The HINDU Notes – 07th January 2019 - VISION

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Monday, January 07, 2019

The HINDU Notes – 07th January 2019






📰 Tahawwur Rana extradition unlikely before 2023, indicates U.S.

ITahawwur Rana extradition unlikely before 2023, indicates U.S.
NIA team told that he will have to complete his 14-year jail term

•Indian agencies will have to wait a little longer before Tahawwur Rana, a key accused in the 26/11 Mumbai terror attack case is extradited here from the U.S.

•The National Investigation Agency (NIA) team that was in the U.S. a few days ago to seek the extradition of Rana, a close associate of David Coleman Headley, has been given an indication that Rana has to first complete his jail sentence.

Arrested in 2009

•Rana, who was arrested in 2009, is serving a 14-year prison term in the U.S. for providing material support to terror outfit Lashkar-e-Taiba (LeT), which planned and executed the attacks.

•Though he was sentenced to 14 years in jail in 2013 by a U.S. district court, his jail term would also include the period he has already served in prison and would come to an end in 2023.

•“An NIA team went to the U.S. in relation to the extradition request of Rana. It’s a quasi-judicial process so no one can predict when he would be extradited. He is now serving a sentence there and we have been assured that the extradition could take place closer to the date when he completes his jail sentence in the U.S.,” a senior government official told The Hindu.

Lok Sabha informed

•Minister of State Gen. V.K. Singh (retired) told the Lok Sabha last week that the Government of India had engaged with relevant U.S. authorities, under terms of the India-U.S. Extradition Treaty of 1997, for extradition of U.S.-based individuals for their role in the November 26, 2008, terrorist attacks in Mumbai.

•“These consultations have been held by means of meetings/visits and teleconferences. Most recently, a team from the NIA visited the U.S. on December 13-15, 2018, for discussion with the U.S. authorities,” the Minister said.

•Unlike Headley, Rana did not enter into a plea bargain with the U.S. authorities.

Double jeopardy

•The ‘double jeopardy’ clause in U.S. law prohibits punishment for the same crime twice, so India renewed its bid to seek Rana’s custody on the ground that he was actively involved in planning an attack on the National Defence College in Delhi and Chabad Houses (Jewish religious centres) in several cities.

•Rana, a Chicago-based businessman, helped Headley open an immigration firm in Mumbai, which was a cover to conduct reconnaissance on possible targets that were attacked on November 26, 2008.

•Rana was a school friend of Headley from Pakistan. According to the FBI, after the 26/11 Mumbai attacks, Headley visited India again in March 2009 to conduct additional surveillance, including of the NDC in Delhi and of Chabad Houses.

•The NIA also has registered a forgery case against Rana for opening the immigration centre based on fake documents.

📰 Soon, you may have to reach railway stations 20 minutes ahead of departure

Just like airports, railways plans to seal stations as part of the new security plan

•Railways is planning to seal stations just like airports and passengers would have to arrive 15-20 minutes before scheduled departure of trains to complete the process of security checks.

•The security plan — with high-end technology — has already been put in motion at Allahabad, in anticipation of the Kumbh Mela which begins this month and at Hoobly railway station in Karnataka with a blueprint for 202 more stations ready for implementation, Railway Protection Force (RPF) Director General Arun Kumar told PTI.

•“The plan is to seal the railway stations. It is primarily about identifying openings and to determine how many can be closed. There are areas which will be closed through permanent boundary walls, others will be manned by RPF personnel and yet others will have collapsible gates.

•“At each entry point there will be random security checks. However, unlike at airports, passengers need not come hours in advance, but just 15-20 minutes ahead of their departure times to ensure that they are not delayed because of the security process,” he said.

•Mr. Kumar said that while security will increase, presence of security personnel will not.

•“If we are investing in technology, then manpower requirement will reduce,” he said.

•These steps are a part of a security plan under the Integrated Security System (ISS) which was approved in 2016 to strengthen surveillance mechanism at 202 railway stations.

•The ISS will comprise CCTV cameras, access control, personal and baggage screening system and bomb detection and disposal system which together provide multiple checking of passengers and baggage from the point of entry in the station premises till boarding of train. The anticipated cost of the ISS project stands at ₹385.06 crore.

•“The security plan envisages a layered security check where passengers will be scrutinised even before they enter the station premises to ease the pressure at stations during peak hours,” Mr. Kumar said.

•It will also include real-time face recognition software which will alert the RPF command centre of any known offenders.

•Passengers will be checked randomly — every eighth or ninth passenger will undergo the process on his arrival at the station,” he said.

📰 The CBI and the rules of political combat

Elite consensus may often degenerate into a ganging up of the powerful, but its absence results in chaos

•The year 2018 witnessed the emergence of two inter-related threats to India’s federal polity. But the political class remains oblivious to the potential of these threats, if not tackled in time, to inflict system-wide damage.

•The first threat is that the national investigative and regulatory agencies, such as the Central Bureau of Investigation (CBI), are increasingly seen to be unmoored of the well-established bureaucratic professionalism and neutrality. The State-level agencies may be far worse, but that is a different matter. The political impact of this sentiment, whether it is it true or false, is the refusal of some State governments to permit the CBI to conduct its operations in their States.

Strong signals

•Giving credence to the doubts about the CBI’s integrity, the families of Govind Pansare and Gauri Lankesh, who were killed in 2015 and in 2017, respectively, have determined to oppose a combined CBI investigation into their killings as well as that of Narendra Dabholkar and M.M. Kalburgi.

•Gone are the days when people would demand a CBI probe into any crime or scam involving influential persons. One may dismiss the State governments’ blocking the CBI probes within their jurisdictions as politically motivated, but one cannot ignore civil society’s lack of confidence in the agency’s competence and neutrality.

•The second threat to our political system is the increasing tendency, especially among the two national parties, to not only implicate each other’s leaders in litigation but relish the spectre of the other having to spend time in courts or in jail. Our political space is turning into the moral universe of Buck Grangerford in Mark Twain’s Huckleberry Finn wherein one is only certain of the other being one’s mortal enemy but one’s not sure of what’s the feud about, or who started it or when. This moral relativism is corrosive and dangerous.

•Though the kind of institutional collapse for which the CBI has become the poster-boy, and the political adversity turning into personal enmity are not new but they, like a disease, have entered a critical phase.

Centre-State implications

•In November, the governments of Andhra Pradesh and West Bengal withdrew ‘general consent’ to the CBI to register fresh cases under its purview. One implication of the decision is that the CBI will have to obtain the State’s consent case by case; this will give a State government the opportunity to both ensure that the CBI is not acting at the behest of the ruling party at the Centre, or insert its own politics into investigations. The agency may technically go ahead with cases it already registered in these States, but that logic holds only on paper. Without a State government’s active cooperation, the CBI or any Central agency cannot carry out its operations in that State.

•This is a truly tragic moment for the CBI, which has had its roots as an anti-corruption wing of the British Indian government known as the Delhi Special Police Establishment, a lacklustre name till 1963, when it became the CBI. That from such humble origins it rose to national eminence was a tribute to its competence and professionalism.

•As mentioned, in the past some States occasionally blocked the CBI probe in specific cases but what is new, as exemplified by the decisions of Andhra Pradesh and West Bengal governments, is that hereafter a State’s refusal to allow the CBI probe in its territory is likely to be based not so much on the merits of a case but on political equations between that State and the ruling party at the Centre.

•It is not the CBI alone that will be caught in the cross hairs of Centre-State feuds in future. Other agencies such as the Enforcement Directorate, the National Investigation Agency (NIA), etc. may find it hard to smoothly carry out their operations in States that are not politically aligned with the ruling party at the Centre.

•There was a time in the 1980s when a special income tax team sought to conduct search and seizure operations against persons close to the ruling party in Jammu and Kashmir without informing the local police for obvious reasons, the team faced unpleasant backlash.

•Under the Constitution, the State governments have exclusive jurisdiction in matters related to law and order. The Centre can claim its jurisdiction over its departments located in States, such as railway property, and on matters like terrorism, sedition, counterfeit currency, etc. Even in these cases the Central agencies cannot discharge their duties without active cooperation from the State government concerned.

•Consider this, for example: unlike the CBI act (the Delhi Special Police Establishment Act) which mandates States’ consent, the NIA Act does not place such a restraint on the NIA. However, the NIA would be no more effective than the CBI when a State refuses to cooperate, whether that refusal is de jure or de facto.

Dialogue required

•Our federal system, insofar as it is concerned with the national investigative and regulatory agencies, worked well due to two reasons. One, as long as a single party remained in power at the Centre and in most States, the issue of political interference did not arise. Two, these agencies’ reputation for professionalism and impartiality also ensured their success.

•It is clear now that no single party will be so dominant at the national as well as State levels into the foreseeable future, and regrettably these agencies are not in pink of their health. But herein lies an opportunity.

•The absence of a single-party dominant polity means that India will witness a revolving-door politics where the ruling party and the Opposition will exchange places fairly regularly. And their propensity to lock up each other will abate.

•The present context also highlights the urgent need to define and delineate ‘federal crimes’ as recommended by the Malimath Committee in 2003. The exercise should not be about compiling a list of crimes and prefacing each crime with the ‘federal’ adjective. Instead, the task should be to bring in States as partners in solving a national problem: how best to calibrate different tiers of government and bring about political consensus so as to ensure India’s constitutional scheme delivers on its promise.

•A first step in this direction has to be the willingness of political parties, especially the Bharatiya Janata Party (BJP) and the Congress, to recognise the danger they pose to each other as well as to the entire polity. And then arrive at a modus vivendi which must contain the need for the elected executive to refrain from ‘monitoring’ investigations; a provision for more effective judicial oversight at all stages of criminal investigations; and the resolve to ensure bureaucratic neutrality.

Restoring credibility

•The task of restoring the credibility of investigative agencies cannot be rocket science. Moreover, it is now in the self-interest of all political parties. As the nation approaches the national elections in a few months, the time is ripe for ideas to strengthen our federalism. Ideas for reforms will spring up and fructify only if elite consensus creates a conducive environment.

📰 India’s options and the Pashtun factor

In fashioning its Afghan policy, India has to take into account a resurgent Taliban

•It’s rightly being pointed out that India has to be prepared for the potential consequences of the withdrawal of U.S. troops from Afghanistan. While New Delhi is weighing its options it must take into account that for all its antipathy toward the Afghan Taliban, the latter does represent, in a distorted form, a facet of Pashtun nationalism. What has given added potency to the Taliban’s appeal is this: its ability to couch in religious terminology traditional Pashtun aspirations for dominance in Afghanistan as well as the aversion of Pashtun tribes to foreign interference in their land.

Invasion shifts power

•It is the combination of ultra-orthodox Islam, a product of Saudi involvement in the so-called Afghan “jihad”, with Pashtunwali, the traditional Pashtun social code, and opposition to foreign presence that provides strength to the Taliban. Most Pashtuns, who comprise over 40% of the population of Afghanistan, believe that they are the rightful rulers of the country. They base this on the history of the past 300 years when Pashtun dynasties ruled Afghanistan almost throughout. While the Persian-speaking Tajiks, who form around a quarter of the population, are more urban and educated than the Pashtun tribes and staffed a substantial portion of the Afghan bureaucracy, the ruling dynasties were invariably Pashtun.

•This situation changed with the American invasion in 2001 aided by the largely Tajik Northern Alliance that shifted the locus of power out of Pashtun hands. The emergence of the Pashtun Taliban from Kandahar in 1994 was in reaction partly to the fear of Tajik domination and partly to the mayhem and anarchy caused by the “mujahideen” factions fighting each other for control of the country. With Pakistan’s military help the predominantly Pashtun Taliban imposed a degree of order and ruled approximately three-quarters of Afghanistan from 1996 to 2001.

•Pashtun resentment against foreign intervention, which drove their opposition to the Soviet invasion and now fuels antipathy towards American military presence, also has a long history going back to their resistance to British intrusion during the 19th century. It was augmented by British success in dividing the Pashtun lands in eastern and southeastern Afghanistan and drawing the Durand Line that attached a large portion to British India, now Pakistan. This drastically reduced Pashtun demographic superiority in Afghanistan. Opposition to the Durand Line was the principal reason why Afghanistan voted against Pakistan’s admission to the UN in 1947.

•Traditionally, Pashtun nationalism in Afghanistan was based on ethnicity and tribal loyalties and not connected to religion, which explains their hostility toward predominantly Muslim Pakistan during the first three decades of its existence. The Soviet invasion of Afghanistan in December 1979 fundamentally changed the nature of Pashtun nationalism. It led to American and Saudi support for the Afghan insurgency, with Pakistan acting as the conduit for American arms and Saudi financial support to the tribes fighting the Soviets and their proxy government in Kabul. It also led to the import of Saudi-Wahhabi ideology through madrasas set up with Saudi funding on the Pakistan-Afghanistan border. These madrasas produced the first generation of the Taliban.

Pakistan and the Pashtuns

•Simultaneously, the Soviet invasion altered the nature of Pakistan’s relationship with Pashtun nationalism, turning it from hostility to support. This process culminated with the installation of the Taliban regime in Kabul in 1996 with Pakistan’s military aid. It provided Pakistan with strategic depth in the event of a future conflict with India. Equally important, Pakistan’s support to this religiously inspired manifestation of Pashtun nationalism largely solved the problem of Pashtun irredentism within Pakistan.

•Although polls show that the majority of Afghans do not support the Taliban, the divided and infirm nature of the nominally ruling dispensation and its corruption and inefficiency have helped the Taliban gain renewed support among parts of the Pashtun population. Added to this is the vicarious satisfaction that many Pashtuns feel at the Taliban’s defiance of the Kabul government, making it a viable force in Afghanistan.

•The resurgent Taliban is driven not so much by Islam as the quest for Pashtun dignity and revenge. While it is not in a position to rule over the entire country, and certainly not the urban areas, it does control large swathes of the rural areas in the predominantly Pashtun provinces of eastern and southeastern Afghanistan. In other words, it is in a position to make the country ungovernable and indefinitely continue the civil war especially because of its control of the drug trade that finances its activities. The withdrawal of American forces will provide it greater opportunity to expand its area of operation.

Indian policy

•It is important that New Delhi takes this factor into account while fashioning its policy toward Afghanistan in anticipation of American withdrawal. India’s refusal to publicly criticise, let alone denounce, the Soviet invasion of 1979, while understandable in that particular geopolitical context and a consequence of India’s gratitude for Soviet support during the Bangladesh war, ended up doing India great harm in the eyes of its traditional friends in Afghanistan, the Pashtuns. It also provided Pakistan greater scope to curry favour with Afghanistan’s largest and traditionally dominant ethnic group.

•It will take a great deal of creative thinking and imaginative refashioning of New Delhi’s policy towards Afghanistan for India to recover lost ground vis-à-vis the Pashtuns. Depending on the U.S., itself on the verge of cutting its losses in Afghanistan, or on other powers such as Russia and Iran to protect Indian interests in that country will be foolhardy and counter-productive.

📰 Removing fear: on literary freedom

The private member’s Bill aimed at protecting literary freedom from threats is welcome

•Literary freedom is taken for granted in democracies, but forces that threaten or undermine it are always at work. Each age has to fight the battle afresh. In recent times, several attempts to get books withdrawn, pulped or sanitised of offending content have achieved full or partial success in India. Wendy Doniger’s The Hindus: An Alternative History was withdrawn from circulation, and A.K. Ramanujan’s essay ‘Three Hundred Ramayanas’ was dropped from a Delhi University syllabus. Tamil writer Perumal Murugan’s Madhorubagan (One Part Woman) was withdrawn by the author under mob pressure but resurrected by a Madras High Court verdict. Public order, national unity and social or religious harmony are the principles commonly invoked against the practice of literary freedom. Threats to free expression, especially artistic freedom, in our times mainly come from those claiming to espouse the interests of a particular religion or social group. It is in this context that Shashi Tharoor, Congress MP and writer, has introduced a private member’s Bill in the Lok Sabha seeking to protect freedom of literature. Its objective — that “authors must be guaranteed the freedom to express their work without fear of punitive action by the State or by sections of society” — commends itself to any society that upholds liberal values. It seeks the omission of three IPC sections, including 295A, in effect a non-denominational blasphemy law, as it targets deliberate or malicious acts to outrage religious feelings.

•Section 295A is a grossly misused section, often invoked in trivial ways to hound individuals, harass writers and curtail free expression. It deserves to be scrapped. Sections that relate to the sale of obscene books and uttering words that hurt religious feelings are also sought to be omitted. However, it is unclear why Section 153A, which punishes those who promote enmity between groups on grounds of religion, race or language, and Section 153B, which criminalises words and imputations prejudicial to national integration, do not draw Mr. Tharoor’s attention. In the process of proscribing a book, he proposes a tweak in the form of a 15-day prohibition. Thereafter, the onus should be on the State government to approach the High Court to seek a permanent ban. It favours the scrapping of the provision in the Customs Act to ban the import of books, but makes a public order exception. It wants to limit the bar on obscenity in the Information Technology Act to child pornography. Private Bills rarely become law, but they are useful in highlighting gaps in the body of law. Seen in this light, Mr. Tharoor’s initiative is most welcome as a step towards removing or diluting penal provisions that inhibit literary freedom.

📰 India’s Atlantic challenge





Trump’s ‘America First’ policy and the Brexit deal could pose more challenges this year

•While 2019 is a year of hope and perhaps provides an opportunity for a reset in some areas of policy for India, a lingering concern is that the choppy waters of the Atlantic Ocean may throw up many economic challenges that might rock India’s boat of stable economic growth. This is because, first, U.S. President Donald Trump’s ‘America First’ policy could lead to more tariff and subsidy hiccups, culminating in protracted trade battles, in the context of protectionism. And second, if the U.K. has a ‘hard Brexit’, India may be looking at unexpected complications regarding trade adjustment, and a U.K.-India Free Trade Agreement (FTA) may be out of the question.

•Considering the U.S. first, the Trump administration is attempting to replace the rules-based trade order with a bilateral trade agreements and sanctions network, a system that has distinct disadvantages for India. The trade experience of 2018 provides a sense of what could happen in 2019 vis-à-vis India-U.S. trade relations. Last year, when Mr. Trump gave the green light to start a trade war by escalating tariffs between U.S. and its three main trade partners – the EU, China and NAFTA – a relatively small yet strategically significant tariff spat broke out between Washington and New Delhi.

•Both countries engaged in a tit-for-tat tariff policy, giving momentum to global trends towards trade protectionism. When India was denied an exemption by the U.S. from increased tariffs on steel and aluminium imports, it reciprocated by hiking import duties on 29 American export products, including pulses and iron and steel products. This show of strength against Washington’s deep-pocketed lobbies was, however, at odds with India’s original stand on this issue, which was pro-globalisation. Indeed, Prime Minister Narendra Modi’s speech at Davos in January 2018 gave considerable time to the reasons why trade protectionism was a worrisome phenomenon.

•A broader disadvantage for India of a spiralling trade war with the U.S. is that it could easily spin out of control and create rifts in other areas such as security and diplomacy. If that happens, it may be of considerable benefit to China, which India — and ironically the U.S. too — wants to contain.

•With the U.K., India’s trade in 2019 depends on the twists and turns of Brexit politics, both in London and in Brussels, with the March 29 deadline for the same looming ever closer. However, for India to secure its trade interests, it needs to renegotiate with both the EU and the U.K. for goods and services. Also, the discussion on FTA with the EU must be resumed and a similar conversation must be launched with the U.K. If these negotiations are managed carefully, Brexit may even emerge as an opportunity for India to recalibrate the legal terms of its trade with the U.K. and the EU, at the multilateral level, and through free trade agreements.

📰 MPs’ panel proposes legal status for SSC

Says its work comparable to UPSC’s

•A Parliamentary Standing Committee (PSC) has recommended that the Centre accord statutory status to the Staff Selection Commission (SSC), one of the largest recruitment agencies in the country.

•The Union Public Service Commission (UPSC) and all State Public Service Commissions either have constitutional or legal status. The SSC is the only such organisation that performs similar functions on a much larger scale, but does not enjoy statutory status.

Rising workload

•The SSC was created to ease the burden of the UPSC by taking over the recruitment for posts below the Group ‘A’ level. There has been a phenomenal increase in the workload of the SSC, from 9.94 lakh candidates in 2008-09 to over 2 crore in 2016-17.

•While the workload and responsibilities of the SSC have increased exponentially over the years, it has remained an “attached body” under the Department of Personnel and Training (DoPT), and has to depend entirely on the government for all its needs, with no autonomy.

•The Committee, headed by BJP lawmaker Bhupender Yadav, said that according statutory status to the SSC would contribute to greater functional autonomy, faster decision-making and efficiency in the overall performance and delivery of results by the SSC in the recruitment process.

•An expert group constituted by the government in 2014, for reviewing the examination system in the SSC, had recommended according statutory status to the Commission.

•At present, the SSC has a sanctioned staff strength of 481 officers but is functioning with 75% of its sanctioned strength.

•The DoPT further stated that the SSC would be conducting the Common Eligibility Test at three levels — Matriculation, Higher Secondary and Graduation — and would attract around 5 crore candidates, making it the largest examination in the world. The SSC has submitted three proposals to the government for provision of additional manpower. The committee has said that it was imperative for the government to accede to the SSC proposals, taking into consideration the serious mismatch between tasks and resources.

📰 Assam Accord Clause 6: Centre forms panel on quota for Assamese in government jobs

Notification under Clause 6 of Assam Accord comes amid protests over Citizenship Bill.

•The Centre has set up a high-level committee headed by former IAS officer M.P. Bezbaruah to assess the appropriate level of reservation of seats in the AssamAssembly and local bodies for the Assamese people, besides providing employment opportunities.

Cabinet decision

•Last week the Union Cabinet took a decision in this effect as per the 1985 Assam Accord.

•The committee and its Terms of Reference (ToR) were notified a day before the joint parliamentary committee on the Citizenship Amendment Bill, 2016, is expected to table its report in Parliament, paving the way for India to grant citizenship to six persecuted minorities — Hindus, Jains, Sikhs, Parsis, Christians and Buddhists — from Pakistan, Afghanistan and Bangladesh who came to India before 2014.

•There has been a strong resistance to the Bill in BJP-ruled Assam as it would pave the way for giving citizenship, mostly to illegal Hindu migrants from Bangladesh in Assam, who came after March 1971, in violation of the 1985 Assam Accord.

•In a notification, the Home Ministry said the committee will examine the effectiveness of actions taken since 1985 to implement Clause 6 of the Assam Accord.

Reccomend reservation

•“The committee will assess the appropriate level of reservation of seats in Assam Legislative Assembly and local bodies for the Assamese people. The committee will recommend the appropriate level of reservations in employment under the government of Assam for the Assamese people,” the notification said.

•The notification said the panel will also hold discussions with various stakeholders, including social organisations, legal and constitutional experts, eminent persons from the field of art, culture and literature, conservationists, economists, linguists and sociologists.

•It will suggest measures to be taken to protect Assamese and other indigenous languages of Assam.

•The committee can also suggest any other measures, as may be necessary, to protect, preserve and promote cultural, social, linguistic identity and heritage of the Assamese people.

•It will submit its report within six months from the date of notification (January 5).

•The panel will be facilitated by the North East Division of the Home Ministry, and the State government will provide necessary administrative and logistic support to the committee.

•Clause 6 of the Accord states: “Constitutional, legislative and administrative safeguards, as may be appropriate, shall be provided to protect, preserve and promote the cultural, social, linguistic identity and heritage of the Assamese people”.

•Besides Mr. Bezbarauah, the members of the panel are former IAS officer Subhash Das, former presidents of Assam Sahitya Sabha Nagen Saikia and Rongbong Terang, former editor of The Sentinel Dhiren Bezbaruah, educationalist Mukunda Rajbangshi, Advocate General of Assam Ramesh Borpatragohain, and one representative of the All Assam Students’ Union.

•The joint secretary in the Home Ministry will be member secretary.

📰 Defence manufacturing rules eased

Licensing process made simpler for private industry to build a range of equipment

•The government issued a notification last week simplifying the the process for approval of manufacturing of a range of defence and aerospace equipment and components by private industry, by bringing them under the licensing authority of the Department of Industrial Policy and Promotion (DIPP).

•The notification was issued as a press note dated January 1 by the DIPP, which is under the Ministry of Commerce and Industry.

Warships included

•Items are listed in three categories — defence aircraft, warships of all kinds, and allied items of defence equipment.

•The most significant aspect is that warships of all kinds, surface and sub-surface, have been included in the listing. “With the list of defence items requiring industrial licences being pruned down by removing the requirement of licensing for ‘parts and components of the equipment’, this would accrue benefits towards Tier-I/Tier-II vendors giving a boost to the small and medium enterprises (SMEs),” industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) said in a statement.

•This notification, which supersedes DIPP’s earlier press note of June 2014 on this issue, segregates defence items in two categories covered by two different Acts — the Industries (Development and Regulation) Act, 1951, and the Arms Act, 1959.

Foreign manufacturers

•This move is also expected to help foreign Original Equipment Manufacturers (OEM) looking for partnerships with the private sector. The Defence Ministry has formulated an ambitious Strategic Partnership (SP) model under the Defence Procurement Procedure (DPP), covering four specific areas to promote role of private sector in defence manufacturing. However, progress on finalising the projects under the SP model has been slow.

•The ASSOCHAM statement said the creation of a strong supply chain is critical.

📰 Panel concerned at CBI vacancies

House committee says the premier probe agency should not be understaffed

•A parliamentary standing committee has raised concern over non-filling of vacancies in the Central Bureau of Investigation, saying it will impact on its performance.

•“Increasing number of cases are now being referred to the CBI pertaining to areas like internal security, cybercrimes, corruption, financial irregularities and the nation cannot afford to have its premier investigative agency understaffed and thus ill-prepared,” the committee said in a report tabled in Parliament last Thursday.

•The committee said the level of vacant positions in executive rank, law officers and technical officers is about 16, 28 and 56% respectively.

•At the top level, out of four posts of Special Director or Additional Director, three are lying vacant.

Simplify rules

•To overcome the perennial problem of vacancies in the CBI, the committee recommended that the government simplify recruitment rules to overcome the procedural bottlenecks.

•“The government may also consider making terms of deputation to the CBI more rewarding in order to retain capable officers and to attract best officers from the State police forces, Central paramilitary forces, Intelligence Bureau, etc.,” the committee recommended.

•The Department of Personnel and Training said efforts were on to fill the vacant CBI posts by fine-tuning the recruitment rules.

•The committee said though Prime Minister Narendra Modi in 2015 announced setting up of the International Centre of Excellence in Investigation (ICEI-CBI) at the CBI Academy in Ghaziabad, “it is yet to see the light of the day and is still pending at various stages of approval.”

•ICEI-CBI was to offer world-class certified courses on investigation and prosecution in specialised and emerging domains of crime including cybercrime.

•The committee recommended that the CBI and the government should expedite approvals for setting up the ICEI-CBI centre.

📰 West Bengal tribals battling food scarcity: study

West Bengal tribals battling food scarcity: study
Communities are ‘far behind’ in terms of human development, says survey of 1,000 households by Professor Amartya Sen’s institute

•Two months after the West Bengal government denied any food scarcity as a possible cause of death of seven persons from a tribal community, a survey report has identified “food scarcity in varying degrees” in about 31% of tribal households in West Bengal.

•The study titled ‘An Inquiry into the world of the Adivasis of West Bengal’, conducted by Professor Amartya Sen’s Pratichi Institute and Asiatic Society, will be released in Kolkata on Monday.

•The survey was conducted in 1,000 tribal households to ascertain living conditions, health and education.

•West Bengal is home to a over five million tribals, with 6% of the India’s tribal population of 100 million. But in many areas, tribals of the State are “far behind” in terms of human development. One area, which has been a matter of contention in recent months after the death of seven tribals in a span of 15 days in November, is scarcity of food. The preliminary survey report claimed that “nearly one third [31%] of the surveyed households” reportedly faced “food scarcity in varying degrees” in the past year.

•“…While some households faced acute hunger only in some months (August–October), in many cases, people had half-meals only twice a day. Also, in some cases, adult members reportedly ate only once a day. Also, in some cases, adult members [of households] reportedly ate only once a day,” the report noted. Most of the families surveyed could hardly afford animal protein or pulses.

•In addition “poverty-born vices like alcoholism [and] the fragility of the public health system…seemed to have resulted in a much lower life chances among the Adivasis than their more privileged co-citizens,” the report noted. Degradation of forest and environmental degradation are cited as two more reasons for “reduced availability of natural nutrients” resulting in early deaths.

Premature deaths

•The report indicated that the number of deaths reported to have occurred in the surveyed households, in the year preceding the survey, “was 52, among which 48 [92%] were premature deaths” and only four were due to old age.

•“The average age of the [tribal] persons who died was 58 years, which is much shorter than the life expectancy at birth” (70 years in West Bengal).

•The survey, a synopsis of which has been accessed by The Hindu, is conducted in 10 districts of the State, of which three were formerly undivided.

•The work participation rate [WPR] is higher among the Adivasis in Bengal “forcing the children of schoolgoing age to discontinue their studies in order to fend [for] themselves and support the families,” the report noted. According to the Census of 2011, while WPR is 39% and 49% in Bengal and India, respectively, “the corresponding figures for Adivasis were 49% and 47%,” indicating the participation of more children.

•“Our survey found that both the children and elderly people were also involved in earning, and that the rate of transition in education was low…” the report noted.

•However, a higher rate of work participation has not contributed to a better living standard, indicated the survey, which followed a “mixed-method approach” combining quantitative and qualitative data. In the area of health and education, too, tribal communities are far behind the rest of State’s population.

•“A substantial number of…children whose immunisation cards were available were not fully immunised: of 36 children, only 21 (58%) were, as recorded in the cards, found to be fully immunised.”

•Moreover, 44% of households do not have access to toilets and nearly two-thirds of the households had no drainage system, the report noted.

📰 GST can boost direct, indirect tax collections, say experts

‘Govt. is also trying to improve revenues via sources such as PSU dividends’

•The fact that the government is increasingly dependent on tax revenue, especially indirect taxes, to meet its fiscal requirements is not a cause for worry, according to tax analysts, who say that the real benefits of the Goods and Services Tax (GST) have not yet taken effect. Once they do, government revenue from both direct and indirect taxes will grow significantly.

•An analysis by The Hindu of the budget documents of the last five years has shown that the government’s dependence on tax revenue has steadily increased, with tax revenue making up a little more than 70% of its total receipts in 2018-19, up from 65% in 2014-15. Correspondingly, the share of revenue from non-tax sources (such as dividends from PSUs and the RBI) and capital receipts (such as disinvestment proceeds) has been declining.

•Within tax revenue, the analysis shows that the share of indirect tax has been growing over the years, increasing to nearly 50% in 2018-19 from a little less than 45% in 2014-15. This increased dependence on tax revenue to meet its fiscal needs has meant that the government has had to push quite hard to increase its tax base at both the direct and indirect tax levels.

•The view among tax analysts is that the government cannot take the risk of increasing tax rates, whether direct or indirect, for fear of a backlash from the public. So, the only option it has to boost tax revenues is to increase the tax base and stop evasion, both of which the government has been trying to do.

•“Several steps such as analysing the business-wise monthly GST payments and ascertaining trends in State-wise movement of goods using the e-waybill data would have already been initiated to evaluate options for enhancing the GST taxpayer database and revenues,” M.S. Mani, partner, Deloitte India, said.

•“Going forward, it is likely that the GST data would be correlated with information relevant from an income tax payment perspective so that incorrect tax filings can be corrected and revenues enhanced.

Detecting tax evasion

•“Hence, the expansion of the GST taxpayer base, improving the return filings compliance and using the large amount of data available to detect tax evasion would become the cornerstone of the government’s measures to enhance tax revenues,” Mr. Mani added.

•The other trend the government would be banking on is that increased economic activity and a higher GDP growth rate will boost consumption and hence, indirect tax collections, other analysts say.

•“The indirect tax rate is fixed, so if there is price inflation, then the government receives a tax on that as well because product prices go up and so the tax component also goes up,” Ranen Banerjee, partner, PwC India, said. “The second aspect is that when the GDP grows, consumption also grows, and so you get more indirect taxes from that.”

Efficiency gains

•“The efficiency gains of GST haven’t yet kicked in and once they do, this will give revenue buoyancy in the next 3-5 years,” Mr. Banerjee added.

•However, he said that the worry for the government should be the fact that an increasing proportion of its indirect tax collections are coming from a single source — oil.

Non-tax revenue

•Despite this optimistic outlook of future growth in tax revenue, the government has also been trying to improve its collections from other sources such as dividends from public sector companies and the Reserve Bank of India, and also through disinvestments.

•The analysis of budget data shows that PSU dividends as a proportion of non-tax revenue have been growing over the years, from 16% in 2014-15 to 21.4% in 2018-19. The government has reportedly been pressurising the state-run oil companies to transfer larger dividends to the Centre every year.

•It is also reportedly asking the state-run oil companies to buy back shares, and is also pushing more PSUs to list on the stock exchanges.

•However, this is an untenable source of revenue for the government because they are based on finite resources.

•Notably, dividends from the RBI, as a proportion of non-tax revenue, have been falling.

•“Non-tax revenues, if you look at the majority, they have come from auctioning spectrum licences and royalties from oil, etc, and also disinvestment,” Mr. Banerjee said.

•“All of these have a limit. Suppose you decide to sell everything, but after that, what? You cannot expand your budget based on this,” he said.

📰 Banks get a breather on bad loans

RBI’s latest financial stability report indicates that Indian banks’ bad loan crisis could be peaking out

•In the last five years, investors and depositors in India have become accustomed to banks springing unpleasant surprises on them every time they thought the worst was over on the bad loan crisis.

•The Reserve Bank of India’s (RBI’s) half-yearly Financial Stability Reports, which take stock of the strength and stability of Indian banks, had turned into chronicles of gloom tracing the steady worsening of the crisis.

•But the RBI’s latest report for December 2018 breaks away from the trend to offer glimmers of hope to these stakeholders. Here are the takeaways from this report.

Dip in proportion

•For the first time since the bad loan saga began to play out six years ago, Indian banks have reported a decline in the proportion of loans gone bad for the half-year ended September 2018.

•Their aggregate Gross Non-Performing Asset (GNPA) ratio dipped from 11.5% in March 2018 to 10.8% in September 2018. The GNPA ratio captures the proportion of loans in a bank’s books on which borrowers haven’t repaid dues for more than 90 days. The trend started tamely enough, with banks reporting a GNPA ratio of 3.4% in March 2013. But more skeletons began tumbling out of the closet after RBI initiated an asset quality review of individual banks to ferret out their problematic accounts in March 2015. The GNPA ratio more than doubled over the next three years to peak at 11.5% by March 2018.

•Even now, the fact that well over a tenth of all loans given out by Indian banks have gone bad is not cause for cheer. But, for banks and their stakeholders, the recent flattening out of the GNPA ratio is to be welcomed because they can finally have a fix on the size of the problem that they’re dealing with, instead of chasing a moving target.

•The bulk of bad loans remains concentrated with public sector banks (GNPA ratio of 14.8%), while private sector banks are much better off (3.8%). Of the 55 banks, 23 had ratios below 5% as of September 2018, 10 featured GNPAs in the 5-10% bracket and 21 banks sat on over-the-top GNPAs of 10% to 30%.

Better accounting

•If the peaking of GNPAs is good news, even better news is the proportion of restructured advances lurking in bank books falling to 0.5% by September 2018. This shows that most of the doubtful loans in bank books are now accounted for.

•One of the most disturbing aspects of the ongoing bad loan saga was that GNPAs officially recognised by the banks were only the tip of the iceberg. In 2013, for every bad loan that banks had recognised as NPA, there was another dicey one hidden from public view because of a cosy arrangement with the borrower to restructure the loan.

•In March 2015, while banks reported a GNPA ratio of 4.6%, their restructured advances were far larger at 6.5%. Today, the GNPA ratio is at 10.8%, but restructured loans are down to 0.5%.

•Again, it is RBI’s asset quality reviews and its February 2018 circular asking banks to wind up all their restructuring schemes that have hastened this recognition.

•The total proportion of ‘stressed’ loans on bank books (NPAs plus restructured loans) peaked at 12.3% in September 2016 and has steadily declined to 11.3% now.

Pending provisions

•The spring cleaning of banks’ books seems to be almost over when it comes to recognising NPAs. But the pain for investors and depositors will be at an end only when the banks have provided for (set aside their profits) all their irrecoverable loans.

•On this score, we are just over the halfway mark. The provision coverage ratio for all banks stood at 52.4% at the end of September 2018.

•This suggests that the dent to bank profitability from bad loan provisions will continue over the next many quarters. But public sector banks with a provision coverage of 51.4% have much more pain ahead of them, than private sector banks (56.2%) or foreign banks (87.1%).

•Rising provisions were the reason why even as their overall bad loan position improved, five banks saw their capital positions dip below RBI-mandated levels of 9% in the half year ended September 2018, compared to just one bank in March.

•The average capital adequacy ratio for all banks was at a comfortable 13.4% as of September 2018.

•RBI’s stress testing shows that 9 of these banks could fall short of the critical 9% mark by March 2019, even with best-case assumptions on GDP growth, deficits, lending rates and inflation.

•Therefore, demands from the distressed public sector banks for capital infusions from the government may continue to tax the fisc and taxpayers in the coming quarters.



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