Daily Current affairs 26 January 2019UPSC - Daily Current Affair
- The Economic Advisory Council to the Prime Minister (EAC-PM) has warned the government against deviating from its fiscal consolidation target.
About Fiscal deficit
- Fiscal Deficit is the difference between total revenue and total expenditure of the government.
- It is an indication of the total borrowings of the government.
- The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in 2003 which sets3% as the fiscal deficit target for the government.
- In May 2016, the government had set up a committee under NK Singh to review the rigidity of the FRBM Act.
- The committee recommended that the government should target a fiscal deficit of 3 per cent of the GDP in years up to March 31, 2020 cut it to 2.8 per cent in 2020-21 and to 2.5 per cent by 2023.
- The government had fixed the targeted of fiscal deficit for the current financial year at 3.3 per cent of the gross domestic product (GDP).
Highlights: Economic advisory council to the Prime Minister (EAC-PM) Meeting
- A meeting to review the economic growth of the country was held to discuss issues related to agricultural problem, investment trends, fiscal consolidation, interest rate management and credit and financial market issues.
- The Economic advisory council to the Prime Minister (EAC-PM) predicted India’s economic growth to remain in the range 7-7.5 per cent in the next few years.
- The EAC panel highlighted that the macro-economic indicators of the economy are sound like:
- The exchange rate management of the rupee by the RBI has been sound despite the volatility in the price of crude oil.
- Indications are saying that financial savings have started going up.
- Credit up tick through private banks to the services sector.
- The EAC-PM Suggested that there must be continued emphasis on social sector intervention but the government also needs to stick to the fiscal consolidation target.
- It warned that in the absence of any new revenue boosting measures, announcing packages for farmers and MSMEs in the budget, could lead to further deviation from the fiscal consolidation roadmap.
- It also highlighted some structural challenges, which needs to be addressed to increase the country’s growth rate by 1 per centand fiscal consolidation. The challenges includes-
- Reforms in the agricultural sector
- Reforms in the MSME sector
- Skill development
- Solving credit issues
- Enhancing digital payments
- Banking sector reforms
- The Council advised external trade could be balanced through supportive policy interventions.
- Agricultural sector should be improved by increasing credit flows and support to employment programmes like MNREGA.
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Section : Economics
- The recent judgment of the Supreme Court upheld the Insolvency and Bankruptcy Code (IBC) and rejected petitions challenging the bankruptcy laws.
Some Important Terms:
- Insolvency: Insolvency is a state of financial distress in which an individual or organization is unable to pay its debts.
- Bankruptcy: Bankruptcy is the legal declaration of Insolvency i.e. Bankruptcy filing is a legal course undertaken by the company to free itself from debt obligations.
- Resolution: It refers to a plan proposed by any authorised person/entity for enabling the overdue payments of a corporate debtor through restructuring or through part payments, while allowing the corporate debtor to continue as a going concern.
- Liquidation: It is done to bring a business to an end and distributing its assets to claimants, after the company is insolvent.
What was the need of the code?
- Earlier there were multiple overlapping laws and adjudicating forums dealing with financial failure and insolvency of companies and individuals in India, which did not aid lenders in effective and timely recovery or restructuring of defaulted assets and caused undue strain on the Indian credit system.
- For improving the business environment and alleviating distressed credit markets, Insolvency and Bankruptcy Code was passed in 2016.
- According to statistics, India is ranked 103 in the World Bank’s rankings of how nations handle insolvencies.
Insolvency and Bankruptcy Code (IBC)
- The code applies to companies as well as individuals and provides for a time-bound process to resolve insolvency.
- In case of a default repayment, creditors acquire control over debtor’s assets and decisions must be taken to resolve insolvency within a period of 180 days.
- For an uninterrupted resolution process, the Code provides immunity to debtors from resolution claims of creditors during this period.
- The Code also provides a legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency.
- To consolidate all laws related to insolvency and bankruptcy
- To tackle Non-Performing Assets (NPA)
- Section 29A of the IBC
- Section 29A bars certain kinds of persons from submitting a resolution plan, which includes willful defaulters, un-discharged insolvent, persons banned from trading in securities market, and an account classified as NPA for more than one year and failing to pay overdue amount before submission of the bids.
- Positive Impacts:
- Time-restricted resolution process
- Power shift from the hands of shareholders and debt holders to creditors (mainly banks) as it ensures maximum assets recovered from the debtor.
- Protect the interests of small investors and make the process of doing business a less cumbersome.
- Boost investor confidence and enhance participation.
- Promotes entrepreneurship and credit markets.
- The flow of financial resource to the commercial sector has increased exponentially as a result of financial debts being repaid
- The Supreme Court bench disposed a batch of pleas filed by companies challenging various provisions of the IBC.
- The SC also clarified clause (j) of Section 29A, and said that related parties in the act should mean a person connected with the business.
- The court also upheld certain relaxations given to micro, small and medium enterprises (MSME) under Section 29A of the Code.
- The court dismissed arguments that the IBC discriminates between financial creditors and operational creditors.
Difference between Financial creditor and Operational creditor:
- Financial creditor & operational creditor are different in the sense that their liabilities arise from different origin, where financial creditor is liable because of a contract such as loan or debt (example: banks), operational creditor is liable because of operational transactions (example taxes paid to government).
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Section : Economics
- Recently, India and South Africa has agreed on a three-year strategic partnership agreement to boost relations.
- The agreement was signed during the visit of South African President in India for Republic day Celebration.
- India and South Africa set in motion a “result-oriented” plan of action to take forward bilateral relations in defence, security, trade and investment.
- Boost Trade:
- South Africa agreed to simplify and reform South Africa’s business visa regime and boost trade and investment.
- The nations agreed to increase bilateral naval cooperation and closer synergy to ensure unhindered passage for trade by keeping the sea lanes secure against illegal actors.
- South African National Defence Force will join the first multinational India-Africa field training exercise at Pune in March 2019.
- Maritime Security:
- The countries discussed the importance of the role of the Indian Ocean Naval Symposium (IONS) in ensuring freedom of navigation by keeping sea lanes free and secure
- A joint statement acknowledged the growing interaction between the Navies of the two countries.
- They also expressed concern at the slow pace of UN reforms and agreed to work together to secure representation in an expanded Security Council.
- India invited South Africa to join the International Solar Alliance (ISA).
- The President of South Africa in his "first IBSA Gandhi-Mandela Freedom Lecture" highlighted the common heritage of struggle and the common aspiration of non-discriminatory national and international politics.
Indian- Africa Field Training Exercise (IFTX-2019)
- The joint training exercise is to be conducted with India and more than a dozen African countries in Pune from 18 March to 27 March 2019
- The IAFTX-2019 is a positive step towards growing political and military ties with the member nations of African continent and will boost the already strong strategic cooperation between the countries.
Indian Ocean Naval Symposium (IONS)
- The Indian Ocean Naval Symposium (IONS) are a series of biennial meetings among the littoral states of the Indian Ocean region, represented by their Navy chiefs.
- It was initiated and launched by India in February 2008.
- It provides a forum to increase maritime security cooperation, providing a forum for discussion of regional maritime issues and promote friendly relationships among the member nations
International Solar Alliance
- The International Solar Alliance (ISA) is an alliance for promotion of solar energy among its member countries.
- The alliance was initiated by India, in which most of the countries being sunshine countries, which lie either completely or partly between the Tropic of Cancer and the Tropic of Capricorn. It has been now extended to all members of UN.
- It came into force in December 2017.
- To work for efficient exploitation of solar energy to reduce dependence on fossil fuels.
- The alliance is a treaty-based inter-governmental organization.
- Countries that do not fall within the Tropics can join the alliance and enjoy all benefits as other members, with the exception of voting rights
Significance of India - South Africa Strategic Partnership
- The partnership seeks to fulfill larger goals of political freedom, economic development and social justice but of their respective regions.
- Strengthening of the partnership is vital in the context of Africa’s development, especially to provide a viable alternative to the China model.
- It can help in dealing with tackling global challenges such as climate change, keeping trade open and avoiding big power domination.
- India and South Africa give these efforts an institutional framework through forums such as the G20, the Indian Ocean Rim Association, Brics and IBSA.
- India and South Africa can work together for the reform of the UN Security Council
- India must win over South Africa as a willing partner in this effort to expand strategic autonomy
- The Asia-Africa Growth Corridor is an ambitious plan by Japan and India to pool their resources (financial, technical, local knowledge and goodwill) to expand opportunities for African nationals while extending the soft power of both India and Japan.
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Section : International Relation
- Hearing the petition over recently passed order by Ministry of Home Affairs(MHA) authorizing 10 central agencies to intercept, monitor or decrypt information, the Supreme Court has sought government’s response over data snooping laws in the country.
- The petition challenged the constitutionality of Section 5(2) of Telegraph Act and Section 69 of the Information Technology Act.
- Recently the Ministry of Home Affairs issued a notification authorizing 10 central agencies under Section 69 (1) of the Information Technology Act, 2000 and Section 5(2) of the Indian Telegraph Act, 1885, to intercept, monitor and decrypt any information generated, transmitted, received or stored in any computer resource and phone respectively.
- Section 69 (1) of IT Act 2000 deals with the lawful interception of social media content
- Section 5(2) of the Indian Telegraph Act, 1885, deals with phone tapping
- Further according to a reply to an RTI filed, in 2013 alone there were about 9,000 cases of phone tapping and over 500 orders every month for interception of emails.
- Accordingly the aforesaid notifications were challenged in the Supreme Court by People’s Union for Civil Liberties on the grounds that it violated Right to Privacy guaranteed under Part 3 of the Constitution.
Why was the order passed?
- The existing provisions in the IT and Telegraph Act did not have explicit provisions to deal with ''stored data'' in devices such as computer, thumb drive, CD or handset memory.
- The notification also clarifies which agencies can exercise the powers of interception, thereby preventing unauthorized use of these powers by other agencies, individual or intermediary.
- Thus it ensures phone tapping or data interception is done as per the due process of law.
Social media content
- Section 69 (1) of IT Act 2000, allows the government authorities to decrypt information if it is in the interest of:
- Sovereignty or integrity of India
- Security of the State
- Friendly relations with foreign States
- Public order
- Preventing the commission of any cognisable offence
- Rule 4 of the Information Technology (Procedure and Safeguards for Interception, Monitoring and Decryption of Information) Rules, 2009, empowers a competent authority to authorise a government agency to “intercept, monitor or decrypt information generated, transmitted, received or stored in any computer resource.
- These provisions are essentially related to monitoring of emails and social media content.
- As per Section 5(2) of the Indian Telegraph Act, 1885, lawful interception of phones and computers can be done by the governments at the Centre and in the states.
- In its guidelines issued in 1996, the Supreme Court laid down certain safeguards for lawful interception under Indian Telegraph Act, 1885.
- Accordingly Section 5(2) does not confer unguided and unbridled power on investigating agencies to invade a person’s privacy.
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Section : Polity & Governance
- The CBSE has decided to use the double encrypted question papers to tackle the menace of question paper leaks only as a back-up option.
- The class X and class XII board exams conducted by CBSE underwent a major crisis in March 2018 when the news of question paper leaks was doing rounds.
- Admitting the leak, the CBSE and Ministry of HRD decided to examine the system of conducting Class X and Class XII examination with a view to prevent leakages.
- Accordingly a 7-member committee under Vinay Sheel Oberoi was constituted to examine the system of conducting Class X and Class XII examination.
- The committee had recommended a secure system with the use of technology to minimize human intervention in distribution of question papers.
- Following this, the CBSE had pilot tested double encrypted question papers in class X compartmental exams.
- However citing logistic issue the CBSE has decided to continue holding board exams via the conventional hard copy question papers while keeping double encrypted paper system only as a back-up option.
Conventional distribution system
- The CBSE question papers are prepared and distributed through an elaborate system involving:
- Setting of question papers by experts
- Moderation to calibrate difficulty levels and ensure syllabus compliance,
- Printing by confidential printers
- Storage in bank vaults
- Distribution to exam centres
- This system is fraught with loopholes at various stages as it leaves scope for tampering of question papers due to human intervention at multiple stages.
Double encrypted question papers
- Under double encrypted paper distribution system
- The question papers are being delivered via e-mails 30 minutes ahead of the exam.
- The passwords are sent separately to the centre superintendent.
- Upon receiving of passwords, the question papers are printed and photocopied at the centres.
- Since the question papers will have details of the centres tracking of papers leaks from the source centre becomes easy.
Issue with double-encrypted paper system:
- The double-encrypted paper system needs robust logistical and infrastructural capabilities in place.
- According to data from CBSE, a centre with around 500 students will need to print 8,000 pages of question papers in one subject.
- The logistics such as printers, internet, photocopiers, uninterrupted power supply or power backup are complete only in about 1800 schools against the requirement of about 4,500 centers as estimated by CBSE.
- With low number of centers having complete infrastructure, the move will drastically reduce the number of centers where students can take up the exam.
- Thus students in remote centers will face the serious problem of lack of accessibility to centers.
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Section : Social Issues
- China plans to extend Belt and Road Initiative to the Arctic by developing shipping lanes opened up by global warming i.e. vision for a “Polar Silk Road”.
- The Arctic Ocean is the ocean around the North Pole, smallest of the world's five oceans.
- The most northern parts of Eurasia and North America are around the Arctic Ocean.
- It is connected to the Pacific Ocean by the Bering Strait and to the Atlantic Ocean through the Greenland Sea and Labrador Sea.
- Countries bordering the Arctic Ocean are: Russia, Norway, Iceland, Greenland, Canada and the United States.
- Endangered marine species: Walruses and Whales.
- Resources: The Arctic is said to possess 30% of the world’s undiscovered natural gas and 13% of its undiscovered oil reserves.
- Imp water bodies of Arctic Ocean includes: Bering Sea, Chukchi Sea, East Siberian Sea, Laptev Sea, Kara Sea, Barents Sea, White Sea, Norwegian Sea, Greenland Sea, Baffin Bay, Labrador Sea, Hudson Bay and Beaufort Sea (in clockwise direction).
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Section : Miscellaneous
Behavioural economics and Nudging:
- Nudging refers to small interventions can help individuals or communities to change behaviour in a predictable way without forbidding any options or significantly changing their economic incentives (that is, not forcing them into change) .
- The concept is a relatively subtle policy shift that encourages people to make decisions that are in their broad self-interest.
- Richard Thaler, the 2017 Nobel Prize winning economist, preached on behavioural economics and, in particular, on the art of “nudging”.
- He says, “by knowing how people think, we can make it easier for them to choose what is best for them, their families and society.”
Used in Swachh Bharat Mission:
- On nudging, Richard Thaler and his co-author Sunstein argued that it is perfectly acceptable for both private institutions and governments to “steer people’s choices in directions which will improve their lives”.
- The Swachh Bharat Mission (SBM) has been, at a mega scale, nudging rural communities in India to change their habit of open defecation by using household toilets.
- It combined individual choice with the government’s decision to try and persuade people to stop defecating in the open (by using individual household toilets).
Swachh Bharat Mission - the challenges:
- The SBM, with its primary objective of ending open defecation, was based on the premise that sanitation was a public good, with significant positive externalities such as health, economic and gender empowerment benefits.
- The challenge was in getting individuals and communities in rural India to choose this two-in-one product: Toilet+ Behaviour change
How it was successful
- Under the SBM, open defecating behaviour was sought to be altered by
- Mass media “nudge” interventionssuch as the Darwaza Band TV and radio campaign led by SBM ambassador, Amitabh Bachchan
- Ground game of interpersonal communicationthrough “triggering” by 580,000 grassroots motivators called swachhagrahis.
Generating awareness that open defecation is bad:
- One of the fundamental challenges faced by the SBM in the early implementation phase was the fact that rural communities, in many cases, were not aware that defecating in the open was a “public bad”.
- Thaler and Sunstein term this as “pluralistic ignorance”, where communities “may follow a practice or a tradition not because [they] like it, but merely because [they] think that most other people like it.”
- In the case of open defecation in India, this came out of deeply ingrained social behaviour practised over centuries, which had become a communally accepted norm.
Nudging people into changing their behaviour:
- Understanding from early experiences, the SBM practised “nudging” at a scale unprecedented in the world.
- 550 million people practising open defecation in rural India were to be nudged into changing their behaviour to using the toilets provided under the programme.
Community Approaches to Sanitation:
- The ministry of drinking water and sanitation adapted various behaviour change techniques including “Community Approaches to Sanitation”.
- The focus here was on nudging the community rather than the individual, to develop ownership and accountability to become open defecation free (ODF) by the village as a whole through peer pressure.
- Getting communities out of "status quo bias" (refusal to change what they are already practicing) was challenging and it took many community meetings with persistent follow up to “trigger” the shift in behaviour.
- “Disgust” as a tool:
- One nudge which was consistently used by swachhagrahis was to use “disgust” as a tool to incentivise the community to stop defecating in the open.
- The common technique was to make people aware that they were, in practice, eating their own and their neighbours’ excreta when they defecated in the open since flies sat on excreta in open spaces and then sat on the food they ate.
- Such a nudge was effective when persistently applied.
- Many other nudges were also applied, including the use of “gandhigiri”.
- Here, members of the community “nigrani samiti” would politely offer a namaste, a polite smile and a flower to those who defied the community’s mandate of preventing open defecation.
- Such nudges mostly worked well.
Challenge ahead - Sustaining the changed behaviour:
- With rural sanitation coverage having dramatically increased from 39% at the start of the SBM in October 2014 to over 98% today, the challenge now is to sustain the ODF behaviour achieved since then.
- While Thaler and Sunstein provide many examples of simple nudges to change behaviour, they do not have any examples of solutions to nudge people to sustain their changed behaviour over time.
- This is what the SBM is currently focusing on.
- There is a need to come up with a few proxy “nudge” ideas to sustain the changed behaviour, including
- Providing financial incentives to communities and districts to remain ODF
- Setting in place institutional mechanisms (e.g. village and Block watch and ward committees etc)
GS Paper IV: Ethics
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Section : Editorial Analysis