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The Hindu 8 August 2019

UPSC - Daily Current Affair
The Hindu August 2019






Downgraded at the stoke of a pen  



Why nuclear when India has an ocean of energy  



Hong Kong adrift and China without an anchor 

Hong Kong facing a worst crisis since 1997




RBI takes offbeat tack to help reverse growth slowdown 



Banks get more headroom for lending to NBFCs

RBI’s Goldilocks’ cut





Downgraded at the stoke of a pen  (The Hindu Page 11)


Mains GS paper II: Polity 


Reorganization of Jammu and Kashmir 


Context: In this article, the author is speaking about the change in the status of J&K by especially drawing a comparison of J&K with Delhi.


About the UT of J&K


  • In J&K the centrally appointed administrator , called the Lieutenant Governor , will have the power to make a wide range of decisions. Earlier just like a regular governor , the governor of J&K too acted typically on the aid and advice of the State’s Council of Ministers.

  • After reorganisation, the legislature of the UT of J&K will be similar to that of the UT of Puducherry and will  have the power to enact laws on matters in the State List and the Concurrent List of the Constitution, whereas the Parliament will retain the power to enact overriding laws. 

  • However, this will ultimately lead to the decision making power of the legislature to be diluted. 


The Delhi parallel


  • Though no  full-fledged State has been converted into an UT before, yet certain parallel can be drawn from Delhi 

  • When the Constitution of India was adopted, Delhi was a ‘Part C’ State administered by the President acting through a Chief Commissioner or Lieutenant Governor. 

  • From 1952 to 1956, Delhi had a Legislative Assembly which could make laws on all matters in the State List except-  law and order, constitution, powers of municipal corporations and local authorities and land and buildings in possession of the Central government situated in Delhi. 

  • However, in 1956, Delhi and all the other Part C States were converted into UTs 

  • In the following years, some of these UTs were given legislatures and were ultimately made into states . e.g. Himachal Pradesh, Manipur, Tripura and Goa etc.

  • However, the restoration of a Legislative Assembly in Delhi was stopped as there was a concern that it might compromise with the Union government’s ability to discharge its functions towards the national capital.

  • Finally in 1992 Delhi was given partial statehood- with full legislative powers on subjects in the State List — except public order, police and land — the elected government in Delhi found its hands tied by the powers of a centrally appointed Lieutenant Governor. 

  • Supreme court in 2018 , put an end to this tussle government in Delhi is democratic and representative. Whenever there is a difference in opinion between the legislature and  the Lt governor, the LG will abide by the opinion of the government and only in exceptional cases can LG’s decision override the state legislatures will.   


J&K’s accession after Independence


  • There can’t be a proper comparison between Delhi and J&K because Delhi was an integral part of India during Independence and also when constitution came into force.

  •  J&K on the other hand was a sovereign Princely State at the time of India’s Independence and acceded to the Indian Dominion in 1948 on terms recorded in the Instrument of Accession. Article 370 of the Indian Constitution, which accorded a special status to J&K in comparison with other States, was a by- product of the IOA. 

  • However, J&K’s special status did not mean it is sovereign because Section 3 of the Constitution of the State of J&K, 1956 recognises it to be an integral part of India.

  • The special status merely meant that provisions of the Indian Constitution (other than Article 1 and Article 370 itself) were to be applied to J&K differently from the rest of the regular States. Such a modified application allowed J&K a higher degree of autonomy. Eg residuary powers was vested with J&K legislature, while for other states it rested with the parliament.

  • With this widespread autonomy, the people of J&K had an even larger arena than regular States for enacting laws through democratic participation. Therefore, J&K’s reorganisation into a UT amounts to a more severe curtailment of democratic rights than that of Delhi in 1956.


Not a constitutional amendment

  • Delhi’s conversion into a UT and the subsequent restoration of its Legislative Assembly were both carried out through constitutional amendments, which cannot easily be amended further. 

  • J&K’s conversion into a UT, on the other hand, was effected through a regular law of Parliament, which can easily be amended at the behest of a majoritarian consensus from time to time.



  • Special status for States in India is not extraordinary. 

  • Several States in India enjoy differential rights in their relationship to the Union by constitutional design, depending on their unique cultural, ethnic and geopolitical compositions. 

  • The basic idea for such an asymmetric arrangement is that the interests of States with stronger intra-group ties or ethnic bases — like Tripura, Arunachal Pradesh, Manipur and Nagaland —will be represented in the Constitution if the structure of the government of these states accommodate these difference.

  • Hence, the Constitution of India’s chose an asymmetrical federal principle to honour these subjective contexts of these states.

  • However this poses a question can more such laws be enacted which will disregard such subjective context and devoid people their right to full democratic participation?





Fragility of India’s federalism  (The Hindu -Page.10)


Mains GS paper II: Polity  


Federalism in India   


Historical Asymmetry of Federal Units

  • The article highlights that abrogating of Article 370 exposes the historical asymmetry which the Centre has negotiated in the past with different states through different agreements.

  • The problem lies with the provision of contingent autonomy for these federal units which can be revised or remodelled based on contemporary needs by strong governments enjoying popular will. 


Regional Politics (1989-2014)

  • Emergence of regional political parties and their continuance in certain states contributed to deepening of federalism and growing autonomy of federal units vis-à-vis the Centre. This can also be attributed to coalition politics at national level till 2014.

  • However, the rise of the Bharatiya Janata Party (BJP) to national political dominance in 2014 started changing the political discourse carried so far by federating units

  •  The present government emerged more powerful in the election to 17 th Lok Sabha. It is in the backdrop of this growing dominance and centralisation of power, the entire abrogation of Article 370 has taken place backed by popular will in Lok Sabha. Jammu and Kashmir

  • Asymmetric federalism involves the granting of differential rights to certain federal subunits, often in recognition of their distinctive ethnic identity. 

  •  In the case of Jammu and Kashmir, the negotiation of Article 370 was a transitional and contingent constitutional arrangement agreed in the midst of a continuing conflict while the Indian Constitution was being finalised. 

  •  Instrument of Accession not only glued Kashmir to Indian Union but also provided it autonomy in its functioning beyond most of the provisions of Indian Constitution.

  •  Thus, Instrument of Accession led to incorporating Article 370 as a Temporary Provision in the Indian Constitution and also allowed President of India to issue Presidential Orders. Over time, this ‘transitional’ clause had become a semi-permanent institutional compromise

  • Thus, the challenge was twofold. On Indian side (by successive PMs) to integrate Jammu and Kashmir politically within the Indian Union and on the Kashmir side, the challenge was to preserve special status under Article 370 because of historical agreements namely Instrument of Accession.

  • Indian Prime Ministers through Presidential Orders issued from time to time under Article 370 had extended most of the entries in Union List and Concurrent List under VIIth Schedule and two thirds of constitutional articles to the state of Jammu and Kashmir. Other States

  • Subsequent asymmetric agreements were reached with the Nagas and the Mizos, which are enshrined in Article 371 in the Constitution.


Arguments about Asymmetric Federalism

  • Asymmetric constitutional provisions are a common feature of federalism in diverse societies. Many argue that asymmetric agreements with states dampen secessionist conflicts as such agreements recognises multiple modes of belonging within the Union. 

  • However, with such agreements with Union, there is a denial of autonomy to such states that can provide ground for growth of secessionist tendency among states.

  • Such asymmetric agreements are generally critisised by majority national communities and by other regions or states who do not have special arrangements. 

  • The argument proposed by the Central Government is that such asymmetric provisions are discriminatory in nature and do not ensure equality. They have taken the example of Article 35A to mention about discrimination in buying property in erstwhile state of J&;K as it privileged certain kinds of ‘special’ identities over others. 

  • On secessionist claims, the government mentioned that Article 370 was the root cause of terrorism in the state.

  • Further, provisions for autonomy arrangements are also presented as anti-egalitarian because they prevent the extension of rights in force elsewhere in a country. On this point the government argued that removing Article 370 will help in extending reservations for Scheduled Castes and Scheduled Tribes in the newly created Union Territories. Federalism constraining Unitary Power of Central Government

  •  Political scientist, Alfred Stepan, identified that federal systems can be more or less ‘demos constraining’. It means that federal systems constrains and undermines the consolidation of power by national governments.

  • India represents an idea of demos enabling. It means that the design of federalism places fewer checks on the power of national majorities. For eg. Rajya Sabha has lesser power with respect to passing Money Bills as compared to Lok Sabha.

  •  Further, Indian constitution provides autonomy to states under VIIth schedule but in times of emergency empowers the Union Government.

  •  Placing this kind of flexibility in the hands of the Central government was deliberate and designed to enable decisive Central action to protect national integrity in the aftermath of Partition. 


Maintaining India’s Federalism

  • In the Constituent Assembly, B.R. Ambedkar highlighted the difference between the ‘tight mould’ of other federal systems and the flexibility hard-wired into India’s federal structure as it enabled it to be both ‘unitary as well as federal’ according to the requirements of time and circumstances.

  •  Thus, constitutional provisions have allowed strengthening federalism in India. Eg: creation of new states and altering of boundaries (under Article 3) on regional demands based on identity and language.

  •  Further, not giving state governments a veto over bifurcation, the Constitution enabled the Central government to accommodate linguistic and ethnic diversities in a way that would have been much harder in a more rigid federal system.

  •  It also enabled the Central government to adopt asymmetrical measures without facing a backlash from other regions that might have resented the ‘special’ treatment of minority regions.

  • Thus, until the 2000s, most of these regional changes were done based on a slow process of consensus building within the regions concerned.

  •  By abrogating Article 370, bifurcating Jammu and Kashmir and downgrading the status of the successor units to Union Territories, the government has used the flexibility of the federal provisions of the Constitution to other ends. 

  • This abrogation of Article 370 without consensus is a sure departure from previous precedent into unknown implications for Indian Federalism.



Hong Kong adrift and China without an anchor (p10) 

Hong Kong facing a worst crisis since 1997  (The Hindu -Page. 14)


Mains: GS Paper II: International relation 


Hong Kong crisis and relation with India        


World History perspective on Hong Kong:

  • Hong Kong was acquired by Britain after defeating China in the Opium War. The war broke out after Qing-dynasty China attempted to crack down an illegal opium trade that led to widespread addiction in China. In 1842, China agreed to cede the island of Hong Kong to the British in perpetuity through the Treaty of Nanjing.

  • Over the next half-century, the United Kingdom gained control over all three main regions of Hong Kong: After Hong Kong Island came the Kowloon Peninsula, and finally the New Territories, a swath of land that comprises the bulk of Hong Kong today. 

  • The final treaty, the 1898 Convention for the Extension of Hong Kong Territory, leased the New Territories to Britain for 99 years. Under the terms of the treaty, China would regain control of its leased lands on July 1, 1997.

  • India’s relations with Hong Kong also date back to this this time period of 1840s.


Handover to China:

  • As the 99-year treaty was to expire on July 1, 1997, both Britain and China signed a joint declaration on the future of Hong Kong in 1984. Under the joint declaration, an innovative “one country, two systems” was devised, under which Hong Kong reverted to Chinese sovereignty while retaining its political and economic system. 

  • The political process in Hong Kong is guided as per the province’s Basic Law, and it has two main features: 

  • The socialist system and policies shall not be practiced in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years. 

  • The Chief Executive (CE) is the highest representative leader in Hong Kong and he shall be selected by election or through consultations held locally and be appointed by the Central People's Government. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a nominating committee.


Current Perspective: 


Geographical Significance 

  • Hong Kong forms a part of the Pearl River Delta Metropolitan Region where the Pearl River flows into the South China Sea. It is the wealthiest region in South China & the largest urban area in the world in both size and population. 
    It includes major economic centers such as Guangzhou, Shenzhen and Macau. Its GDP is at $1.2 trillion, which make it the largest economic region in South East Asia, above Indonesia.


Cause of tensions between China & Hong Kong:

  • The main crux of the tension is about the right to universal suffrage in selecting the highest governing personnel in Hong Kong, whereby it is the Chinese government that nominates individuals who then can stand for Chief Executive. China wants its control on the nominations process wherein China nominates only Pro-Chinese government individuals that do not critique Chinese policies in Hong Kong. The pro-democracy activists prefer a more direct election process.

  • Apart from this, when Hong Kong was handed over to China in 1997, it was a major source of economic investment into mainland China, however the growth of Chinese economy has allowed Chinese government to increase stronghold of Hong Kong.

  • The are several cultural differences between Hong Kong and China, whereby Mainland China is a Mandarin speaking region, while Hong Kong is a Cantonese speaking region. Hong Kong considers itself culturally distinct from China like other countries of Indo-China region.


Editorial Context:

  • Hong Kong is currently witnessing anti-government and pro-democracy protests, wherein the a bill has been introduced to allow Hong Kong courts to allow extradition to mainland China, which would allow China to legally take actions against anti-China activists.

  • China has hinted at using People’s Liberation Army (PLA) to quell the protests, however according to author this may lead to a similar fallout as the Tiananmen square incident in 1989, in which PLA killed thousands of pro-democracy protesters. This would not be tolerated by other countries such as the U.S., UK and EU.

  • China for now has put on hold the law, but the protests are still continuing.


India - Hong Kong relations:

  • India respects and follows the 'One Nation, two system' policy of China and Hong Kong. India on this basis does sign separate agreement with China and Hong Kong on economic issues such as DTAA, Customs, etc. This is due to their different economic systems. 

  • Hong Kong has always acted as a “Gateway to China” for the companies in rest of the world. With the rapid growth in engagement between the Chinese and Indian economies, Hong Kong acts as a “Gateway to India” for the mainland companies. Hong Kong is major re-exporter of items it imports from India to Mainland China. 

  • India was Hong Kong’s 3rd  largest export market destination (after China, US) in 2017 (Jan-Dec) and Hong Kong was India’s 3rd largest export market (after US, UAE).  Hong Kong occupies the 12th position in FDI equity inflows into India in 2018.

  • Hong Kong has for more than 150 years been home to a large Indian community and its contribution to Hong Kong includes their oldest university: Hong Kong University. Several Hong Kong based persons of Indian origin have been awarded the Pravasi Bhartiya Samman Award.




RBI takes offbeat tack to help reverse growth slowdown (The Hindu -Page.01)

Banks get more headroom for lending to NBFCs (The Hindu -Page.15)

RBI’s Goldilocks’ cut (The Hindu -Page.10)


Prelims: Economy 

Mains: GS Paper III: Economy 


Monetary policy and rate cuts 



  • In response to the present economic slowdown, the RBI has decided to reduce the benchmark repo rate by 35 basis points(bps) to 5.4% from the present 5.75%.

  • This is the first time that RBI has moved the interest rates by a figure that is not a multiple of 25 bps. This was done because, on one hand, cut of 25 bps was considered to be inadequate while cut of 50 bps was considered to be much higher.

  • The RBI has also slashed the real GDP growth for 2019-20 from 7% to 6.9%.


New Policy Rates

  • Repo Rate: 5.4%

  •  Reverse Repo: 5.15% (Usually maintained 0.25% below repo rate)

  • Marginal Standing Facility: 5.65% (Usually maintained 0.25% above repo rate)


Other Important decisions


Relief Measures for NBFC Sector:

  • The RBI has decided to raise a bank's exposure limit to a single NBFC from 15% to 20% of Tier-I of the Bank. This would enable the Banks to increase the credit flow to the NBFCs.

  • The RBI has decided to allow bank lending to registered NBFCs for on-lending to agriculture, micro and small enterprises and housing to be classified as priority sector lending. It would augment the flow of credit to priority sectors that contribute significantly to exports and employment.


Payment System:

  • 24X7 NEFT Transfer: The National Electronic Funds Transfer (NEFT) payment system operated by the Reserve Bank as a retail payment system will be made available on a 24x7 basis from December 2019. This is expected to revolutionise the retail payments system of the country.

  •  Bill payment system expanded: In order to leverage the advantages of Bharat Bill Payment System (BBPS), the RBI has decided to permit all categories of billers (except pre-paid recharges) who provide for recurring bill payments to participate in BBPS on a voluntary basis. Currently, it covers 5 segments- DTH, Electricity, Gas, Telecom and water bills.

  • Digital Fraud Registry: The RBI has proposed to facilitate the creation of a central payment fraud registry that will track digital transaction frauds.