economic strata. • But in contrast, this year, all deaths have been recorded in the lower income groups. • While well-nourished children eating litchi remain unaffected even if they go to bed on an empty stomach, the under-nourished ones were at grave risk. • This is because under-nourished children lack sufficient glucose

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reserve in the form of glycogen. • Also, the production of glucose from non-carbohydrate source is unsafe as it is unsustainable and thus stopped midway. • This leads to low blood sugar level, giving way for further health complications. • In all, even if litchi is a triggering factor, the real cause for adverse effects is said to be malnutrition. • So, while the cause of AES is still being researched, hypoglycaemic AES may be caused by malnutrition, heat, lack of rain, and entero-virus.

Geographical Extend of the Disease • Malnutrition is high in both states, and malnourished children are prone to infection. • As per Health Ministry data, UP and Bihar together account for over 35% of child deaths in the country. • National Family Health Survey-4 data show that in 2015-16, 48% children aged less than 5 in Bihar were stunted, which is the highest in India. • Also, heat, humidity, unhygienic conditions and malnutrition which are unique to these areas, together contribute to the rise in AES. • Incidence is higher in litchi fields around which malnourished children live.

Measures taken so far • In 2014, 74% of sick children were saved through a simple intervention by infusing 10% dextrose within 4 hours of the onset of illness. • Infusing dextrose is necessary to completely stop the attempt by the body to produce glucose from non-carbohydrate source. • Also, the prevention strategy of ensuring that no child goes to bed without eating a meal was adopted from 2015. This ensured

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a sharp drop in the number of children falling sick. • The Bihar government introduced free vaccines at all primary health centres.The current coverage is 70%. • The central and state governments have also conducted awareness campaign asking people not to expose their children to sun. • Also, ensuring a proper diet and increased fluid intake were insisted. • Besides these, early hospital referral and standard treatment for convulsions, high fever and vomiting can save lives.

Way forward • The basic rights to food and nutrition must be viewed as a primary responsibility of a state government. • As the health is a concurrent subject centre and state should share the responsibility to eradicate the menace of AES. • Strengthening the PDS systems in the regions and providing targeted food supplements could reduce the numbers of human loss. • There need to be a thorough study to be conducted in the disease hit regions of Bihar and UP. • Research institutions must make available of the international help if necessary in this regard. • Just as individuals are punished for legal violations, the government must be held legally accountable for the violation of these basic rights of children due to this disease. • The systematic violation of basic rights must be treated on a par with the breakdown of constitutional machinery. • To sum up, right to life is a fundamental right. Hence it is the duty od any democratic state to ensure its fulfilment.

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#Practice Question 1. What is Acute Encephalitis Syndrome (AES)? Explain the cause and remedies of AES. (200 words)

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15 NCRB’s Prison Statistics India 2016

GS2: powers, functions and responsibilities of various Statutory, regulatory and various quasi-judicial bodies

What is the Issue? • The Prison Statistics India 2016 report was published by the National Crime Records Bureau (NCRB) some time back. • The lack of certain categories of information in the report calls for the NCRB to be more prompt and open in releasing data.

BACKGROUND • Overcrowding : According to Centre’s reply in response to a question in the Lok Sabha in 2017, 149 jails in the country are overcrowded by more than 100% and that 8 are overcrowded by margins of a 500%. • Under-trials- More than 65% of the prison population in India are under trials. • Legal aid lawyers are poorly paid, and often over-burdened with cases. Further, there is no monitoring mechanism to evaluate the quality of legal aid representation in most states. • Prison structures in India are in dilapidated condition. Further, lack of space, poor ventilation, poor sanitation and hygiene make living conditions deplorable in Indian prisons. • The ratio between the prison staff and the prison population is approximately 1:7. In the absence of adequate prison staff, overcrowding of prisons leads to rampant violence and other criminal activities inside the jails. • Prisoners are subjected to inhuman psychological and physical torture. Sexual abuse of persons in custody is also part of the broader pattern of torture in custody. • In 2015, a total of 1,584 prisoners died in jails. A large proportion of the deaths in custody were from natural and easily curable

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causes aggravated by poor prison conditions. • Labour is extracted from prisoners without paying proper wages. • According to Humans Rights Watch, a “rigid” class system exists in the Indian prisons. There is rampant corruption in the prison system and those who can afford to bribe, often enjoy luxuries in prison. • Poor security measures and prison management often leads to violence among inmates and resultant injury and in some cases death. • In the prison the problem of the overcrowding, poor sanitary facilities, lack of physical and mental activities, lack of decent health care, increase the likelihood of health problems. • Women prisoners face number of challenges including poor nutrional intake, poor health and lack of basic sanitation and hygiene. • Absence of reformative approach in Indian prison system has not only resulted in ineffective integration with society but also has failed to provide productive engagement opportunities for prisoners after their release SC Judgements.

Prisons and Prison Laws in India: • Prison is a State subject under List-II of the Seventh Schedule in the Constitution. • The management and administration of Prisons falls exclusively in the domain of the State Governments, and is governed by the Prisons Act, 1894 and the Prison Manuals of the respective State Governments. • Thus, States have the primary role, responsibility and power to change the current prison laws, rules and regulations. • The Prisons Act, 1894: It contains various provisions relating to health, employment, duties of jail officers, medical examination of prisoners, prison offences etc. • Transfer of Prisoners Act, 1950 - The Act deals with transfer of prisoner from state to another state

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• Repatriation of Prisoners Act, 2003: The act enables the transfer of foreign prisoners to the country of their origin to serve the remaining part of their sentence. It also enables the transfer of prisoners of Indian origin convicted by a foreign court to serve their sentence in India • Model Prison Manual 2016: It aims at bringing in basic uniformity in laws, rules and regulations governing the administration of prisons and the management of prisoners across all the states and UTs in India • Legal service Authority Act, 1987: According to the law, a person in custody is entitled to free legal aid.

Recommendations of the Mulla Committee (1980-83) • Improving prison condition by making available proper food, clothing, sanitation; • The prison staff to be properly trained and organized into different cadres. • Setting up an All India Service called the Indian Prisons & Correctional Service. • After-care, rehabilitation and probation to be an integral part of prison service. • The press and public to be allowed inside prisons and allied correctional institutions periodically, so that the public may have first-hand information about the conditions of prisons and be willing to co-operate in rehabilitation work. • Undertrials in jails to be reduced to bare minimum and they be kept away from convicts. • Undertrials constitute a sizable portion of prison population. Their number to be reduced by speedy trial and liberalization of bail provisions. • The Government may make an effort to provide adequate financial resources.

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Krishna Iyer Committee, 1987 • The committee mandated to study the condition of women prisoners in the country, recommended induction of more women in the police force in view of their special role in tackling women and child offenders.

DISCUSSION Highlights NCRB Report • Prison population - The report notes that at the end of 2016, there were close to 4,33,000 people in prison. • Of these, 68% were undertrials, or people who are yet to be found guilty of the crimes they are accused of. • India’s under-trial population remains among the highest in the world. • More than half of all undertrials were detained for less than 6 months in 2016. • This suggests that the high proportion of undertrials in the overall prison population may be the result of unnecessary arrests and ineffective legal aid during remand hearings. • Preventive detention - Another concern is the rise in the number of people held under administrative (or ‘preventive’) detention laws in Jammu and Kashmir. • There has been a 300% increase, with 431 detainees in 2016, compared to 90 in 2015. • Administrative, or ‘preventive’, detention is being used by authorities to unfairly detain persons without charge or trial and circumvent regular criminal justice procedures. • Prisoner release - A new and important addition to the report is the data on number of prisoners eligible to be released and actually released. • In 2016, out of the nearly 1,500 undertrials found eligible for release under Section 436A, only 929 were released. • [Section 436A of the Code of Criminal Procedure allows

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undertrials to be released on a personal bond. • This is possible if they have undergone half of the maximum term of imprisonment they would have faced if convicted.] • Research by Amnesty India has found that prison officials are frequently unaware of this section and unwilling to apply it. • In 2017, the Law Commission of India had recommended that undertrials who have completed a third of their maximum sentence for offences attracting up to 7 years of imprisonment be released on bail. • The NCRB could consider including the number of such undertrials in its upcoming report for informing the policy on the use of undertrial detention.] • Unnatural deaths - Unnatural deaths doubled between 2015 and 2016, from 115 to 231. • Mental health concerns - About 6,000 individuals with mental illness were in jail in 2016. • The rate of suicide among prisoners has also increased by 28%, from 77 in 2015 to 102 in 2016. • The National Human Rights Commission in 2014 stated that on average, a person is one-and-a-half times more likely to commit suicide in prison than outside. • This is an indicator of the magnitude of mental health concerns within prisons. • Moreover, the report mentions that there was only one mental health professional for every 21,650 prisoners, in 2016. • Only 6 States and one Union Territory had psychologists/ psychiatrists. • Odisha, U.P. and M.P., the 3 States with the most prisoners with mental illness, did not have a single psychologist or psychiatrist.

Shortcomings in the Report • Demographic details - The NCRB failed to include demographic details of religion, and the Scheduled Caste and Scheduled Tribe

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status of prisoners. • But these demographic details, which were consistently published for the last 20 years, are crucial to understand India’s prison population. • It had, notably, been instrumental in revealing the overrepresentation of Muslims, Dalits and Adivasis among under-trials in prisons. • [The 2015 report noted that Muslims, Dalits and Adivasis accounted for 55% of the under-trial population. • This was despite the fact that they made up only 50% of the convict population and 38% of the total Indian population.] • Prison visits - The 2016 prison statistics do not mention the number of prison visits by official and non-official visitors. • [The non-official visitors include district magistrates and judges, social workers and researchers.] • The number of “unnatural” deaths in prisons underlines the relevance of prison visits. • The details on this aspect can be used to provide some information on independent monitoring of prisons. • This is essential to uncover torture and other forms of ill- treatment, increase transparency and balance the power asymmetry in prisons. • Mental health concerns - The report does not provide information on whether the reported mentally affected prisoners were diagnosed with mental illness before entering prison. • The resultant lack of clarity thus makes it difficult to determine whether prison conditions worsened their plight.

Steps taken so far • Modernization of Prisons scheme:The scheme for modernisation of prisons was launched in 2002-03 with the objective of improving the condition of prisons, prisoners and prison personnel. Various components included construction of new

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jails, repair and renovation of existing jails, improvement in sanitation and water supply etc. • E-Prisons Project: It aims to introduce efficiency in prison management through digitization • Draft National Policy on Prison Reforms and Correctional Administration

Way forward • This present report is different from its earlier versions on account of its omission of certain key data. • However, despite these gaps, the report brings to light some concerns involved in India’s prison system. • The important information in the report has to be utilised, to facilitate a dialogue on improving prison policies. • Going forward, the NCRB should also address the shortcomings and open about its prison statistics for appreciable democratic discourse in India.

#Practice Question 1. Data on criminal activities are the foundation stone for any policy in this regard. Do you think that the National Crime Records Bureau (NCRB) serve its purpose in policy making in India.( 200 words)

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16 NITI Aayog’s Health Index 2019

GS2: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

What is the Issue? • The second edition of NITI Aayog’s Health Index was recently released in its report titled ‘Healthy States, Progressive India: Report on Rank of States and UTs’.

BACKGROUND • The report has been developed by NITI Aayog, with technical assistance from the World Bank, and in consultation with the Ministry of Health and Family Welfare (MoHFW). • The report ranks states and Union territories innovatively on their year-on-year incremental change in health outcomes, as well as, their overall performance with respect to each other. • It aims to establish an annual systematic tool to measure and understand the heterogeneity and complexity of the nation’s performance in Health. • The Index ranks the States and Union Territories based on 23 health-related indicators which include – »» neonatal mortality rate »» under-five mortality rate »» proportion of low birth weight among new-borns »» progress in treating tuberculosis and HIV »» full immunisation coverage »» improvements to administrative capability and public health infrastructure »» proportion of districts with functional Cardiac Care Units

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»» proportion of specialist positions vacant at district hospitals • The report has ranking in three categories - larger States, smaller States and Union Territories, to ensure comparison among similar entities. • The Health Index does not capture other related dimensions, such as non-communicable diseases, infectious diseases and mental health. • It also does not get uniformly reliable data, especially from the growing private sector.

DISCUSSION Need for the Health Index • Health Index has been developed as a tool to leverage co- operative and competitive federalism to accelerate the pace of achieving health outcomes. • It would also serve as an instrument for “nudging” States & Union Territories (UTs) and the Central Ministries to a much greater focus on output and outcome-based measurement of annual performance than is currently the practice. • With the annual publication of the Index and its availability on public domain on a dynamic basis, it is expected to keep every stakeholder alert to the achievement of Sustainable Development Goals (SDGs) Goal number 3.

Highlights of the Report • Kerala continued to top the list for the best performing State in the health sector among the 21 large States. • Kerala was followed by Andhra Pradesh, Maharashtra, Gujarat and Punjab, Himachal Pradesh, Jammu and Kashmir, Karnataka and Tamil Nadu. • Andhra Pradesh and Maharashtra have had the additional distinction of making incremental progress from the base year. • Uttar Pradesh retains the worst performer tag in the index.

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• Uttar Pradesh continued to be at the bottom of the list with its score falling to 28.61; Kerala got a score of 74.01. • Other States at the bottom of the list are Bihar (32.11), Odisha (35.97) and Madhya Pradesh (38.39). • Among the UTs, Chandigarh jumped one spot to top the list with a score of (63.62). • •It is followed by Dadra and Nagar Haveli, Lakshadweep, Puducherry, Delhi, Andaman and Nicobar and Daman and Diu (41.66). • Overall, only about half the States and UTs showed an improvement in the overall score between 2015-16 (base year) and 2017-18 (reference year). • Among the 8 Empowered Action Group States, only 3 States (Rajasthan, Jharkhand and Chhattisgarh) showed improvement in the overall performance.

Concerning Issues on Health • Even though Kerala is the topper, its performance has slumped form the last year. • Some States and Union Territories are doing better on health and well-being even with a lower economic output. • In contrast, others are not improving upon high standards, and some are actually slipping in their performance. • In the assessment during 2017-18, a few large States showed less encouraging progress. • This reflects the low priority their governments have accorded to health and human development since the first edition of the ranking for 2015-16. • The disparities are very evident in the rankings, with the populous and politically important Uttar Pradesh being in the bottom of the list.

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Criticism over the Index • States like Tamil Nadu points to the inherent inconsistencies and contradictions in the NITI Aayog’s health index. • Some of the methodologies used in the Health Index are questioned for its parity with other similar tools. • There is also criticism over the purposeful degrading of certain states by the NITI Aayog in the current index. • Niti Aayog’s health index is less helpful for state governments, than it should have been. • A single set of indicators used for comparison across all states is a very simplistic proposition considering the vast differences in socio economic contexts, histories and complexities across states. • some of the most vital goals of health systems, like the reduction of catastrophic health expenditures and impoverishment due to healthcare, which have been addressed through very high profile initiatives, are not included in the list though data is available.

Way forward • For the Health Index concept to encourage States into action, public health must become part of the mainstream politics. • The Centre has paid attention to tertiary care and reduction of out-of-pocket expenses through financial risk protection initiatives such as Ayushman Bharat. • But several States lag behind when it comes to creating a primary health care system with well-equipped PHCs (Primary Health Centres) as the unit. • Neglect of such a reliable primary care approach affects States such as Bihar where infant and neonatal mortality and low birth weight are high. • Special attention is needed to raise the standards of primary care in low performing states such as Odisha, Madhya Pradesh, Uttarakhand, Rajasthan, Assam and Jharkhand.

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• State governments now have greater resources at their command under the new scheme of financial devolution. • So States, in partnership with the Centre, must use the funds to upgrade and transform the primary health care.

#Practice Question 1. Niti Aayog’s health index is found less helpful for state governments, than it should have been. Explain (150 words)

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National Registry of Citizen and 17 the Mohammad Sanaullah’s Case

GS2&3: Government policies and interventions for development in various sectors and issues arising out of their design and implementation & Challenges to internal security

What is the Issue? • Upon the orders of the Gauhati High Court, Mohammad Sanaullah was recently released on bail from a detention camp in Assam.

BACKGROUND • According to the Assam Accord, individuals who entered Assam after March 24, 1971 are illegal immigrants. • There are two parallel processes to establish citizenship: »» The Foreigners Tribunals operating under the Foreigners Act »» The National Register of Citizens (NRC), which is under preparation • These two processes are nominally and formally independent. But in practice, these two systems influence each other. • People, who have been declared as foreigners by the Foreigners Tribunals, and even their families, were dropped from the draft NRC. • Mohammad Sanaullahhad been detained few days back after a Foreigners Tribunal had declared him an illegal immigrant. • It was learnt that Mr. Sanaullah had served for three decades in the Indian Army. • Following this, after a week of sustained public pressure, the Gauhati High Court’s bail order has come. • The register is meant to be a list of Indian citizens living in Assam. It was first compiled in 1951, after the Census completed that

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year, a crude, approximate document with several irregularities in it. • One of the stated aims of the updating exercise is to identify so- called “illegal immigrants” in the state. • As per Assam accord, those who entered on or after March 25, 1971, the eve of the Bangladesh War, would be declared foreigners and deported. • The National Register of Citizens now takes its definition of illegal immigrants from the Assam Accord – anyone who cannot prove that they or their ancestors entered the country before the midnight of March 24, 1971, would be declared a foreigner and, presumably, face deportation.

DISCUSSION Issues with the Procedural • In the intervening period of Sanaullah’s release, a shocking number of irregularities surfaced. • In its inquiry report, the Assam border police had written that Mr. Sanaullah was a ‘labourer’. • The three men who signed the case report claimed that the investigating officer had fabricated their signatures. • The investigating officer himself admitted that it might have been an “administrative mix-up”. • Yet, it was on the basis of such disputable material that the Foreigners Tribunal concluded that Mr. Sanaullah was a “foreigner”and sent him off to a detention camp. • [The Foreigners Tribunal is a quasi-judicial body expected to follow the rule of law.]

Real issue Behind • Investigative journalists have revealed over the last few years that ‘administrative errors’ of this kind are the rule rather than the exception.

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• Sometimes, such disputable materials lead to people being detained for 10 years or more. • For these individuals, without the benefit of media scrutiny, there may be no bail; in other words, an endless detention. • In most cases, the legally mandated initial inquiry before an individual is brought before a tribunal as a suspected “foreigner” does not happen; it did not happen for Mr. Sanaullah. • Foreigners Tribunals themselves are only constrained by a very limited number of procedural safeguards. • This has led to situations where Tribunals have issued notices to entire families, instead of just the suspected “foreigner”. • Additionally, reports show that Foreigners Tribunals habitually declare individuals to be “foreigners” on the basis of clerical errors in documents. • These may include as small things as a spelling mistake, an inconsistency in age, and so on. • The hardest hit by such irregularities are the vulnerable and the marginalised, who have limited documentation at the best of time. • They are rarely in a position to correct errors across documents. • On occasion, orders determining citizenship have been passed by tribunals without even assigning reasons, a basic element of the rule of law. • In addition, a substantial number of individuals are sent to detention camps without being heard. • In detention centres families are separated, and people are not allowed to move beyond narrow confined spaces for years on end. • Driven by the Supreme Court, the NRC process has been defined by sealed covers and opaque proceedings. • The Supreme Court developed a new method of ascertaining citizenship known as the “family tree method”.

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• This method was not debated or scrutinised publicly, and it is found that people from the hinterland were unaware of the method. • Also, those who were aware had particular difficulties in putting together “family trees” of the kind that were required; the burden fell disproportionately upon women. • Recently, a process allowed for individuals to file “objections” against people whose names had appeared in the draft NRC. • On the basis of this, such people would be forced to once again prove their citizenship. • This had resulted in thousands of indiscriminate objections being filed, on a seemingly random basis, causing significant hardship and trauma to countless individuals. • The bi-annual talks between the Border Security Force (BSF) and Border Guards Bangladesh have not flagged the issue of undocumented migration from across the border beyond the angle of narcotics and cattle smuggling. • Possible solution will lead to a diplomatic crisis, not just with Bangladesh, but with other nations too. It also questions India’s moral authority on the international arena.

Fate of Non-citizens in Future • In 2014, the Supreme Court had asked the Central government to enter into necessary discussions with the government of Bangladesh to streamline the process of deporting illegal Bangladeshi immigrants. • Although India and Bangladesh entered into an extradition treaty during the UPA II regime in 2013, the expulsion of undocumented immigrants from Bangladesh allegedly residing in Assam, a sensitive issue. • Those deemed to be foreigners are transferred to detention centres. Till date, there are six across Assam, carved out of local prisons. • There is no repatriation treaty under which they can be deported

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to Bangladesh.

What is the Significance of Sanuallah’s Case? • Citizenship issues are very elemental and important demanding careful implementation and necessary procedural safeguards. • This is especially true as the consequences of being declared a non-citizen are grave. • These may include disenfranchisement, exclusion from public services, incarceration in detention camps, statelessness, and deportation. • Ensuring rule of law in such cases is of utmost importance. • Given this, Mr. Sanuallah’s case has brought the citizenship issue in Assam to the centre stage. • It can prompt some urgent national introspection about a situation in which thousands of people languish in detention camps for years. • It must serve as an urgent call for rethinking the National Register of Citizens.

Role of Judiciary • In a process with such flaws, and where the consequences are so drastic, judiciary intervention is crucial. • It is expected to fulfil its role of being the guardian of fundamental rights and the guarantor of the rule of law. • In cases where the cost of error is so high, the supreme court should realize that it is not “speed” that matters, but the protection of rights.

Way forward • The Assamese would like to protect their ancestral land, culture and identity, as well as a political majority in the state. • Those who do not make it to the final list will have to fight cases in the Foreigners’ Tribunals of Assam.

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• India needs to find a way out to the issue keeping in mind the human rights dimensions. • Some experts and political scientists suggest issuing work permits to those who are proved non-citizens as a solution to the problem. • The Assam Accord provides for granting citizenship to ‘foreigners’ through naturalisation. As per its Clause 5(4), names of foreigners so detected will be deleted from the electoral rolls in force. • Section 3 of the Citizenship Act as originally enacted in 1950 defined citizenship by birth by saying that all persons born in India automatically become Indian citizens (whatever be the nationality of his/her parents). • Hence, even if both parents were foreigners, the person became an Indian citizen if born in India. • Many of the migrants lost their valid documents in natural calamities such as flood and landslides. Hence some form of amnesty should be given to the genuine cases. • Even though it is a security problem, the humanitarian angle should not be forgotten for the mere political convenience.

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18 Blacklisting Pakistan under FATF

GS2&3: Important International institutions, agencies and fora, their structure, mandate Role of external state and non-state actors in creating challenges to internal security.

What is the Issue? • The Financial Action Task Force (FATF) is to hold its Plenary and Working Group meeting in Orlando, Florida. • It is likely to take up a proposal to downgrade Pakistan to the blacklist on terrorist financing from its current grey list status.

BACKGROUND • The Financial Action Task Force (FATF) was set up in 1989 by the western G7 countries, with headquarters in Paris. • It acts as an ‘international watchdog’ on issues of money- laundering and financing of terrorism. • FATF has 37 members that include all 5 permanent members of the Security Council, and other countries with economic influence. • Two regional organisations, the Gulf Cooperation Council (GCC) and the European Commission (EC) are also its members. • Saudi Arabia and Israel are “observer countries” (partial membership). • India became a full member in 2010. • Pakistan was placed on the grey list by the FATF in June for failing to curb anti-terror financing. • It has been scrambling in recent months to avoid being added to a list of countries deemed non-compliant with anti-money laundering and terrorist financing regulations by the Paris- based FATF, a measure that officials here fear could further hurt its economy.

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Present status of Pakistan • Pakistan has been under the FATF’s scanner since June, 2018. • It was put under the greylist for terror financing and money laundering risks. • This was done after an assessment of its financial system and law enforcement mechanisms. • FATF and its partners such as the Asia Pacific Group (APG) review Pakistan’s processes, systems, and weaknesses. • This is done on the basis of a standard matrix for anti-money laundering (AML) and combating the financing of terrorism (CFT) regime.

Pakistan’s Subsequent Commitment • In June 2018, Pakistan gave a high-level political commitment to work with the FATF and APG. • It promised to strengthen its AML/CFT regime, and to address its strategic counter-terrorism financing-related deficiencies. • Based on this commitment, Pakistan and the FATF agreed on the monitoring of 27 indicators under a 10-point action plan, with deadlines. • Successful implementation of the action plan and its physical verification by the APG will lead the FATF to move Pakistan out of the grey list. • But failure in implementation and in meeting the deadlines would result in Pakistan’s blacklisting by September 2019.

FATF’s Current Stance on Pakistan • There was only limited progress by Pakistan on action plan items due in January 2019. • So FATF, in February, 2019, urged Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019. • Pakistan, recently, presented its progress on the 27 indicators in a meeting with the Joint Group of the APG.

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• It was agreed that there have been improvements in the AML/ CFT regime and the integrated database for currency declaration arrangements. • But the Joint Group informed Pakistan that its compliance on 18 of the 27 indicators was unsatisfactory. • The other gaps in progress include the following: • contradictory situations and poor coordination among stakeholders • lack of cooperation among law enforcement agencies at various tiers of Pakistan’s government • insufficient physical action against proscribed organisations to block the flow of funds • Pakistan was thus asked to do more to demonstrate strict action against 8 terrorist groups, and in combating money laundering. • It must show that terror financing prosecutions result in effective, proportionate and restrictive sanctions.

Possible Action on Pakistan • Pakistan faces an estimated annual loss of $10 billion if it stays in the greylist. • If blacklisted, its already fragile economy will get even weaker. • Its $6 billion loan agreement with the International Monetary Fund (IMF) could be threatened. • Notably, the IMF has asked Pakistan to show commitment against money laundering and terror financing.

India’s Role in the Process • India is a voting member of the FATF and APG, and co-chair of the Joint Group. • [India is represented by the Director General of India’s Financial Intelligence Unit (FIU) in the Joint Group.] • Pakistan had asked for India’s removal from the group, citing bias and motivated action, but that demand has been rejected.

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• But India was not part of the group that moved the resolution to grey list Pakistan in 2018 in Paris. • The movers were the US, UK, France, and Germany; China did not oppose it.

Legal Framework in India to Contain Financial Crimes • Unlawful Activities (Prevention) Act, 1967 (UAPA): provided for the prevention of certain unlawful activities of individuals and associations and for matters connected therewith. • It was amended in 2004 to criminalise terrorist financing. • It was further amended in 2008 to broaden its scope and confirm with the requirements of the United Nations Convention on the Suppression of the Financing of Terrorism. • Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 was introduced to prevent smuggling and the Smugglers. • Foreign Exchange Manipulators Act,1976 provided for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators. • Foreign Contribution (Regulation) Act, 1976 dealt with regulating the acceptance and utilization of foreign contribution and foreign hospitality. • Narcotic Drugs and Psychotropic Substances Act, 1985 made stringent provisions for the control and regulations of operations relating to narcotic drugs and psychotropic substances. • Prevention of Money Laundering Act, 2002 (PMLA) which came into force in 2005 and amended in 2009 and 2012 was introduced to counter the trend of money laundering. • Foreign Exchange Management Act (FEMA), 1999 was enforced to regulate the development and maintenance of foreign exchange market

Asia Pacific Group of FATF • In 1995 an Asia-Pacific regional office called the “FATF-Asia

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Secretariat” was established and funded by the government of Australia. • It worked with countries in the Asia-Pacific to generate wide regional commitment to implement anti-money laundering policies. • In 1997, the Asia/Pacific Group on Money Laundering (APG) was officially established as an autonomous regional anti-money laundering body. • It was set up by unanimous agreement among 13 original founding members. • A new secretariat was also established to serve as the focal point for APG activities, in Sydney, Australia.

Way forward • India’s compliance with global standards in countering money laundering and terror funding is on the right track, however the gaps need to be addressed and worked upon. • India has adopted its own model to fight money laundering and terrorist financing based on its specific domestic and regional considerations. • To enhance the functionality of the FATF in India, government agencies have launched a National Risk Assessment exercise on January 2016 so as to identify the sectors that are most susceptible to money laundering and terror funding and thereby plug deficiencies, if any. This conforms with the FATF recommendations.

#Practice Question 1. What you mean by FATF grey list? Do you think that the present development at FATF on Pakistan will help in contain terrorist financing in India? (200 words)

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19 Liquidity Risk Management Framework for NBFCs and CICs - RBI

GS3: Indian Economy and issues relating to planning, mobilization of resources, growth, development

What is the Issue? • RBI has put up the draft circular, Liquidity Risk Management Framework for Non-Banking Financial Companies and Core Investment Companies.

BACKGROUND Existing Liquidity risk management Mechanisms • RBI notify Risk Management Systems in Banks which includes the multiple steps in different verticals of the banking. • Banks in the process of financial intermediation are confronted with various kinds of financial and non-financial risks viz., credit, interest rate, foreign exchange rate, liquidity, equity price, commodity price, legal, regulatory, reputational, operational, etc. • These risks are highly interdependent and events that affect one area of risk can have ramifications for a range of other risk categories. • Thus, top management of banks should attach considerable importance to improve the ability to identify, measure, monitor and control the overall level of risks undertaken. • The primary responsibility of understanding the risks run by the bank and ensuring that the risks are appropriately managed should clearly be vested with the Board of Directors. • The Board should set risk limits by assessing the bank’s risk and risk-bearing capacity. • At organisational level, overall risk management should be assigned to an independent Risk Management Committee or Executive Committee of the top Executives that reports directly

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to the Board of Directors.

DISCUSSION Need for Present Regulations • The recent incident of IL&FS has triggered the RBI to take a fresh look at the liquidity risk management at The NBFCs and Core Investment companies. • Many large NBFCs have come under severe liquidity pressure, compelling them to bring down their reliance on commercial papers following series of default by group companies of IL&FS beginning September last year. • Ever since the IL&FS crisis erupted, banks have been averse to lending to the sector, which has put them in a tight spot. There are concerns that NBFCs may run out of money, which will lead to defaults. • According to estimates, about Rs 1 lakh crore of commercial papers (CPs) raised by NBFCs from investors will come up for redemption in the next three months. • Recently, DHFL was downgraded on a concern of default in payment obligation towards CPs. • Further, RBI intends to prescribe stringent rules for liquidity risk management as many NBFCs were hit by a severe asset liability mismatch. • India’s shadow lenders have been under pressure since last year, when a series of defaults by Infrastructure Leasing & Financial Services forced the government to intervene and exposed weaknesses in the sector. • Since then, the banks and mutual funds which provided funding to the NBFCs have reduced their exposure, creating a cash crunch which caused the shadow lenders to sell assets and restrict new loans. • They ran their business using short term funds to give long term loans. • Most of the NBFCs working under the radar of the RBI tend to

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evade their liquidity position with them. • It further complicates the risk in the financial system, which is already strained by bad loans. • Hence the NBFCs, most of whom are cash strapped, want the RBI to implement liquidity risk management rules only in tandem with an arrangement for making available much needed funds.

What are the New Rules? • LCR - Non-Banking Financial Companies (NBFCs) should maintain a liquidity coverage ratio (LCR) in line with banks. • [The LCR requires banks to hold enough high-quality liquid assets (HQLA) that can be sold to fund banks during a stress scenario.] • The LCR requirement shall be binding on NBFCs from April 01, 2020. • The liquidity rules were proposed for all NBFCs. • But for NBFCs with assets above Rs 5,000 crore and deposit- taking NBFCs, the LCR is mandatory. • HQLA - RBI has asked the firms to have sufficient High Quality Liquid Asset (HQLA) that would keep them liquid for at least 30 days. • HQLAs are generally cash or government securities that can be quickly sold in the market to raise cash. • The minimum HQLAs to be held from April 1, 2020 will be 60% of the LCR. • But by April 1, 2024, large and deposit-taking NBFCs should have HQLAs of a minimum of 100% of net cash outflows over the next 30 calendar days. • Collaterals - An NBFC must actively manage its collateral positions, differentiating between encumbered and unencumbered (free of liabilities) assets. • NBFCs should monitor such assets so that they can be mobilised in a timely manner.

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• All NBFCs must have contingency funding plans for responding to severe disruptions. • Liquidity position - Firms are to measure their liquidity in a granular manner, measuring as minutely as 1-7 days’, 8-14 days’, and 15-30 days’ period. • Asset-liability mismatches should not exceed 10-20% in the timeframes running up to a year. • Liquidity position has to be reported to the RBI, along with the interest rate sensitivity statement. • Liquidity positions should also be disclosed to the public for investors. • In addition to the structural and dynamic liquidity needs, a stock approach will also have to be maintained to gauge liquidity needs. • NBFCs were thus asked to maintain tools that would generate early warning on risk situations. • Under the revised framework, even if a borrower pays to an NBFC but has defaulted with a bank/small finance bank, the NBFC gets roped in signing the Inter Creditor Agreement and becomes part of the resolution plan.

Issues with the Present Guidelines • NBFCs may see profit margins squeezing from RBI draft liquidity norms. • Instead of providing a much-expected liquidity window to non- bank finance companies via the regular lenders, the central bank took a tougher stance • The proposed guidelines should be made concomitant with provision of a mechanism of liquidity support for NBFCs. • Currently, with the tight liquidity conditions in the industry have made generation of funds a very difficult task. • NBFCs request the RBI to kindly consider putting in place a suitable mechanism for such liquidity support.

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• Currently, tight liquidity conditions in the industry have made generation of funds a very difficult task, and we request the RBI to kindly consider putting in place a suitable mechanism for such liquidity support. • Alternatively, the implementation of these guidelines may kindly be deferred until return of normal liquidity conditions for the sector. • Credit growth is unlikely to pick up despite the three successive rate cuts by the central bank due to the capital constraints at banks and the deepening crisis in the non-banking lenders sector.

RBI’s Proposal to Introduce LCR for large NBFCs • The frequent incidents of the failures among the sytemetically important NBFCs triggered RBI to intervinee with a new proposal to large NBFCs. • RBI proposed introducing a liquidity coverage ratio (LCR) for large non-banking finance companies (NBFC) to help tackle liquidity problems in the sector. • • The central bank said it planned to implement LCR, a liquidity buffer, “in a calibrated manner” over four years starting from April 2020. • The LCR is proposed for all deposit-taking NBFCs, and non- deposit taking NBFCs with an asset size of Rs 5,000 crore ($720 million) and above. • NBFCs will have to maintain minimum high-quality liquid assets of 100 percent of total net cash outflows over the following 30 calendar days.

Way forward • The regulator won’t bail out any particular company but will ensure the NBFCs are more disciplined and strong at the cost of some short-term pain. • If implemented, the draft guidelines could hit the NBFCs’ margins and business growth.

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• Imminent crisis” in NBFCs sector as misadventures by some large entities and credit squeeze present a perfect recipe for disaster. • Since the IL&FS crisis, there has been notable uncertainty in the NBFC market. • Over the past few months, many NBFCs have not been able to borrow from markets, including banks. • In this backdrop, the regulatory norms are good for the long- term sustainability of the NBFC sector. • With the RBI bringing in the guidelines to manage asset-liability mismatches, lenders will get more confidence. • It ensures that an NBFC has sufficient collateral to meet expected and unexpected borrowing needs. • This is a new requirement where the decision-making is not only linked to the quantum of loan extended by the lenders but also the number of lenders.

#Practice Questions 1. NBFCs are inevitable for the economic growth in the country. Do you think the present credit risk management systems are supportive of these objectives? (200 words)

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Why India needs a Solar 20 Manufacturing Strategy?

GS3: Infrastructure: Energy, Ports, Roads, Airports, And Railways etc.

What is the Issue? • India has made an ambitious target for its National solar mission and co-authored to start the International Solar alliance. • Despite making significant progress in solar power generation, India still relies on China for equipment. In this context, here is an overview of India’s solar manufacturing potentials and shortfalls.

BACKGROUND • The Prime Minister’s emphasis since 2014 has given a new fillip to solar power installation in India. • India has made significant progress in creating capacity for solar energy generation in the last few years. • The unit costs of solar power have fallen, and solar energy has become increasingly competitive with alternative sources of energy. • India expanded its solar generation capacity 8 times from 2,650 MW in May, 2014 to over 20 GW in January, 2018, and 28.18 GW in March, 2019. • The government had an initial target of 20 GW of solar capacity by 2022, which was achieved 4 years ahead of schedule. • In 2015, the target was raised to 100 GW of solar capacity by 2022.

India’s Solar Manufacturing Potential at Present • The supply chain of solar photovoltaic (PV) panel manufacturing is as follows: silicon production from silicates, production of solar grade silicon ingots, solar wafer manufacturing and PV

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module assembly. • The capital expenditure and technical know-how needed for these processes decreases from the first item to the last. • Moreover, silicon production is more capital-intensive than module assembly. • Most Indian companies are engaged in only module assembly or wafer manufacturing and module assembly. • No Indian company is involved in silicon production, although a few are making strides towards it. • Finally, India may not see domestic players, in the short term at least, replacing imported ones.

Requirement of Solar cells • According to the Ministry of New and Renewable Energy (2018), India has an annual solar cell manufacturing capacity of about 3 GW. But markedly, the average annual demand is 20 GW. • The shortfall is met by imports of solar panels. The government is a near monopsonistic buyer (the market condition that exists when there is one buyer) in solar sector. • India is regarded by the global solar industry as one of the most promising markets. • But the low-cost Chinese imports have undercut India’s ambitions to develop its own solar technology suppliers. • Imports, mostly from China, accounted for 90% of 2017 sales, up from 86% in 2014.

Reasons for the Skewed Growth of its Solar Industry • India is energy deficient, yet blessed with plenty of sunlight for most of the year. • Ideally speaking, India should have taken a lead in solar panel manufacture to generate solar energy long ago, but it did not. • So despite the new policy focus on solar plant installation, India is still not a solar panel manufacturer.

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• India has no real plan in place to ensure solar panel manufacture, much like a lack of a dedicated Industrial Policy. • [The share of all manufacturing in GDP was 16% in 1991; it remained the same in 2017. • The solar power potential offers a manufacturing opportunity.]

China’s Advantage over India • China’s cost advantage derives from capabilities on three fronts. • Core competence - It takes time for companies to learn and put in action new technologies. • When the solar industry in China began to grow, Chinese companies already possessed the know-how. • The 6 largest Chinese manufacturers had core technical competence in semiconductors well before starting solar cells manufacturing. • In contrast, Indian companies had no learning background in semiconductors when the solar industry in India began to grow from 2011. • State governments need to support semiconductor production as part of a determined industrial policy to develop this capacity. • Government policy - The Chinese government has subsidised land acquisition, raw material, labour and export, among others. • None of this is matched by the Indian government. • Perhaps even more important is commitment by the government to procure over the long run. • This is crucial for investment in building up the design and manufacturing for each of the 4 stages of production of solar power equipment. • Cost of capital - Cost of capital is another advantage for China in this regard. • The cost of debt in India (11%) is highest in the Asia-Pacific region, while in China it is about 5%.

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• Sustaining exports - In 2018, China cut financial support to developers and halted approval for new solar projects. • As a result, Chinese producers will cut prices to sustain their manufacturing plant capacity utilisation by sustaining exports to India. • In other words, the Chinese strategy is to undercut any planned effort by India to develop the entire supply chain capacity within India. • It thereby ensures that dependence on imports from China continues.

India’s Efforts in this Regard • In the solar panel manufacturing sector, the Indian government allows 100% foreign investment as equity. • The sector also qualifies for automatic approval. • The government is also encouraging foreign investors to set up renewable energy-based power generation projects on build- own-operate basis. • But the Chinese government is clearly adopting an aggressive stance, exploiting India’s growing demand for solar power. • The safeguard duty on solar cells now puts locally made panels on par with imported ones in terms of cost. • But the domestic sector needs to do a lot more to be effective.

Government Initiatives • The ISA’s major objectives include global deployment of over 1,000GW of solar generation capacity and mobilisation of investment of over US$ 1000 billion into solar energy by 2030. • The National Solar Mission is one of the eight missions of the National Action Plan on Climate Change (NAPCC). It will make India one of the largest Green Energy producers in the world.

Areas to be Focused in near Future • Remaining dependent on imports only leads to short-term

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benefits for India. • Substituting for imports requires human capabilities, technological capabilities and capital in the form of finance. • Making input components locally instead of importing them and putting the modules together here are essential for covering the entire supply chain. • Public procurement should be promoted with high priority. • The government is still free to call out bids for solar power plants with the requirement that these be made fully in India. • This will not violate any World Trade Organization (WTO) commitment. • However, no bids will be received as manufacturing facilities for these do not exist in the country. • If the bids are large enough with supplies spread over years, then bidders will emerge and local manufacturing can begin. • This is because it will give enough time for a green field investment to be made for manufacturing in India. • In all, India needs a solar manufacturing strategy, perhaps like the Automotive Mission Plan (2006-2016). • [The Plan is credited with making India one of the largest manufacturers of two-wheelers, three-wheelers, four-wheelers and lorries in the world.] • Most Indian companies are engaged in only module assembly or wafer manufacturing and module assembly. No Indian company is involved in silicon production, although a few are making strides towards it.

Way forward • India is regarded by the global solar industry as one of the most promising markets, but low-cost Chinese imports have undercut its ambitions to develop its own solar technology suppliers. • Imports, mostly from China, accounted for 90% of 2017 sales, up from 86% in 2014.

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• Substituting for imports requires human capabilities, technological capabilities and capital in the form of finance. • On the first two capabilities, the supply chain of solar photovoltaic panel manufacturing is as follows: silicon production from silicates (sand); production of solar grade silicon ingots; solar wafer manufacturing; and PV module assembly. • The capital expenditure and technical know-how needed for these processes decreases from the first item to the last, i.e. silicon production is more capital-intensive than module assembly. • While the safeguard duty now puts locally made panels on par with imported ones in terms of cost, the domestic sector needs to do a lot more to be effective. • Public procurement is the way forward. The government is still free to call out bids for solar power plants with the requirement that these be made fully in India.

# Practice Question 1. Despite making significant progress in solar power generation, India still relies on China for equipment. Critically analyse the reasons for the stagnation of solar manufacturing in India. (250 words)

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Impact of Air Pollution on Human 21 Health

GS3: Conservation, environmental pollution and degradation, environmental impact assessment

What is the Issue? • The United Nations has warned that 9 out of 10 people on the planet are now breathing polluted air and nobody is safe from air pollution, in a report on the eve of the World Environment Day.

BACKGROUND • The five main sources of air pollution are - • Indoor burning of fossil fuels, woods and other biomass to cook, heat and light homes • Industry, including power generation such as coal-fired plants and diesel generators • Transport, especially vehicles with diesel engines • Agriculture, including livestock, which produces methane and ammonia, rice paddies, which produce methane, and the burning of agricultural waste • Open waste burning and organic waste in landfills • Burning fossil fuels for power, transport and industry is a major contributor to air pollution. • Some of the same pollutants contribute to both climate change and local air pollution, including black carbon or soot and methane. • Mining operations in large scale

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Major air Pollutants • Particle pollutants • Ground-level ozone • Black carbon & Carbon monoxide • Sulfur dioxide • Nitrogen oxides • Lead

DISCUSSION Possible Health Hazards • Respiratory disorders • Cardiovascular dysfunctions • Neuropsychiatric complications • Fatigue, headaches and anxiety Irritation of the eyes, • nose and throat Damage to reproductive organs Harm to the liver, • spleen and blood

Air Pollution and its Impact • Air pollution has led to a growing global health crisis, which already causes about 7 million deaths per year according to WHO. • It is as well the main source of planet-warming carbon emissions. • In the 15 countries that emit the most planet-warming gases, the cost of air pollution for public health is estimated at more than 4% of GDP. • In comparison, keeping heat to the Paris Agreement temperature limits would require investing about 1% of global GDP.

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Human Impacts of air Pollution • Air pollution kills 800 people every hour or 13 every minute. • This accounts for more than 3 times the amount of people who die from malaria, tuberculosis and AIDS combined each year. • Air pollution is responsible for 26% of deaths from ischemic heart disease, 24% of deaths from strokes, 43% from chronic obstructive pulmonary disease and 29% from lung cancer. • Household air pollution causes about 3.8 million premature deaths each year. • The vast majority of them are in the developing world, and about 60% of these deaths are among women and children. • 93% of children worldwide live in areas where air pollution exceeds WHO guidelines. • 600,000 children below the age of 15 died from respiratory tract infections in 2016. • In children, it is associated with low birth weight, asthma, childhood cancers, obesity, poor lung development and autism, among others. • As many as 97% of cities in low- and middle-income countries with more than 100,000 inhabitants do not meet the WHO minimum air quality levels. • In high-income countries, 29% of cities fall short of guidelines. • Among urban ambient air pollution factors from fine particulate matter, - • about 25% is contributed by traffic • 20% is contributed by domestic fuel burning • 15% is contributed by industrial activities including electricity generation • Keeping global warming well below 2°C could save about one million lives a year by 2050 through reducing air pollution alone.

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India’s Effort to Contain Air Pollution • The Air (Prevention and Control of Pollution) Act, 1981: It provides for the prevention, control and abatement of air pollution and for the establishment of Boards at the Central and State levels with a view to carrying out the aforesaid purposes. • The Environment (Protection) Act,1986 (Air Act): It is an umbrella legislation designed to provide a framework for the co-ordination of central and state authorities established under the Water Act,1974 and Air Act,1981. • National Clean Air Programme: It aims to meet prescribed annual average ambient standards at all locations in the country in a stipulated timeframe. • Launch of National Air Quality index (AQI): • Dust Mitigation Plan: Centre has notified Dust Mitigation Plan under Environment (Protection) Act, 1986 to arrest dust pollution. • Indian Government plans to have an all-electric fleet of vehicles by 2030. For promotion of electric vehicles FAME (Faster Adoption and Manufacturing of (hybrid &) Electric vehicles scheme has been launched. • Measures to curb indoor air pollution: The government launched Pradhan Mantri Ujjwala Yojna to replace unclean cooking fuels used in the most underprivileged households with clean and more efficient LPG (Liquefied Petroleum Gas). • Graded Response Action Plan (GRAP) for Delhi-NCR: Under GRAP, there are 4 stages of pollution – Moderate to Poor, Very Poor, Severe and Severe+ or Emergency and action are listed that need to be undertaken as the levels are breached.

International Efforts to Tackle Air Pollution • To alleviate the negative effects of atmospheric pollution on health, the World Health Organization (WHO) and the Climate and Clean Air Coalition (CCAC) – made up of the United Nations Environment Programme (UNEP) and 54 nations, among other

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agencies – launched the BreatheLife initiative. • This is a program that aims to “aims to mobilize cities and individuals to protect our health and our planet from the effects of air pollution” and which has fixed the objective of cutting by half the number of deaths linked to air pollution before 2030. • Actions will be local and focused on improving transport, waste management, indoor air quality, energy supply, industry, food and agriculture.

Poverty and Air Pollution • A major hurdle in addressing air pollution is poverty. Poverty ridden households are still dependent on cook stoves, heating fuel, and kerosene lighting which are all common sources of pollution. • Further, though air pollution affects all, but the poorest and most marginalized people are worst affected and air pollution related deaths occur mostly in poorest households. • Governance: Poor governance is also a major challenge in curbing air pollution since lax enforcement of standards for car exhausts, crop burning, or dust from construction sites leads to more particulates in the air. • Technological challenges: major technological challenges include Old technology and High average age of vehicles, obsolete technology used in industries etc.

Way forward • Air pollutions have major impacts on human health, triggering, and inducing many diseases leading to high morbidities and mortalities, particularly in the developing countries such as Iran. • Therefore, air pollutions control is vital and should be on the top of priority list of the governments. • The policy makers and legislators in these countries must update all laws and regulations related to air pollutions. • Coordination between different departments involving in

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air pollutions must be leaded by a powerful environmental protection organization. • An effective environmental protection organization should have enough budgets for administration, research, development, monitoring, and full control of the environment including air pollution. • It is important to strengthen public transport and encourage people to use public transport. • Emphasis should be laid on reducing emissions from thermal power plants and industry by instituting strong emissions standards. • Both in-situ crop residue management and creation of infrastructure and market for the use and management of stubble outside of the field (ex-situ management) should be used. • Measures should be taken for building and improving proper waste management systems and efforts should be made to reduce, reuse and recycle waste. • Massive thrust should be provided to mass awareness campaigns involving community organisations such as resident’s associations, students, voluntary bodies and NGOs. • There is a dire need for political will for effective implementation of environmental regulations and ensure coordination among all stakeholders. • Research and development backed with adequate funding should be encouraged to develop and promote green technologies.

# Practice Question 1. Analyse the human cost of air pollution? Suggest some measures to tackle its impact on human life. (200 words)

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22 St. Petersburg International Economic Forum

What is the Issue? • The 23rd St. Petersburg International Economic Forum (SPIEF) was recently held in St. Petersburg, Russia.

BACKGROUND • The first SPIEF was held in 1997. Now over past two decades, it has become one of leading global platforms for communication between business representatives and discussion of crucial global economic issues. • Since 2006 it has been held under auspices and participation for Russian President Vladimir Putin. • The SPIEF 2018 edition brought together around 17,000 participants from more than 140 countries. • At the event Russia tries to boost its appeal to international businesses and investors. • St. Petersburg International Economic Forum 2019: brought together high-profile politicians, leaders from participating countries, leaders of International organisation, representatives of major international companies and organisations as well as experts from various fields.

Russia’s Relation with the U.S. • St. Petersburg International Economic Forum is Russia’s annual investment gathering. • The meet took place in the backdrop of heightened tensions between the U.S. and Russia and China. • Unsurprisingly, it was boycotted by the U.S. Ambassador to Russia, Jon Huntsman. • His absence was ascribed to the prevailing environment in Russia for foreign entrepreneurs.

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• This is particularly in regards with the detention of U.S. private equity investor Michael Calvey on allegations of fraud. • Conversely, the Chinese telecommunications equipment manufacturer Huawei signed an agreement with Russia’s principal mobile operator to start 5G networks. • This came after Washington blacklisted Huawei, prohibiting it from selling technology to the U.S. • The U.S. also barred domestic firms from supplying semiconductors to Beijing.

DISCUSSION Geopolitical Irritants Developed • The rift between the West and Russia began with Moscow’s annexation of Crimea in 2014 and the stand-off in eastern Ukraine that continues. • Russia’s tensions with the U.S. and some EU countries are also due to their opposition to the 1,200-km-long Nord Stream 2 gas pipeline from Russia to Germany. • U.S. plans to export liquefied natural gas to Europe, which is partly the reason why it objects Russia’s initiative. • Thwarting Russia’s ambition to dominate the region’s energy market is also one of U.S.’s objectives. • Another more sensitive issue is U.S. Special Counsel Robert Mueller’s inquiry into possible Russian meddling in the 2016 U.S. presidential election.

Relevance of the Current Engagement • Amid mounting tensions with the United States, long China’s top single trading partner, Beijing is now especially keen to emphasize the economic side of its relationship with Russia. • There are some early signs that relationship is benefitting as China moves away from importing U.S. energy and agricultural products.

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• As the Middle East heats up with Iran-USA issues, the energy security of the China hangs on the Russian support. • A clear focus on geopolitics in China-Russia relation. • Moscow and Beijing, hostile rivals of the Cold War era, have for a while been adopting common positions at the UN Security Council on critical international issues. • Chinese cooperation would moreover prove critical for Russia’s elaborate plans to exploit the Northern Sea Route along the Arctic as an alternative transportation hub. • Equally, President Donald Trump’s “America first” policy is compelling potential rivals to make common cause. • Russia proposed massive investments in infrastructure, including upgrading the trans-Siberian railway to better link his country to the Pacific.

Russia-China Relations in New ways • Russian President Putin and his Chinese counterpart Xi Jinping made it clear that the tensions with the West had only drawn them closer. • Amid the tensions, both leaders emphasised that bilateral relations were at a historic high, marked by increased diplomatic and strategic cooperation. • Notably, China participated in Russian military exercises on its eastern border recently, marking a watershed. • Also, Moscow and Beijing, hostile rivals of the Cold War era, have for a while been adopting common positions at the UN Security Council on critical international issues. • Bilateral relations are also guided by pragmatism. • Russia appears realistic about the growing Chinese economic influence in Central Asia. • This is primarily driven by China’s massive infrastructure investments under the Belt and Road Initiative. • For Russia, Chinese cooperation would also prove critical for its

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plans to exploit the Northern Sea Route along the Arctic as an alternative transportation hub. • Besides, international sanctions have not been very effective in isolating Russia. • European states, notably Germany, recognise the importance of engaging with Russia to contain Mr. Putin’s expansionist aims. • Equally, President Donald Trump’s “America first” policy is compelling potential rivals to make common cause.

Role of India in this Pivot • The Russia-China-India currently has engagements at SCO and BRICS. • International politics is changing so fast that it requires a degree of human ingenuity to grapple with geopolitical dynamics on a continuous and concurrent basis, and regional and sub-regional groupings are required to re-position and address themselves to emerging realities thoughtfully and imaginatively. • The India-China-Russia trilateral is still at a nascent stage. • China and India had reservations at being identified with the grouping, as their relationship with the USA was quite comfortable. • The convergence of economic interests and the imperative of mutual cooperation, however, provided the glue to put up the nomenclature in a proper perspective. • India, Russia and China, as countries with growing international influence, can make substantive contributions to global peace, security and stability. • The three countries uphold the concept of a multi-polar world and frequently take similar stands at multilateral bodies, they could utilise the synergy to promote their domestic economic development. • China has been articulating the view that the three countries could join hands in several fields, including trade, energy, and science and technology to broaden strategic ties with each

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other.

Way forward • In the increasing volatile global energy market, the St Petersburg economic format is an opportunity for India to leverage its best interest. • Widen scope of their economic partnership in the sectors of energy, Arctic region, transfer of technology, joint projects under Make in India initiative and manpower. • Russia is an age old friend of India; hence the vital relations with Russia for energy, geopolitical, economic and security fronts are important to be continued in a healthy form. • India can also benefit from SBEF, Russian transfer of technology including in railway sector. Defence ties was discussed in the context of Make in India initiative and the two leaders referred to AK-203 rifles factory in Amethi as Joint Venture. • Pharmaceuticals have been one of the traditional industries where India and Russia have developed strong ties. But India and Russia should change the model of cooperation. • Russia is interested in developing cooperation in the transportation sector, including Railways. • Currently, several Russia-based IT companies and venture funds are exploring investment opportunities in India.

#Practice Question 1. In what ways the ongoing Russia – China relations affect the national interest of India? How shoul India respond to this situation? (250 words)

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23 Need for a Legal Framework for Artificial Intelligence in India

GS3: Science and Technology- developments and their applications and effects in everyday life.

What is the Issue? • Artificial Intelligence-/AI-driven tech will become counter productive if a legal framework is not devised to regulate it.

BACKGROUND • To make it simple – Artificial Intelligence is intelligence exhibited by machines. • It is a branch of computer science which deals with creating computers or machines as intelligent as human beings. • The term was coined in 1956 by John McCarthy at the Dartmouth conference, Massachusetts Institute of Technology. • It is a simulation of human intelligence processes such as learning (the acquisition of information and rules for using the information), reasoning (using the rules to reach approximate or definite conclusions). • Further it supports self-correction by machines, especially computer systems. • Nowadays it has become an umbrella term which encompasses everything from robotic process automation to actual robotics. • Recently it has become widely popular and gained prominence due to its multifaceted application ranging from healthcare to military devices. • China and U.K. estimate that 26% and 10% of their GDPs respectively in 2030 will be sourced from AI­related activities and businesses. • There has been tremendous activity concerning AI policy positions and the development of an AI ecosystem in different

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countries over the last 18 to 24 months. • Infrastructural supply side interventions have been planned by various countries for creating a larger ecosystem of AI development. • Not just national governments, but even local city governments have become increasingly aware about the importance and potential of AI and have committed public investments.

DISCUSSION Recent developments in AI • Recently, the Kerala police inducted a robot for police work. • Around the same time, Chennai got its second robot-themed restaurant. • Here, robots not only serve as waiters but also interact with customers in English and Tamil. • In Ahmedabad, a cardiologist performed the world’s first in- human telerobotic coronary intervention on a patient nearly 32 km away. • All these examples symbolise the arrival of Artificial Intelligence (AI) in everyday lives of human beings. Global Efforts to Regulate AI • Till recently there has been interest across the world to develop a law on smart technologies. • In the U.S., discussions are being taken up about regulation of AI. • Germany has come up with ethical rules for autonomous vehicles. • It stipulates that human life should always have priority over property or animal life. • China, Japan and Korea are following Germany in developing a law on self-driven cars. • India is yet to make a comprehensive policy and regulation of such path breaking technologies. Currently IT act governs the

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AI too. Advantages of AI • No leisure time required • Lower error rate compared to humans. Better precision and accuracy. Eg: Robotic radio surgery • Better speed • Not affected by surrounding environment • Replace humans in repetitive, tedious tasks • Better user experience through predictive technology e.g. Help in predicting what a user will type, ask, search, and do. Can easily act as assistants and recommend actions. • Interact with humans for entertainment or a task. E.g. Sophia robot • Logical – devoid of emotions. Can make rational decisions with less or no mistakes. Disadvantages of AI • Building trust: AI is all related to science and algorithms, which lies on the technical side. People who are completely unaware of these algorithms and technology that lies behind the working of Artificial intelligence find it difficult to understand its functioning. • The challenge here is the shortage of data science skills within humans to get maximum output from artificial intelligence. • Another challenge of artificial intelligence is that not all business owners or managers are willing to invest in it. • No technology or human is perfect. In case of software or hardware crashes, it is difficult to put a finger on what went wrong. On the other hand, tasks performed by humans can be traced. • Ever since AI made its way into our lives, we have a notion that all tasks, minute or a gigantic, can be managed by artificial intelligence. However, this can be true to a certain extent. But not all the tasks can be undertaken by AI.

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• AI could have serious issues with the expectations of the people around. People, in general, don’t have a detailed understanding of how AI works and hence they have extremely high expectations; some of which are not even possible. • It may lead to moral degradation in society due to decreased human to human interactions.

Challenges India’s Artificial Intelligence Development is facing • Lack of enabling data ecosystems • Low intensity of AI research • Inadequate availability of AI expertise, manpower and skilling opportunities • High resource cost and low awareness for adopting AI in business processes • Unclear privacy, security and ethical regulations • Unattractive Intellectual Property regime to incentivise research and adoption of AI.

India’s need in AI • Traffic accidents lead to about 400 deaths a day in India, 90% of which are caused by preventable human errors. • Autonomous vehicles that rely on AI can reduce this significantly, through smart warnings and preventive and defensive techniques. • Patients dying due to non-availability of specialised doctors can be prevented with AI reducing the distance between patients and doctors. • AI has several positive applications, as seen in the above examples. • AI systems have the capability to learn from experience and to perform autonomously for humans. • This also makes AI the most disruptive and self-transformative technology of the 21st century. • So, if AI is not regulated properly, it is bound to have unmanageable

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implications. • E.g. the consequence if electricity supply suddenly stops while a robot is performing a surgery and access to a doctor is lost • These questions have already confronted courts in the U.S. and Germany. • All countries, including India, need to be legally prepared to face such kind of disruptive technology.

The challenges Involved • Predicting and analysing legal issues in regards with AI use and their solutions are not that simple. • E.g. an AI-based driverless car getting into an accident that causes harm to humans or damages property • In such cases, criminal law may face drastic challenges as the party to be held liable is disputable. • In India, NITI Aayog released a policy paper, ‘National Strategy for Artificial Intelligence’, in June 2018. • The paper considered the importance of AI in different sectors. • The Budget 2019 also proposed to launch a national programme on AI. • But notably, all these developments are taking place on the technological front. • No comprehensive legislation to regulate this growing industry has been formulated in India till date.

Way forward • The first need is to have a legal definition of AI in place. • It is essential to establish the legal personality of AI which means AI will have a bundle of rights and obligations, in the context of India’s criminal law jurisprudence. • Since AI is considered to be inanimate, a liability scheme that holds the producer or manufacturer of the product liable for harm must be considered.

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• Moreover, since privacy is a fundamental right, certain rules to regulate the usage of data possessed by an AI entity should be framed. • This should be a part of the Personal Data Protection Bill, 2018. • Incentivising creation of jobs that could constitute the new service industry • Recognition and standardisation of informal training institutions • Creation of open platforms for learning and financial incentives for re-skilling of employees • Lack of qualified faculty that poses a serious problem in the present scenario can be addressed through innovative initiatives like credit bearing MOOCs (Massive Open Online Courses). • Acceptability and adoption of these decentralised teaching mechanisms can be ensured through prescribed certification in collaboration with the private sector and educational institutions. • Additional investment and collaboration with the private sector and educational institutions in order to meet the market demand.

#Practice Question 1. Do you think that the Artificial Intelligence (AI) is poised to disrupt our society? Critically analyse the possible disadvantages of Artificial Intelligence in our daily lives. (250 words)

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24 SEBI Norms for Credit Rating Agencies

What is the Issue? • Securities and Exchange Board of India (SEBI) has released a new framework for financial disclosure by credit rating agencies (CRAs).

BACKGROUND • Credit Rating Agencies (CRAs) are companies that evaluate the financial condition of issuers of debt instruments. • CRAs assign a rating that reflects its assessment of the issuer’s ability to make the debt payments. • Rating is denoted by a simple alphanumeric symbol. E.g. AA+, A-, etc. • In India, CRAs are regulated by SEBI (Credit Rating Agencies) Regulations, 1999 of the Securities and Exchange Board of India Act, 1992. • The entities that are rated by credit rating agencies comprise companies, state governments, non-profit organisations, countries, securities, special purpose entities, and local governmental bodies. • Some of the key CRAs in India include - • Credit Rating Information Services of India Limited (CRISIL) • ICRA Limited • Credit Analysis and Research limited (CARE)

DISCUSSION Issues Related to Credit Rating Agencies • Ideological biases: CRAs might favour certain political ideologies to limit negative policy and market surprises as they strive to

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keep ratings stable over the medium term. • A panel analysis of Standard & Poor’s, Moody’s, and Fitch’s rating actions for 23 OECD countries from 1995 to 2014 shows that left executives and the electoral victory of non-incumbent left executives are associated with significantly higher probabilities of negative rating changes. • Conflict of interests: CRAs are funded by the very companies they rate. • Lack of ability to predict: CRAs follow the market, so the markets alert the agencies of trouble. This happens post-market and after something has happened. This is the reason for CRAs inability to predict frequent near default, default, and financial disasters. • Negligence & incompetence: Methodology of CRAs has come under question. For example, even after using different methodologies, the result for sovereign debts comes the same. It is also alleged that, CRAs can make sound judgement on rating, but they didn’t make an effort to do it. • For e.g. Moody accepted that it did not have a good model on which it could have estimated a correlation between mortgages backed securities, so they made them up. • Politically motivated: It has also been alleged that CRAs, through their rating mechanism forces the govt to follow the path prescribed by them. • For e.g. during the turmoil in Tunisia, S&P issued a report warning of “downward ratings pressures” on neighbouring governments if they tried to calm social unrest with “populist” tax cuts or spending increases. • Further, after Crimea annexation rating agencies downgraded the rating of Russia. • Policy meddling: In 2003, to stop predatory lending, state of Georgia brought a law. Other states of USA were to follow the suit, until S&P retaliated. • And it is well known that predatory lending is responsible for financial crisis of 2008-09.

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New Norms in this Regard • Rating agencies have to clearly state the “probability of default” of the instruments they rate for the benefit of investors. • Probability of default describes the likelihood of a default over a particular period. • It provides the likelihood that a borrower will be unable to meet its debt obligations. • SEBI will prepare and share standardised and uniform probability of default benchmarks. • This will be fixed for each rating category for one-year, two-year and three-year cumulative default rates - both for the short run and long run. • Probability will be based on a 10-year marginal default rate and the economic cycle. • The agencies will also have to publish information on their performance in the rating of debt instruments, in comparison with a benchmark created in consultation with SEBI. • This will help investors to better judge the performance of credit rating agencies. • SEBI also introduced disclosure of factors to which the rating is sensitive. • Rating agencies will have a specific section on rating sensitivities in each SEBI’s press release. • This would explain the broad level of operating and financial performance levels that could trigger a rating change - upward and downward. • This is critical for the end-users to understand the factors that would have the potential to impact the credit worthiness of the entity. • Besides, SEBI expects rating agencies to make meaningful disclosures on client’s liquidity position using simple terms. • This may include terms such as superior or strong, adequate,

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stretched or poor. • This should also come with appropriate explanations, to help the end users understand them better and avoid any ambiguity.

Issues the Credit Agencies • The credibility of rating agencies has been eroding since the global financial crisis in 2008. • This is primarily because of the conflict of interest arising from issuer-pays model. • Under this, the ratings agency is paid by the issuer of the instrument that it rates. • So agencies are found to be more loyal to companies whose instruments they rate rather than to investors who provide precious capital. • In effect, agencies fail to downgrade troubled firms until they are on the verge of bankruptcy. • The defaults at Infrastructure Leasing and Financial Services (IL & FS) in 2018 that led to a liquidity crisis among non-bank lenders in India has brought the focus back to CRAs. • CRAs as SEBI-registered intermediary are supposed to be an alert system of an instrument before the actual default. • But after failing to detect early signs of the crisis, credibility of CRAs as an institution and their utility under the regulatory system were questioned. • Given the impact of this over the larger economy, SEBI aimed at tightening the disclosure guideline. • This is believed to enhance the quality of information made available to investors by the rating agencies. • Overall, SEBI’s attempt seems to be to align ratings methodologies with global best practices. • But it is not clear how the new framework will effectively resolve the conflict of interest issue that for long deteriorates the rating industry.

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National Credit Rating in India • No uniformity among rating companies in India: An average investor in India is not able to understand the different credit ratings prevailing in India as there is no uniformity among the credit rating agencies. • No standardization in rating and no standardized fee structure for rating agencies in India is one of the other issues.

Need for Credit Rating Agencies • From the 80s onwards, as the financial system became more deregulated, companies started borrowing more and more from the globalised debt markets, and so the opinion of the credit ratings agencies became more and more relevant. • Reduce information asymmetry: Since CRAs get access to the management of the company, and confidential information about its working, they can give an informed opinion about the ability of an instrument to meet its obligations. • RAs provide tangible benefits to financial market regulators by reducing the costs of regulation. • Some financial regulators mandate that certain instruments must be rated mandatorily before they are issued. • It compels developing countries to pursue more prudent and sensible monetary and fiscal policies.

Need for CRAs Regulation • Rating shopping: It has often been seen that both issuer and investor are involved in rating shopping. • Oligopolistic Tendencies: Around 95% of market is controlled by only 3 CRAs VIZ. S&P , MOODY’S and FITCH. Further they use expansionist marketing. • Hegemonic Control: As the big three CRAs are located in North America, America exerts a great control on the functioning of CRAs. • CRAs have great control on the world economy as their ratings

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can result in the flight of capital from any given country. • CRAs are not accountable to any country and moreover their functioning is not transparent.

Way forward • Rotation of credit rating agencies: Under the current framework, there is no provision for the rotation of credit rating agencies. • Regulators in India may consider other options as well, such as ‘investor pays model’ or ‘regulator pays model’ after weighing the relevant pros and cons. • For resolving conflict of interest disclosures being made by credit rating agencies should also include important determinants such as: Extent of promoter support, Linkages with subsidiaries and Liquidity position for meeting near-term payment obligations. • With the help of technology, open source models, such as Credit Risk Initiative of National University of Singapore Risk Management Institute, with fully transparent inputs and outputs should be created and promoted. • Legal liability of credit rating agencies should be increased. • Use of credit ratings in regulations that set capital requirements and restrict asset holdings for financial institutions should be removed or replaced

#Practice Question 1. “Strict enforcement may work better than higher disclosures in disciplining rating agencies”. Critically examine the short comings in the functioning of the credit rating agencies in India. (200 words)

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25 Agricultural Credit in India and issues around

GS3: agricultural produce and issues and related constraints

What is the Issue? • Recently, there is an intense discussion on the strategies needed for addressing farmer distress in India. Among others, assured and greater access to institutional credit has been proposed as a way forward.

BACKGROUND • The politicians believe that the removal of credit constraints is necessary to improve farmer welfare and support agricultural growth. • But, the academic studies state that in India, the correlation between the institutional agriculture credit and the agricultural growth is weak. • And no enough attention is given to a key policy question - Whether agriculture credit of such size contributes commensurately to agricultural growth.

Credit Intensity • Reason to measure it - To assess the productivity of institutional credit to the agriculture sector. • Credit intensity of Agriculture sector = Agricultural credit / • There is a striking increase in the ratio of agricultural credit to agricultural GVA since 2005-06. • This reveals that the agricultural credit intensity has increased tremendously over the years. • Calculating agricultural credit implies that it has become less efficient in delivering agricultural growth.

DISCUSSION

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Consequences of Rural Indebtedness • Rural indebtedness is also likely to have some undesirable social consequences. Due to ever-­growing debt there emerges in the rural economy of India a class of landless labourers and tenants. • Consequently independent or self-sufficient farm­ers gradually lose their identity. • The landless work­ers have nothing to offer as security in order to obtain loans from moneylenders, except their la­bour power. • the acquisition of land by the traders and moneylenders and the con­sequent deprivation of the poor farmers of their meager landed property was the root cause of the Naxalite movement.

RBI on Agricultural Credits • RBI’s study: There is no statistically significant causal relationship between agricultural growth and credit cycles in India. • Seminal study using State-level data: • Agricultural credit plays a role in influencing the purchase of agricultural inputs by farmers. • But it has a weak impact on agricultural GDP. • Instead, the performance of agricultural GDP is determined by sectoral composition, output prices, the area under irrigation and public expenditure. • Studies suggest that there is a weak relationship between the flow of institutional credit to the agriculture sector and agricultural growth in the Indian context. • The ability of credit to induce agricultural GDP growth is limited. • Adequate attention should be given to building other capabilities or non-credit growth ingredients required to promote agricultural growth. • Emphasises the need for proper targeting of agricultural credit to achieve the desired impact on agricultural growth.

What is the Current Scenario?

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• A substantial part of subsidised agricultural loans has been diverted for non-agricultural purposes. • Categorisation of gold loans as farm credit by banks adds to the problem because such loans are mostly used for consumption purposes. • No concrete actions by RBI to ensure proper use of agricultural credit are not forthcoming even though it investigated the diversion of farm loans for non-agricultural uses. • A notification issued by the RBI in this regard to public sector banks had advised the latter to ensure that all farm loans meet certain criteria.

Advantages of Farm Credits • Institutional credit will lead to the increase in cropping intensity, irrigated area and particularly labour intensive high yield verities of crops. • Previous efforts to infuse farm credits show a positive production output in the agricultural economy. • Increased agricultural activities led to the increased income for the agriculture labours not necessarily to the farmers. • It also helps to avoid the local money lenders and thereby end the debt trap.

Disadvantages of Farm Credit • It needs to be recognised that credit schemes for agriculture are not scientifically designed. • Further, as institutional lenders withdraw from the area, after a loan waiver, borrowers are pushed to high-cost unorganised channels, like moneylenders. • Also, given the life-cycle and shelf life of crops, in the absence of warehouses and agro-processing units, price and market insurance is completely absent.

Farm loan waiver pros and cons

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• States’ debt-to-GSDP ratio will worsen by average 4 percentage points if all states waive off 50% of farm debt. • Farm loan waivers will increase states’ interest payments. • NPAs (non-performing assets) in agriculture rose quickly after the large-scale debt waiver in 2008. • Such waivers are unlikely to help the cause of either distressed farmers or troubled banks over the long run. • And they may well impair the quality of public spending by states, as the central bank fears.

Non - credit Growth Ingredients or Capabilities: • Productivity increases, • expansion of infrastructure, • higher public expenditure on agriculture and allied services, • effective extension services, • sound institutions, • export competitiveness. • Gross Domestic Product (GDP): • Gross Domestic Product (GDP) is a broad measurement of a nation’s overall economic activity. • It is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. • It is calculated within a domestic territory which in layman terms may mean political frontiers of a country. • It includes all private and public consumption, government outlays, investments, additions to private inventories, paid-in construction costs and the foreign balance of trade.

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Way forward Ensure crop insurance penetration across the country and extend reach of minimum support price, which has, for too long, been dedicated to few crops and in a narrow geographical area. • The agro-processing industry and warehousing needs to expand so that agricultural produce can be stored when prices plunge. • Credit products for agriculture need to be tailor-made based on cropping and rain cycle, specific to a particular region. The regional offices of commercial banks should contribute in this exercise. • The period of crop loan should be extendable to four years, given that, on average, every second or third year the spatial distribution of rain pattern is erratic in India. • Monitoring of agricultural credit utilisation at the ground level is the need of the time. • The RBI and commercial banks are aware of the ground reality. • Actions should be taken to ensure proper use of agricultural credit by ensuring that the loan is used for the stated purpose. • Public Sector Banks (PSBs) to ensure that all farm loans meet certain criteria as per RBI’s notification to PSBs • Limiting the disbursement of farm loans only to an agriculturist, • Ensuring that the loan is used for the stated purpose, • Verifying that disbursal and recovery of farm loans follow seasonality pattern. • To a larger extent, these tasks could be carried out using technology such as analytic software, which is made possible today as all major banks in India follow the Core Banking Solution system. • Since the problem of rural indebtedness has two major dimensions, to solve the problem we have to adopt a two-fold strategy. • Since the mag­nitude of debt is quite high, steps may be taken

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to cancel old debts. There is a strong case for reduc­tion of ancestral debt and even for their liquida­tion.

#Practice Question 1. There is a growing demand to treat farm loans in a similar way as loans to industry. Do you think that such an approach will help to solve agricultural credit issues and financial stress on Banks? (200 words)

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26 India as an Innovation Economy

GS3: Indian Economy and issues around it

What is the Issue? • The gravity of business growth is shifting from capital to creativity, and in this, the market belongs to the most vigorous innovator. • In this context, here is an assessment on the challenges and priorities for the business community in the innovation economy.

BACKGROUND • Ever since the introduction of the LPG reform in India, the need for an innovation based economy is started to felt. • Modern industrial economies are based on the scientific and technological innovations in the 21st century. • Hence India is also aim to make it as one of the leading innovation economies with new start up companies. • Innovation economy is based upon the idea that knowledge, entrepreneurship, innovation, technology and collaboration fuel economic growth. • In 2016, the country launched its flagship innovation programme, Atal Innovation Mission, focused on scaling start-up incubation centres and promoting innovation culture among schoolchildren by providing them with hands-on experience in 3D printing, the internet of things (IOT) and robotics.

Requirements of an Innovation Economy • Strengthen the IPR policies of the country to meet the international standards. • Set up an enabling IT infrastructure for the smooth functioning of the innovation and newly developing companies.

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• Crony unionism has to be avoided to strengthen the working conditions. • Improve the ease of doing business to facilitate the start up companies. • Ensure the adequate physical infrastructure and financial support to the new business ventures. • Digital economy is a good booster to the innovation economy.

DISCUSSION Yuva Sahakar-Cooperative Enterprise Support and Innovation Scheme • To cater to the needs and aspirations of the youth, the National Cooperative Development Corporation (NCDC) has come up with a youth-friendly this scheme for attracting them to cooperative business ventures. • The newly launched scheme would encourage cooperatives to venture into new and innovative areas. • The scheme will be linked to Rs 1000 crore ‘Cooperative Start- up and Innovation Fund (CSIF)’ created by the NCDC. • It would have more incentives for cooperatives of North Eastern region, Aspirational Districts and cooperatives with women or SC or ST or PwD members. • All types of cooperatives in operation for at least one year are eligible.

Institution’s Innovation Council (IIC) • Union HRD Ministry has launched the ‘Institution’s Innovation Council (IIC) program under Innovation cell of MHRD in New Delhi. • Aim: To foster the culture of Innovation in all Higher Education Institutions (HEIs) across the country. • It is a significant step in institutionalizing innovation and developing a scientific temperament in the country.

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• More than 1000 Higher Education Institutions (HEIs) have already formed IICs in their campuses and enrolled for the IIC network managed by MHRD’s Innovation cell. • Indian universities are setting up research centers through ‘Institution’s Innovation Council (IIC) program to improve global innovation ranking in next 2-3 years through this initiative.

Emerging in Economy and Business • Innovation economy is that which is light on assets and heavy on knowledge. • Data is overtaking experience in making decisions and directing strategy. • ML (Machine Learning), IoT (Internet of Things), and blockchain are becoming vital for producing innovations. • Businesses will have to be equipped with the tools for acquiring, analyzing and applying data intelligence. • Skilling every employee to work in a highly automated environment is also essential. • The innovation economy takes away security from businesses. • But it offers unprecedented rewards in the form of lightning- fast growth and great market dominance. • In the innovation economy, an unconventional and risk-taking mindset is the key to business leadership. • It is also essential to break away from the business models that cannot keep up with the market’s evolution. • A modern business leader must have a strategy to reinvent even a successful business. • The first-mover advantage (gained by a company from being the first to establish itself in a given market) is brief. • This is because capital and technology are now easily accessible to anyone. • So it is much easier to imitate and enhance a successful product

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in the new economy than it used to be. • Therefore, besides being quick with innovations, companies also have to continuously listen to the user and upgrade products frequently. • The main feature of innovation in the new economy is the delivery of total solution to the customer. • Aggregation and intermediation are central to innovation and delivering convenience, efficiency and economy to the customer. • Innovation, in this context, is more of a collaborative venture. • Business leaders have to persuade investors, employees, suppliers, customers and even regulators to back disruptive innovations. • Regulators are increasingly playing a critical role in bringing innovations to market. • Bringing an innovation to customers can take a lot of money and work hours without any guarantees of returns. • Business heads thus need to be determined and resilient, and they have to keep betting on crazy ideas. • It also requires them to be in touch with the ground realities as innovation is often a bottom-up process. • Maintaining direct communication with customer-facing employees is essential to ensure that middle management does not block either information or ideas. • Leaders of conventional businesses face the challenge of insuring the future with innovations while preserving existing revenues. • One way of preserving a successful business and reinventing it at the same time is to sandbox innovations. • A parallel organisation may be set up to experiment with disruptive products and models. • If the alternate venture succeeds in taking the market away from conventional competitors, the mother company could be absorbed in it.

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Way forward • Innovation economy should be supported by the environment for innovation and the execution of innovative ideas. • A support system for the new age companies like incubators in district level is also feasible to support innovation based economy. • India’s ongoing efforts in promoting bilateral investment and cooperation in the area of innovation had a strong impact. • Amicably settling trade and technology transfer disputes between developed economies are important for the building of a strong innovation economy. • Revamping higher and research education in India can also give an impetus to the innovation ecosystem. • Linkage of various innovation schemes under a single central and sate level agencies are helpful to ensure the effectiveness of its functioning.

#Practice Question 1. Innovation economy is the solution for India to achieve its economic goals. Discuss (200 words)

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Report Card on Left Wing 27 Extremist Hit States

GS3: Role of external state and non-state actors in creating challenges to internal security.

What is the Issue? • Government actions on Naxal hit areas have resulted in shrinkage of violence in a great geographical spread.

BACKGROUND • The term Naxal derives from the name of the village Naxalbari in West Bengal, where the Naxalite peasant revolt took place in 1967. • Naxalites are considered far-left radical communists, supportive of Mao Zedong’s political ideology. • Their origin can be traced to the split in 1967 of the Communist Party of India (Marxist) following the Naxalbari peasant uprising, leading to the formation of the Communist Party of India (Marxist–Leninist) two years later. • Initially, the movement had its epicenter in West Bengal, in later years, it spread into less developed areas of rural southern and eastern India, such as Chhattisgarh, Odisha, Andhra Pradesh and Telangana through the activities of underground groups like the Communist Party of India (Maoist). • Some Naxalite groups have become legal organizations participating in parliamentary elections, such as the Communist Party of India (Marxist-Leninist) Liberation and the Communist Party of India (Marxist-Leninist) Janashakti. • As of April 2018, the areas where Naxalites are most visible are: Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Odisha and Telangana

DISCUSSION Causes of Naxalism

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• Tribal discontent over The Forest (Conservation) Act, 1980 deprives tribals, who depend on forest produce for their living, from even cutting a bark. • Massive displacement of tribal population in the naxalism- affected states due to development projects, mining operations and other reasons. • Gaps in the socio-economic system of the country to support people in these forested areas of Eastern India. • It is seen that there is little follow up action, even after police takes hold of a region, administration fails to provide essential services to the people of that region. • Confusion over tackling naxalism as a social issue or as a security threat. • Criminal Naxal nexus has grown over the years such as cultivating Gnaja for them by Naxals in return of money. • Naxals are functioning not only for the ideology but also for vested interest of few leaders in certain region. • Active support of external and instate insurgency groups and a section of the social intelligentsia called urban naxal now.

Measures taken to Develop Naxal hit Areas • The Government is committed for holistic development of LWE affected areas at par with other areas of the country. • Apart from flagship/developmental Schemes being implemented by the line Ministries/ Departments, some specific schemes are also being implemented in LWE affected areas. • Action Plan 2015 - The Government of India has a holistic, multi- pronged strategy envisaged in Action Plan-2015 to combat LWE, which include development as an important prong. • Apart from flagship/developmental Schemes being implemented by the line Ministries/ Departments, some specific schemes are also being implemented in LWE affected areas. Details are as follows:

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• Special Central Assistance (SCA) – This scheme aims to fill critical gaps in public infrastructure and services of emergent nature in the most LWE affected districts. • This Scheme is for 3 years i.e. from 2017-18 to 2019-20 with an outlay of Rs.3000 crore. Rs.163.33 crore was released to Government of Bihar till now. • Security Related Expenditure Scheme - To assist the States to combat LWE, support is being given to 90 districts under Security Related Expenditure (SRE) scheme. • Government of India provides funds for Police Modernization to all the States. • Funds are also being provided under ‘Special Infrastructure Scheme (SIS)’ for strengthening the Special Forces of the States and State Intelligence Branches (SIBs) to LWE affected states. • Construction of 250 Fortified Police Stations in LWE affected States is also envisaged under the scheme. • Road connectivity Plans - Road Requirement Plan-I scheme envisages construction of 5,422 km roads for LWE affected areas, of which 4,809 km have been constructed, including 674 km in Bihar. • Road Connectivity Project for LWE affected Areas scheme envisages for improving road connectivity in 44 LWE affected districts of 10 States. • It aims for construction of 5,412 km roads including 1050 km for Bihar, of which 644 km have been completed as a whole in the nation. • Skill development and Education Initiatives - Union government has sanctioned 7 New Kendriya Vidyalayas and 6 new Jawahar Navodaya Vidyalayas in the most LWE affected districts. • Under RMSA, 1590 new/upgraded Schools and 349 girl’s hostels have been sanctioned in most LWE affected districts. • Skill Development in LWE affected districts is being implemented by the MoSDE in 47 LWE affected districts of 10 States.

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• The Scheme envisages construction of 01 ITI in each of 47 districts and 02 Skill Development Centers (SDCs) in each of 34 districts • Other Infra developments - Installation of Mobile Towers in the LWE affected districts is being implemented by the Department of Telecom. • Financial Inclusion -627 new bank branches & 947 ATMs have been opened in 30 most LWE affected Districts in last 4 years between. In addition 1759 Branch Post Offices have been opened since 2017.

Way forward • Steadfast implementation of the Action Plan-2015 has resulted in consistent decline in LWE related violence and considerable shrinkage in geographical spread. • In 2018 LWE related violence was reported in 60 districts in the year 2018 with 10 districts accounting for 2/3rdviolence. • Government needs innovative solutions for locating armed groups in the thick forests of the naxalism-affected regions. • Local Police knows the language and topography of a region; it can fight naxalism better than the armed forces. Andhra Police rose ‘Greyhounds’; special forces to deal with naxalism in the state. • Government needs to ensure two things; security of the peace- loving people and the development of the naxalism-affected regions. • State governments need to understand that naxalism is their problem also and only they can tackle it effectively. They can take help from central government if required.

#Practice Question • 1. India has made some success in containing naxalism but the root causes have not been addressed yet. Illustrate (200 words)

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U.K. Sinha Committee on MSMEs 28 Sector

GS3: Indian Economy and issues relating to planning, mobilization of resources

What is the Issue? • The RBI-appointed U.K. Sinha-led committee, set up to study the problems faced by MSMEs, submitted its recommendations recently.

BACKGROUND • MSMEs are the back born of the Indian job market. Most of the informal jobs are created in the last decade were in this sector. • However, various policies such as Demonetisation, GST, sluggish global demand, poor rejuvenation of MSMEs itself has caused negatively on them. • Around 63 million MSMEs in India contribute significantly to the country’s economic growth; they account for - »» about 45% of manufacturing output »» more than 40% of exports »» over 28% of gross domestic product »» More importantly, the MSME sector employs about 111 million people. »» Worldwide, small businesses account for more than 50% of employment. • They are key engines of job creation and economic growth in developing countries. • Besides these, the MSME sector is also a true reflection of economics where people really matter. • Given its employment share, the sector’s health is crucial to the economy’s vitality and society’s well-being.

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DISCUSSION Challenges faced by MSME sector • Fiscal indiscipline combined with bank credit going from Rs 18 lakh crore in 2008 to Rs 54 lakh crore in 2014 converted India from high growth, low inflation economy to low growth, high inflation economy and created our Rs 14-lakh-crore bad-loan problem. • MSME sector is facing challenges and does not get the required support from the concerned Government Departments, Banks, Financial Institutions and Corporates which is proving to be a hurdle in the growth path of the MSMEs. • Limited capital and knowledge and Non-availability of suitable technology are few critical issues in this sector. • Ineffective marketing strategy, Constraints on modernization & expansions and Non-availability of skilled labour at affordable cost are few other concerns surrounding the sector. • India’s formal MSME involves a regulatory burden of 60,000+ compliance items, 3,300+ annual filings, and 6,000 changes every year. • This subjects them to corruption, grovelling and mental torture from a high-handed, poorly structured and weakly-managed civil service. • The average employer in India is not a formal MSME but an informal MSME, fewer than 2 per cent of our 63 million MSME’s are formal. • Due to this fact, most of the MSME workers are one way or the other connected with Agro-related business and expect benefits from the government.

Need for the Present Committee • In India, small businesses have been facing a range of disruptions since the demonetisation decision in 2016. • This disruptive move was followed by the hasty implementation of the goods and services tax in 2017.

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• Now, there is also the liquidity crunch issue triggered by a series of debt defaults by group companies of Infrastructure Leasing and Financial Services Ltd in 2018. • All these have made the smooth functioning and development of the MSME sector very challenging. • Given this, in January 2019, the RBI constituted the expert committee on MSMEs to undertake a comprehensive review of the MSME sector. • It was tasked to study the problems faced by MSMEs, identify the causes, and propose long-term solutions.

Key Recommendations • Distressed Asset Fund - The committee has suggested a Rs.5,000 crore stressed asset fund for domestic micro, small and medium enterprises (MSMEs). • The creation of a distressed asset fund will be structured to assist units in clusters. • This is intended as a relief to small businesses hurt by demonetization, GST and an ongoing liquidity crunch. • The fund would go into reviving MSMEs in which a change in the external environment has led to them becoming non-performing asset (NPA). • The fund could work in tandem with RBI-mandated restructuring schemes or bank-led NPA revival solutions for MSMEs. • The onus of creating this fund would lie with the government. • Fund of Funds - The committee suggested forming a government- sponsored Fund of Funds of Rs. 10,000 crore. • This is to support venture capital and private equity firms investing in MSMEs. • MSME Act - The committee observed that small industries face problems of delayed payments. • They hesitate to enforce legal provisions available to them under the MSME Development Act, 2006 due to their weak bargaining

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power. • The committee thus recommended an amendment to the Act. • Under this, it calls for all MSMEs to mandatorily upload from time to time all their invoices above an amount (to be specified by the government) to an information utility. • This mechanism will entail automatic display of the names of defaulting buyers. • This will also act as moral suasion on them to release payment to these suppliers. • Also, many Indian start-ups that are at the forefront of innovation are drawn to look overseas. • So the new law ought to address the sector’s biggest bottlenecks, including access to credit and risk capital. • This will go a long way in prioritizing market facilitation and ease of doing business. • SIDBI - The committee has recommended expanding the role of the Small Industries Development Bank of India (SIDBI). • It called for SIDBI to deepen credit markets for MSMEs in underserved districts and regions. • It emphasised on the role of private lenders such as non-banking financial companies and micro finance institutions in this regard. • Further, SIDBI was suggested to develop additional instruments for debt and equity. • This would help crystallize new sources of funding for MSMEs and MSME lenders. • Loan portal - New entrepreneurs may not necessarily have information like GSTIN, income-tax returns and bank statement. • The committee thus suggested that the ‘PSBLoansIn59Minutes. com’ portal also cater to such new entrepreneurs. • Besides, obtaining regular sanctions from the banks post in- principle approval had not been smooth for entrepreneurs.

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• It was thus suggested to fix a timeline of 7-10 days for disposal of applications, which have received in-principle approval. • The committee also recommended enhancing the threshold of loan up to Rs. 5 crore. • Technology – The committee acknowledged the fact that technology, especially digital platforms, having become inevitable. • It thus made a case for greater adoption of technology-facilitated solutions to many of the problems encountered by the MSME sector.

Other Suggestions Include - • introduction of adjusted priority sector lending guidelines for banks to specialize in lending to a specific sector • doubling the collateral-free loan limit to Rs. 20 lakh • providing insurance coverage to MSME employees by the government • The committee also suggested to develop group policies for death and accident cover for MSME entrepreneurs. • This, it said, should be significantly higher than the cover currently offered by the Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Bima Yojana. • Another suggestion entails expediting the integration of information on the Government e-Marketplace (GeM) platform with the Trade Receivables Discounting System. • The objective is to boost liquidity at MSMEs. • Going forward, the task is now for the RBI and the Centre to act on these recommendations to help actualize the sector’s true economic potential.

Way forward • It is very important to empower the SME sector to utilize the limited resources (human & economic) they have in an optimum

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manner. • The SMEs need to be educated and informed of the latest developments taking place globally and helped to acquire skills necessary to keep pace with the global developments. • To counter the challenges faced by the SME sector and grab the opportunities in the market, various key strategies need to be adopted to promote and support the SME sector. • Thus the only way to create millions of jobs with decent wages is a policy re-imagination of the rights, needs, and treatment of formal MSME entrepreneurs.

#Practice Question 1. Discuss the potential and challenges associated with the growth of MSME sector in India. Suggest some measures to revamp the sector. (250 words)

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