IASbaba’s Daily Current Affairs – 14th September, 2015

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IASbaba’s Daily Current Affairs- 14th September, 2015

INTERNATIONAL

A greater need for UNSC reforms

• TheUnited Nations Security Council (UNSC) is one of the six principal organs of the United Nations and is charged with the maintenance of international peace and security.
• It has 15 Members, five permanent members (USA, Russia, France, China and United Kingdom) with veto power and ten non-permanent members, elected by the General Assembly for a two-year term.
• Security Council over the years has performed its task of maintaining international peace and security.
• However, many critics argue United Nations Security Council is not that effective in its present form and that it needs to be fundamentally reformed.

What reforms are expected?

New categories of membership:

• This deals with enlargement of UNSC with current 15 members ( 5 permanent and 10 non permanent). Two models have been proposed so far. Model A proposes adding six new permanent seats, with no veto, and three new two-year term elected seats. Model B creates a new category of eight seats, renewable every four years, and one new two-year non-renewable seat.

Candidates to those new category seats:

• This is one question which countries are debating for a very long time. Lot of groups have been formed among the countries to lobby for the UNSC permanent seat.
• G4/Group of 4: Brazil, Germany, India and Japan. G4 is one of the strong contenders for UNSC permanent seat.

Focus on regional representation:

• Africa with a population of 1.1 billion has no permanent representation in security council. Similarly Asia with population of 4.4 billion has only 1 country(China) as a permanent member of security council.
• There is a need for a more balanced regional representation of countries in security council.

Question of veto powers :

• The veto powers in present security council reflect 1946 economic status. However over the years the economic status of countries have changed a lot especially that of Asian countries like India, Indonesia etc.
• The veto powers of the council should reflect present economic status and not that of 20^th

What should be the relationship between Security Council and general assembly:

• UN General Assembly is always subordinated to Security Council in terms of decision making in critical issues like military sanctions etc.
• Both being important organs of the United Nations, should work together on critical and important issues. In this regard reforms are needed.

Parties lobbying for the UNSC reforms:

• G4/Group of 4: Brazil, Germany, India and Japan. In favour of 6 new permanent seats and 4 new non-permanent seats.
• L69: A group of 43 developing countries (also including Brazil and India) in favour of new permanent seats, and in favour of adding veto rights to new permanent seats. Also in favour of dedicated non-permanent seat for small island states.
• C10/African Union: 53 African countries. In favour of 2 permanent seats for Africa, including veto rights. 14 African countries are also part of the L69 group. Furthermore, South Africa and Nigeria concur with the G4 position. The C10 coordinates the African Union’s position and consists of Algeria, DRC, Equatorial Guinea, Kenya, Libya, Namibia, Senegal, Sierra Leone, Uganda, and Zambia.
• UfC (Uniting for Consensus, alia the Coffee Club): 12 core members (Argentina, Canada, Colombia, Costa Rica, Italy, Malta, Mexico, Pakistan, Republic of Korea, San Marino, Spain and Turkey). Indonesia and China participate in meetings. Against new permanent seats. In favour of adding non-permanent seats and /or longer term and renewable seats.
• Arab Group: In favour of new permanent seat for Arab States.
• CARICOM (Caribbean Community): group aligned with the L69’s position.
• Pacific SIDS (Small Island Developing States): Aligned with L69. In favour of non-permanent seat for SIDS.

Procedure for reform:

• 2/3 of the whole membership of the General Assembly should vote in favour of a resolution with Security Council reform proposal.
• 2/3 of the Security Council membership, including five permanent members, should ratify the reform proposal.

Why India deserves a permanent place in UNSC?

• India was among the founding members of United Nations.
• It has been a member of UNSC for 7 terms and a member of G-77 and G-4, so permanent membership is a logical extension.
• It is the second largest and a one of the largest constant contributor of troops to United Nations Peacekeeping missions.
• Today, India has over 8,500 peacekeepers in the field, more than twice as many as the UN’s five big powers combined.
• India, largest liberal democracy is home to world’s second largest population.
• It is also the world’s tenth largest economy by nominal GDP and third largest by purchasing power parity.
• Some of Permanent members supports G4 membership in UNSC like Russia & UK

Way ahead : (Iasbaba’s view)

Any reform in the Security Council should reflect the following:

• A more reflective, representative and legitimate council, which reflect contemporary power realitiesof the 21st century.
• A council which is more capable and democratic in functioning.
• Permanent in long time: Power in international politics is not a constant. The rise and fall of empires throughout history is testament to this fact. The once powerful are no longer powerful and the once weak are now strong. Any reformative model should look into this aspect as well.

Connecting the dots:

• Critically analyse the reforms that are expected to be brought in UNSC.
• Does India really deserve a permanent membership in UNSC? Critically analyse.

ECONOMICS

RRB’s further distance themselves from the poor

• The regional rural banks (RRBs), the Indian Grameen Banks, would have been the most suitable institutions to serve the poor, better than the so called ‘world’s best model’, ‘Grameen Bank’ of Bangladesh.
• However, continued distortions in the name of reforms by successive governments have distracted them from their original goals.
• The final blow in that direction came to them in the form of the recent RRBs Amendment Act, 2015.

Background of RRB’s in India :

• The RRBs came into being in 1975, through an ordinance, which was later made RRBs Act, 1976, with the sole purpose of catering to the credit and other needs of the poor — small and marginal farmers, agricultural labourers, rural artisans, street vendors, petty traders and all those below the poverty line — as enshrined in the very preamble to that enactment.
• The share of Centre, States and sponsor banks in the RRB’s is in the ratio 50:15:35 respectively.
• By 1990, that is, within 15 years, as many as 196 RRBs were established with 14,500 branches in the un-banked rural, tribal and far-flung areas of the country.
• About 123 million poor were given loans to support their small farming and other economic activities. All this was not without some cost, but this was within anticipated levels.

These banks had been genuinely successful in achieving the goals set. But that was before the so-called reforms set in. 

The reforms that hindered the development of RRB’s :

• The architects of the RRBs had rightly forecast in the very beginning that they would incur some losses, which should be treated as essential social cost for the social benefit of covering the rural poor.
• But the accumulated losses of Rs. 621 crore by 1991-92 of 152 out of 196 RRBs had resulted in the policy prejudice of the later day governments, whereby the loss sustained was blown out of proportion, although it worked out to just Rs. 18 lakhs per RRB per year — peanuts compared to the service they had rendered to the millions of poor people.
• The policy makers who had become obsessed with making profit went ahead with the overhauling of the RRBs.
• The first crucial distortion was made in 1992-93 when the RRBs were allowed to finance to the non-target groups — the rich borrowers — removing the barrier of financing exclusively to the weaker section.
• The priority-sector norms were set just on a par with other commercial banks: limiting only 40 per cent of their lending to that sector and 10 per cent of the total to the poor. These ratios, however, were slightly altered to 60 and 15, yet bringing down the weaker sections’ share of RRBs’ credit from 100 per cent to 15 per cent.
• In addition, the RRBs were given freedom to fix their own interest rates, allowed to liberally invest in shares and securities and the choice of opening and closing the branches was left to the RRBs. 
• Another significant change was the sponsor bank-wise merger of RRBs in each State. Following the Vyas Committee’s recommendation, 196 RRBs have been condensed to 57 as of March 2014.

The distancing of the RRBs from the rural poor did, however, result in increasing their profits. As per the latest available data, all the RRBs made profits in 2013-14. The net profit earned in the year was Rs. 2,833 crore.

The banks made the above profit at the cost of rural development and claiming lives of many poor rural farmers.

A final blow in name of RRBs Amendment Act, 2015 :

The amendment to the Act facilitates the raising the share capital of RRBs from the present Rs. 5 crore to Rs. 2,000 crore, infusing capital from other than the present owners to the extent of 49 per cent against the present arrangement of the Centre, States and sponsor banks sharing in the ratio 50:15:35 respectively. These changes will pave way for their part privatisation and pure commercialisation, totally ignoring the very purpose of their birth.

Way ahead (Iasbaba’s view):

With increase in farmer suicides within the country and low financial literacy among the rural population, the new amendment to the RRBs Act will surely help for the deepening of the reforms process which means further distancing the rural poor, from the access of institutional credit, with great impunity.

Connecting the dots:

• Critically analyse the role played by RRB’s in rural development.
• Over the years, the RRB’s have slowly distanced themselves from the rural poor. Analyse the above statement with special reference to RRB’s amendment bill 2015.