IASbaba’s Daily Current Affairs – 8th October, 2016

IASbaba's Daily Current Affairs Analysis, IASbaba's Daily Current Affairs Oct 2016, National, UPSC

IASbaba’s Daily Current Affairs – 8th October, 2016

NATIONAL

TOPIC:

General Studies 2

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Development processes and the development industry
Important aspects of governance

General Studies 3

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Inclusive growth and issues arising from it.
Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

‘Make in India’ should not be by Government of India

Make In India on track?

High investments are inflowing in India in technology-oriented industries such as telecom and over the top (OTT) services which are dependent on telecom networks such as financial technology and e-commerce.
Recently, Rs 47,700 crore were infused by UK based Vodafone Plc. into its Indian arm. This indicates that Indian markets are still much desired.
The manufacturing investments are also targeting Indian consumers who want to have technology as a daily part of their lives. Chinese telecom giant Huawei will begin manufacturing smart phones in India in 2016. It is 40^th such manufacturing investment in India in past two years.
In addition, the ease of doing business rank has improved as well as parliamentary consensus on GST has been achieved.
Such encouraging indications may tempt to presume that ‘make in India’ is on track. But it may not be true.

Still in a transitional phase

Transition from agricultural economy to service economy has posed a challenge for many who see industrialization as the only way to create jobs in India.
It is very important to relocate the mass employment from agriculture to manufacturing sector so that economy can create jobs for the growing population. Service sector cannot absorb the agricultural population directly. But manufacturing and industries can undertake the agrarian population for its various unskilled and skilled (post training) jobs.
For proper Industrialisation, best-in-class infrastructure, cheap energy and a skilled workforce is required which can be fulfilled in long run only. But the need is now.
For that, ‘digital economy’ offers a way out. Productivity gains from automation and digitisation have helped industrial growth in advanced countries over previous decades but its effects have not been fully realised in India
Thus, digital economy can potentially mobilise millions of Indians which also constitutes large number of ‘informal workforce’, bringing them within a more productive fold.
Hence, India’s biggest challenge has the potential to become its best opportunity- the large, young workforce which is untrained now but can develop and imbibe skills to understand applied technology through early exposure.

Government should be more of facilitator than operator

The digital economy has high potential in India than the advanced country counterparts because real income growth in advanced countries requires sustained and fundamental innovation whereas India can harness incremental innovation towards higher rates of growth (mostly owing to a favourable demographic).
However, there is more threat to ‘Make in India’ from the government-run enterprise itself. It has been a noted trend that successive governments have first created favourable conditions for investments and then jeopardised them.
For example, the telecom industry is often cited as an example of successful liberalization. But, now it finds itself at crossroads as the industry lacks bandwidth to deliver affordable data.
The reason is that it remained overly dependent on voice calls revenues (which are falling) despite enough global evidence to show that data revenues are the future.
This situation can be attributed to policy inertia which is partly due to BSNL. For long policymakers have hesitated from undertaking comprehensive reforms around key challenges such as Right of Way regulations, hoping that BSNL’s networks will find some solution.
However, BSNL has not been able to deliver quality goods- whether it is internet infrastructure or service ethics. It reminds of the pre-liberalisation era. Thus, BSNL has not been a profit making and sustainable enterprise but still it thrives on public money.
The concept of ‘BharatNet’ brought forward harnessing of a well-designed ‘ring network’. Instead, now India has to settle with optic fibre cables on electric poles which has a feeble infrastructural withstanding capacity and more chances of data loss.
In broadcasting, most of advanced countries have successful public broadcasters. However, in India, Prasar Bharti has not been that successful. It has not readily given spectrum to private operators. This has led to private broadcasting industry losing money due to high ‘carriage’ cost.
Also, the private broadcasters have to restrict their lifeline advertising revenues by applying Mandatory Sharing regulations on high value content such as sports broadcasts.
The result is that broadcasting investments have stopped over past decade despite progressive liberalization of FDI caps.

Conclusion

The government should not be both regulators and competitors. It disrupts the neutrality aspect of governance.
Of course it is difficult to not have government enterprises as there are public sentiments attached to it. But, while public enterprises have succeeded, to an extent, in traditional industries, they are not optimized for the new economy which requires constant innovation and high standards of service delivery.
Thus, the government should focus more on being a licensor, regulator and adjudicator and let the consumer select their choice in the market where there is no constraints on capital or technology.

Connecting the dots:

Government’s role as a regulator and operator cannot go hand in hand. Critically analyse.
India is increasingly finding itself as an attractive investment destination. In such scenario, government has an important role to play. But it has to maintain a thin line between facilitating and interfering. Do you agree? Substantiate.
Name some of the statutory regulatory bodies, their mandates. If they were in news recently, give a brief of account of the issue.

NATIONAL

TOPIC:

General Studies 1

Social empowerment

General Studies 2

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections

General Studies 3

Land reforms in India

Singur verdict: What it means?

In August 2016, SC invalidated the expropriation of land in Singur which was carried out by erstwhile Left Front government in Bengal. It ordered that the acquired properties be returned to their original landowners.

What the judgement means?

The judgement highlighted the core issue that government’s acquisition of land for the purported use by Tata Motors Limited to construct a car factory was in violation of the procedural mandates of the Land Acquisition Act, 1894.
Though today the colonial era law might stand repealed by new Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013 (LARR Act), it raises important concerns about the extent of the state’s supposedly sovereign power to acquire property, and the nature of what constitutes a “public purpose” permitting such taking.
Expropriation: Expropriation is the act of a government in taking privately owned property, ostensibly to be used for purposes designed to benefit the overall public.

Working around the law

The 1984 land act had two forms of recognised expropriation

For public purpose for governmental use.
Forced transfer of land from private individuals to corporations for the latter’s commercial use.

In the case of acquisitions intended to benefit companies, a special procedure was prescribed in Part VII of the Land Acquisition Act which incorporated additional safeguards to ensure that governments don’t abuse their avowed power of eminent domain.
If the government wanted to acquire land using this provision, it had to conduct a prior inquiry to establish that the project would be useful for local people. The government had to enter into an agreement with the company for which the land would have been acquired, pointing out how the cost of the acquisition would be met. The government would have had to publish the agreement in the form of a gazette notification before issuing the acquisition notice.
But in 2006, the CPI (M) government bypassed the binding requirements of Part VII and acquired a tract of nearly 1,000 acres of land in Singur.
Instead, it acquired these lands, which were specifically identified by Tata Motors for constructing a manufacturing plant that would produce the Nano, envisioned as the world’s cheapest car, through a State-owned entity, the West Bengal Industrial Development Corporation.
The government’s argument was that the acquisition was in furtherance of the State’s new industrial policy and it was for public purpose as the plant would create jobs for hundreds of people.
Though the Calcutta HC agreed with states in 2008, man small and marginal farmers who had refused to accept the compensation filed appeals in SC.

Property Rights and State

The scope of an individual’s right to property has been mentioned in the Constitution of India.

In original constitution, Art 19 (1)(f) guaranteed all citizens freedom to acquire, hold and dispose of property, subject to reasonable restrictions in public interest
Also, Art 31 vested in the state an explicit power to expropriate property for a public purpose by paying compensation to the landowner. However, such acquisition had to be backed by suitable legislation.
These provisions enabled the judiciary to review virtually every act of acquisition during the initial years of Constitution. But judicial interventions further strengthened the government’s resolve to dilute property rights, through measures that were meant to enable the state to bring about greater equality in land ownership.
Finally in 1978, the 44^th constitutional amendment deleted both Article 19(1)(f) and Article 31 which gave the right to property a mere non-fundamental status.
The reason for this amendment was to provide the state with wide latitude to enable it to achieve land reforms. But the amendment instead deepened the inequality.
The continued use of 1894 Act showed that both the Union and the various State governments have routinely acquired land for the benefit of private industry in name of ‘public purpose’.
Thus, these acquisitions have tended to work to the benefit of the rich, often at grave costs incurred by small farmers.

Understanding the ‘public purpose’

Earlier, Supreme Court which was burdened by accusations of excessive intervention, allowed the expansion of the state’s power in this domain.
It has generally ruled that even a token contribution by the government towards the cost of acquisition is sufficient to escape the requirements of Part VII.
In 2003, the court validated an acquisition of land to establish a “diamond park” which comprised of various units for cutting and polishing diamonds. It reasoned that such park would generate a “good deal of foreign exchange” and would create “employment potential”.
The SC in its ultimate analysis said that land acquisition for setting up of an industry in private sector could be called for ‘public purpose’ only if the government sanctioned the payment of a nominal sum towards compensation.
Therefore while hearing pleas of farmers, the SC was facing challenge of mountain of precedent that had allowed a precipitous (hasty) expansion of the meaning of public purpose.
Though one judge out of two judge bench accepted that the left government’s expropriation was intended for the benefit of the public, the other judge was far more suspicious.
Through a scrupulous analysis of Cabinet memoranda and letters exchanged between the State government and Tata Motors, the other judge concluded that the lands in question were acquired solely for the benefit of the company.
Hence, the attempt by the government to circumvent the special procedures of Part VII through a claim that the lands were acquired in public purpose was a colourable exercise of power.
The judge observed that if such acquisition was allowed to sustain, it would attempt to justify any and every acquisition of land of the most vulnerable sections of the society in the name of ‘public purpose’ to promote socio-economic development.
To some extent, the LARR Act 2013 specifically defines public purpose with greater clarity and also mandates that where acquisitions are made for the benefit of private companies, the prior consent of at least 80% of the affected landowners ought to be secured.

Conclusion- The judgement as a guiding light

State governments of Tamil Nadu, Rajasthan and Gujarat, among others, have already either amended the new law or enacted legislation of their own creating a sui generis processes that permit takings even in the absence of a direct public purpose.
States like Telangana are also in process to amend the land law in such a manner as to do away with the requirement of consent when acquiring property for private companies so long as the acquisition is for a public purpose.
It is known that many State laws offend the Constitution’s guarantee of equal treatment, but unless the courts make express declarations to such an effect, they are likely to be widely deployed to acquire land under LARR 2013 and also extending the meaning of public purpose to absurd lengths.
The LARR is not a panacea to issues like possession of land which is taken on impulse, mostly delayed payment of compensation and treating public hearings prior to any acquisition, if conducted, as inconvenient formalities.
But, in comparative terms it is certainly a progressive legislation. It redefines the manner in which the state ought to exercise its immense power to take property.
In this light, the Singur judgment is seen as the positive affirmation of the law along with a judgement that could guide the Supreme Court towards interpreting the Constitution in its finest meaning.

Connecting the dots:

What is the importance of Land Acquisition, Rehabilitation and Resettlement Act of 2013 (LARR Act). Discuss in light of recent Singur judgement.
The Supreme Court has taken a new stand with regards to interpreting ‘public purpose’ which is often used for benefits of private individual/organisation. Critically examine.