MAINS CURRENT AFFAIRS 14th AUGUST – 2018
THE MENACE OF LAND EROSION
WHAT IS THE ISSUE?
Soil is virtually a non-renewable natural resource that needs to be guarded at all costs
IMPORTANT FACTS :
- About 120 million hectares, or nearly 37 per cent, of the country’s total land is degraded in varying degrees; much of it due to water
- On an average, about 1,535 tonnes of soil is lost from every square km land every year due to
- About 5.37 to 8.4 million tonnes of plant nutrients are also lost annually along with the wasted
- Nearly 13.4 million tonnes of potential crop output, valued at over Rs 205.32 billion at 2015-16 prices, fails to materialise due to land erosion every
ISSUES DISCUSSED IN THE PAPER :
It takes 200 to 400 years for natural evolution to form one centimetre layer of soil and another 3,000 years to make it fertile. Therefore, soil is virtually a non-renewable natural resource.
Conservation of land i.e. its physical, chemical and biological health is imperative also because it is finite and is qualitatively deteriorating while its demand for various development purposes is growing.
Net cultivated area is more or less stagnant for a long time. Per capita land availability has declined from and is projected to shrink further to by 2050.
The per-head availability of arable land has diminished.
Climate change is gradually exacerbating the hazard of land degradation.
Every one per cent accentuation in rainfall intensity can potentially increase its soil erosion power by two per cent.
WHAT IS THE RESULT
This makes land in India all the more vulnerable to the adverse fallout of climate change, boding ill for food as well as environment security.
WHAT SHOULD BE DONE?
Several soil and water conservation programmes based, on the
watershed development principles are underway.
These programmes offer multiple benefits such as increase in crop
productivity, generation of more employment, rise in farmers’
income, reduction in poverty and augmentation of groundwater resources.
The mean internal rate of return from the investment on watershed- based soil and water conservation programmes has been estimated at 27.4 per cent — sufficient to justify higher budgetary allocations for these programmes.
Cultivable land should normally not be used for non-farm purposes except under exceptional circumstances.
River catchment basins should also not be disturbed much.
What is needed, therefore, is a well-judged land use policy based on its capability categorisation.
RAJA MANDALA: BREAKING THE
POINTS TO BE UNDERSTOOD IN THE ARTICLE
Beijing’s interest in making the China-Pakistan Economic Corridor (CPEC), the flagship project of President Xi Jinping’s expansive Belt and Road Initiative (BRI), more profitable by extending it to India.
CPEC is not an exclusive bilateral project between Islamabad and Beijing and can be turned into a more broad-based regional initiative. Pakistan’s other neighbours, Afghanistan and Iran, are eager for such an extension.
Delhi’s longstanding critique of CPEC and BRI would seem to make it impossible for India to engage with these projects.
WHAT CAN BE DONE?
The differences on economic and other issues in relation to BRI can easily be overcome through a focus on specific projects, whose terms could be negotiated to the satisfaction of India.
INDIA & PAKISTAN FACTOR
Transit trade with India — in association with CPEC infrastructure — could help make Pakistan into a commercial hub between South and Central Asia, including China’s western regions.
As Pakistan’s relations with the US rapidly go south under the Donald Trump Administration, Pakistan has become more dependent than ever on China’s support.
China’s stakes in the stabilisation of Pakistan and Afghanistan, given
its restive Muslim-majority Xinjiang province, are rising.
Beijing is playing a more active role in Afghan peace-making and gingerly stepping forward, along with Russia, to encourage Pakistan’s reconciliation with India.
Overland transit trade with India could be the gamechanger for new
GROWTH MAY PICK UP, BUT CONCERNS REMAIN
THE HINDU INTRODUCTION
India may well clock the highest growth rate globally, but more is needed to create jobs and reduce poverty.
SECTORAL GROWTH TRENDS IN INDIA
The monsoon has been somewhat below expectations — the overall rainfall deficiency was 3% (as of July 25).
The area sown has come down.
Rice-producing Bihar, for instance, has been severely affected. There is no consensus on the future behaviour of the monsoon.
2) SERVICE SECTOR
The services sector may perform better because public expenditure
will be maintained at a high level (due to elections).
As for the industrial sector, we have data for the Index of Industrial Production (IIP) for the first quarter. They show substantial improvement over the corresponding period of the previous year.
3) MANUFACTURING SECTOR
A pick-up in the growth rate in the manufacturing sector is likely.
The problems of the goods and services tax (GST) may have been largely overcome, but it is still a work in progress.
International financial institutions have forecast a growth rate of
The Reserve Bank of India (RBI) expects it to be 7.4%. CONCERNS
1) EXTERNAL ENVIRONMENT
The U.S. has raised duties on several products such as steel and aluminium, and on certain products imported from China. In turn, China has retaliated. India has also been caught in this exchange.
Besides these, there are country-specific sanctions such as those against Iran, which have a direct impact on crude oil output and prices.
India benefited from the fall in crude prices earlier but this position has reversed. There has been some lull in crude prices.
India’s trade deficit has always remained high .With a rising trade deficit and some outflow of capital, the rupee has depreciated.
- REVIVING THE BANKING SYSTEM
The RBI’s latest report on financial stability shows that the gross non- performing asset (NPA) ratio of scheduled commercial banks rose to 11.6% (March 2018). The ratio for public sector banks was 15.6%.
Recapitalisation of banks has become an urgent necessity.
3) IMPACT ON THE FISCAL POSITION
It is estimated that GST revenues are currently running behind budgetary projections.
The second concern relates to the impact of the proposed minimum support prices (MSPs) for various agricultural commodities.
If market prices fall below MSPs, there are only two ways in which
farmers can be assured of the minimum price.
One is the M.P. model where the State pays the difference between market price and MSP.
The other alternative is for the government to procure excess
production over normal production so that market prices rise.
Thus the burden on the government as a result of the new MSPs is
uncertain and needs to be watched.
The expected growth rate of 7.3-7.4% may be reassuring. It may even be the highest in the world economy. It is below of what is needed to raise job opportunities and reduce poverty.
It is true that the external environment is not helpful. All the same, a stronger push towards a much higher growth is very much the need of the hour.
WRONG LESSONS: IMPORT SUBSTITUTION WILL UNDO
THE ECONOMY’S GAINS OVER THE LAST TWO DECADES
Protectionism is contagious.
WHAT IS THE NEWS?
A government taskforce has been set up to recommend policies which will promote import substitution.
POINTS TO NOTICE
Two intertwined developments changed the nature of global trade over the last three decades.
First, advances in information and communications technology, and innovations in logistics allowed multinational companies to slice production processes and locate them in different countries. This showed up in the form of a surge in intra-firm global trade and intermediate exports.
Second, lowering of trade barriers through multilateral and bilateral agreements helped the value chains spread across countries. In other words, there is no longer any benefit in clustering within national borders.
The right way to go ahead is to relentlessly remove impediments which get in the way of economic activity and India’s overall competitiveness.
For example, reducing the time taken by GST system to refund exporters will do a lot more for durable job creation than coming up with a new import substitution policy.
If the last 25 years in India have been its best period in terms of economic growth and poverty reduction, openness has had an important role to play.
KISSING THE SUN: NASA’S PARKER SOLAR PROBE WILL GO WHERE NO
MAN-MADE OBJECT HAS GONE BEFORE TOI
POINTS TO NOTICE
The probe, named after 91-year-old astrophysicist Eugene Parker, will become the closest man-made object to the Sun.
Over a period of seven years, it will make 24 approaches to the star,
coming to within 6.12 million kilometres of the Sun’s surface.
It will, allow the Parker probe to dip directly into the Sun’s corona or outer atmosphere.
It will also become the fastest man-made object travelling around the Sun at speeds of up to 6,90,000 kmph – represents a giant leap in space science.
ONE NATION ONE ELECTION? DON’T RUSH IT
WHAT IS THE NEWS?
Prime Minister Narendra Modi has led the case for simultaneous elections for the Lok Sabha and state assemblies.
WHAT HAS BEEN DONE?
Law Commission is examining the proposal and has held consultations with different political parties about it.
ARGUMENTS TOWARDS IT
Simultaneous elections would save money.
Save the country from being in perpetual “election mode.
INDIA NEEDS OPEN SYSTEMS TO BUILD SMART CITIES
WHAT IS THE NEWS?
Experts plan a ‘City Data Exchange’ to build an open stack that can be used by all.
India has an ambitious smart city programme, which was kicked off by the ministry of housing and urban affairs.
WHAT CAN BE DONE?
City municipal bodies will be expected to provide seamless, operationally excellent ways of delivering citizen services and to increase the level of civic engagement from city dwellers.
Lack of coordination among civic bodies in our cities.
Smart city solutions currently deployed are actually siloed and application-specific, thereby limiting the ability of the city administration to truly leverage the value of the variety and volume of data being produced by these solutions.
Vendors for each of these systems tend to use their own proprietary solutions since smart city implementations are actually multiple independent implementations, each optimized for their own targeted objectives.
Different implementations have different vendors, who use different types of hardware, firmware and software.
Vendors internally use open source software such as Linux to write the software or firmware that manages their devices or systems, but in actuality, each system is a stand-alone fortress that at best has
“open” application programming interfaces, or APIs, to allow other
systems to communicate with it.
Private firms expect to make money on the uniqueness of their overall solutions and so fear that a completely open system will not allow them this opportunity.
WHAT CAN BE DONE?
So, raising all systems with enabling open source in an infrastructure is akin to a rising tide, which consequently raises all boats.
In such a model, not just the APIs, but every aspect of the enabling infrastructure is open, including its internal schemas and interfaces, and the entire programming “source” code of the implementation is also made available on a royalty-free basis.
“City Data Exchange”, or CDX, and are working with various firms, which have interest in India’s smart city programme, in order to build an open stack that can be used by all players.
The vision is to allow seamless data exchange among various private providers’ applications so that communication between city civic bodies is enhanced.
It is heartening that public-private partnerships are harnessing some of the best technical and scientific brains in the country to build an infrastructure that can be useful to all.
HOW TO MOVE A MOUNTAIN
Seven decades after Independence, the massive obstacle of caste
is still difficult to dislodge.
POINTS TO BE DISCUSSED
The low status of women and sudras in the Manusmriti and the Rig Veda.
The low status of women, sudras and communities considered polluted was raised systematically by Jyotiba Phule, B.R. Ambedkar and E.V. Ramasamy ‘Periyar’, as also other significant thinkers in the Hindu reform sects of Bengal, Punjab and Maharashtra, and the non- Brahmin discourses of the south, throughout the colonial period.
Is caste unrelated to birth?
Hindu society is inherently gender-blind; or that if the term “varna”
does not occur, there is no discrimination. ?
The meaning and provenance of the word “Harijan”;
The question of equality and inequality in the Hindu Vedas, smritis and sastras, versus the Indian Constitution.
Some claim that reservations policy discriminates against Brahmins
whilst encouraging undeserving SCs, STs and OBCs.
India’s Constitution favours minorities, leaving Hindus exposed and vulnerable.
Alas, the unfortunate reality is that prevailing forces of orthodoxy and reaction will demonise, humiliate and attempt to subdue whosoever confronts the gigantic caste system.
But in the age of Hindutva, outdated injunctions glorifying a hierarchical and unequal social order have risen again from the ashes.
Rule-based corporate governance: Does one size fit all?
‘Comply or explain’ approach in corporate governance regulations is most appropriate.
How to be a good regulator
Regulators prefer principle-based regulations when ‘one-size does
not fit all’.
Across the globe, regulators prefer principle-based accounting regulations (Generally Accepted Accounting Principles).
The Sebi has adopted rule-based regulations, while the contexts of different companies are different.
Most rules are aligned with best practices evolved in the US and other advanced economies, while Indian contexts are different.
Therefore, they may not benefit companies.
A recent amendment to the SEBI (LODR) Regulations
It requires companies to seek the approval of the three-fourth majority (special resolution) of shareholders (voted for the resolution) for appointing of a person or continuation of a person who has attained the age of 75 years as a non-executive director.
The voting at the AGM of HDFC held on July 30, 2018, on resolutions to appoint Deepak S Parekh and J J Irani as non-executive directors tells a story worth pondering.
A director was voted to discontinue because he was serving as a director in 7-8 companies.
The rationale is that it is challenging for an individual to devote adequate time to each company in which he/she is a director if he/she is a director in a large number of companies.
Analysis of the voting results in the AGM of HDFC shows that institutional investors and public shareholders are not concerned about the age of directors. They overwhelmingly voted in favour of Irani, who has attained the age of 82 years.
The ’75 years of age’ criterion is arbitrary.
Whether physical agility is more important than cognitive ability
depends on the contribution expected of a non-executive director.
If the board expects the non-executive director to provide guidance on complex and critical issues, the cognitive ability and wisdom are more important than physical agility. The age does not matter.
‘Seven listed companies’ criterion is also arbitrary.
Listed companies are of different sizes and operate in environments with different levels of complexities.
The demand on the time and attention of individual directors often depends on the size and complexity of the business.
The decision on retirement age, etc should be left to the board of directors.
The board should decide its composition and the desired profiles of individual directors.
The Sebi regulations should not create avoidable constraints for companies which value good corporate governance and adopt good corporate governance practices.
Those who do not value good corporate governance adopt ‘tick- the-box’ approach in complying with regulations.
‘Comply or explain’ approach in corporate governance regulations is most appropriate, as companies differ in size, ownership, and complexities in the business model and the business environment.
As one size does not fit all, the ‘comply or explain’ approach provides the desired flexibility.
The rupee opportunity
WHAT HAS HAPPENED?
Following an extraordinary attack by Turkey’s president, Recep Tayyip Erdogan, on the US and global financial markets, the Turkish currency, the lira, took a special battering.
Its fall has been the highest since 2001.
US President Donald Trump announced on Twitter that tariffs on Turkish steel would, in fact, be increased.
As a consequence, concern rippled through emerging markets —
sending the rupee, in particular, to its lowest value against the dollar.
POINTS TO BE NOTICED
It could be argued that the rupee has not weakened sufficiently against the currencies of its peers but against the dollar, which has gathered strength amid the slow and long-delayed tightening of monetary policy by the US Federal Reserve.
An examination of the real exchange rate of the rupee — as measured not just against the dollar but by the 36-country index of trading partners maintained by the RBI — would show that it has, in the four years to January 2018, gained in strength by 20 per cent.
WHAT SHOULD BE DONE NOW?
The priority for the RBI should be to manage the fall of the rupee — a fall brought on by structural considerations, such as increasing weakness on the external account brought on by a sustained inability to compete in world markets.
Instead of tariff tweaks or “special packages” for exporters, what is needed is an all-round attempt to make Indian exports more competitive.
The next steps in this strategy should be ensuring that exporters have easier access to tax refunds; a war-footing attack on red tape at the borders; and a clear commitment to opening up to new market- enhancing trade deals.