IASbaba’s Daily Current Affairs (Prelims + Mains

Focus)- 3rd January 2018

Archives

(PRELIMS+MAINS FOCUS)

The ‘Electoral Bonds’ scheme

Part of: Mains GS Paper II- Salient features of the Representation of People’s Act

Key pointers:

• The electoral bonds will be a bearer instrument in the nature of a Promissory Note and an interest-free banking instrument.
• A citizen of India or a body incorporated in India will be eligible to purchase the bond. The bonds can be purchased for any value in multiples of Rs. 1,000; Rs. 10,000; Rs. 1 lakh; Rs.10 lakh; and Rs. 1 crore.
• The bonds will not carry the name of the payee and will be valid only for 15 days during which it can be used to make a donation only to certain political parties.
• To benefit from the electoral bonds scheme, the political parties must have been registered with the Election Commission and should have secured not less than 1 per cent of the votes polled in the most recent General Election to the Lok Sabha or a State legislative assembly.
• The bonds can be encashed by an eligible political party only through a designated bank account with an authorised bank.

Pic credit: http://www.thehindu.com/todays-paper/article22355504.ece/alternates/FREE_660/02NDSRN01ElectGLE35NTCT1jpgjpg

Key benefits:

• It seeks to ensure the flow of clean money to political parties, without revealing the donors’ names.
• The fact that neither the donor nor the donee is known (under the electoral bonds scheme) means people will be free to donate to any political party of their choice, he said.

Article link: Click here

One-fourth of world’s land may become arid

Part of: Mains GS Paper III- Conservation, environmental pollution and degradation

Key pointers:

• Over a quarter of the world’s land could become significantly drier even if global warming is limited to the target of two degree Celsius, according to scientists including one of Indian origin.
• Researchers from U.K. and China studied projections from 27 global climate models to arrive at above conclusion.
• Aridity is a measure of the dryness of the land surface, obtained from combining precipitation and evaporation.
• “Aridification is a serious threat because it can critically impact areas such as agriculture, water quality, and biodiversity. It can also lead to more droughts and wildfires.
• But two thirds of the affected regions could avoid significant aridification if warming is limited to 1.5 degrees Celsius.

Article link: Click here

 “Nari”: The National Repository of Information for Women

Part of: Mains GS Paper II- Welfare schemes for vulnerable sections; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.

Key pointers:

• In order to make information on all government schemes and initiatives for women more easily accessible, the Ministry for Women Child and Development launched a new web platform – “Nari”.
• The National Repository of Information for Women summarises over 350 schemes and other important information benefiting women.
• Nari is a niche initiative by the WCD Ministry to list all the central and state-specific schemes. The platform will provide information to women on issues affecting their lives.
• Nari will provide links to the Ministries, departments and autonomous bodies offering the schemes as well as easy access to online applications and grievance redressal.
• The website will have tips on good nutrition, suggestions for health check-ups, information on major diseases, tips for job search and interview, investment and savings advice. Besides, information on crimes against women and reporting procedures.
• It will also have contacts of legal aid cells, simplified adoption procedures and many other facilities.
• It will endow women with the power of information to build their life skills and facilitate them in taking full advantage of the services provided by the government.

Article link: Click here

(MAINS FOCUS)

NATIONAL

TOPIC:

General Studies 1:

• Social empowerment, communalism, regionalism & secularism.

General studies 2:

• Issues relating to development and management of Social Sector or Services relating to Health, Education, Human Resources.
• Role of civil services in a democracy.
• Development processes and the development industry- the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders.

Social Entereprises

Introduction:

The ideology of ‘privatisation’ of economies and societies has advanced so much around the world in the last 30 years that the very concept of ‘economic reforms’ has become restricted to reductions in the role of government and more freedom for business corporations.
There is realisation now that business corporations set up to make profits for their investors cannot be the solution to many challenges that societies must address such as increasing inequity, persistent poverty, and poor public health and education in large parts of the world. They may even be the causes of some of these problems. Neither have government-owned enterprises solved these problems very well.
Therefore, new forms of enterprises must be designed to solve them.

Issue with present enterprises:

• The distance between the wealth of the richest one per cent and the wealth of the rest of the world has been increasing over the past 30 years.Almost all the income and wealth of people at the top comes from their association with business corporations, as investors or managers, from corporate profits and stock prices, and from bonuses and salaries.
• The power of corporations to influence governments and fix ‘the rules of the game’ regarding taxation, international trade, and their own regulation, is also being resented by citizens.
• Mistrust of for-profit business corporations that run public services such as hospitals and educational institutions, is growing in India and elsewhere too.

Now new forms of business enterprises are required that will serve public purposes more democratically.

The concept of a ‘social enterprise’:

Has been propagated by Muhammad Yunus and some others.

It reconciles the essentials of democracy with the requirements of good economics.

• Social enterprises are democratic enterprises. They belong to the people, produce benefits for the people, and are run by the people.
  Whereas capitalist enterprises are owned by their investors, produce profits for them, and are run by their agents.
• Social enterprises are economically self-sustaining: it’s income must covers its costs. Whereas capitalist enterprises go much further since their success is measured by the amount of profits they produce .
• The success of a social enterprise is measured by the public benefits it produces: the number and quality of livelihoods it generates, or the quality, cost, and reach of the public services — healthcare, education, energy, water, etc — it provides.
• Social enterprises need capital to start. They can obtain it from the state or from philanthropists. While they do not produce profits for their capital providers, they produce enough economic margin in their operations to return the capital.
• Social enterprises enable people to stand on their own feet, reducing dependence on the charity of others. They also use all their energy to produce what people need, not distracted by the need to increase shareholder’s financial return.
• These enterprises produce more sustainable ‘bang-for-the-buck’ impact on the lives of citizens at the bottom of the pyramid than can conventional philanthropy and CSR(Corporate Social Responsibility).

Thus, social enterprises are a solution that can produce much larger outcomes from the same amount of ‘charity’ money than can be produced by organisations that must rely on a continuous stream of grants and donations.

Examples:

The concept of social enterprises is not entirely new. Cooperative enterprises, producer companies, and so on are operating in many countries and in many industries.
Amul and SEWA in India and the Grameen organisations in Bangladesh are some examples of different shapes of social enterprises.

Capitalist enterprises:

Capitalist business enterprises generate large amounts of wealth for their investors and top executives. Wealthy people are being pressed to give more to philanthropy and corporations to give more to CSR.
In this way, the people below become dependent on the ‘trickle down’ from the accumulating wealth at the top.
Inequities are increasing because the pace of the trickle-down has not been commensurate with the pace of accumulation at the top.
The trickle-down route is much less effective than social enterprises in improving citizens’ well-being.

Conclusion:

The growing band of ‘impact investors’ (and philanthropists and CSR managers), who wish to multiply the generation of more jobs and livelihoods and produce better public services around the world, should support the growth of more such social enterprises.
And governments must ease the regulatory hindrances on their growth with even more zest than they apply to easing regulations for the growth of large, for-profit companies.

Connecting the dots:

• What do you mean by the term ‘social enterprise’? How are these different from capitalist enterprise? Dicuss.
• Social enterprises can go a long way in generating more jobs and livelihoods and producing better public services for the common people when compared to capitalist enterprises. Comment.

ECONOMY

TOPIC:General Studies 3:

• Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
• Inclusive growth and issues arising from it

Electronics sector: Promoting competition

Introduction:

A growing middle class, rising disposable incomes, declining prices of electronics and a number of government initiatives have led to a fast-growing market for electronics and hardware products.
However, India’s weak manufacturing base has not been able to respond to this increasing demand, leading to a growing trade deficit. 

Background:

• Of the country’s total demand for electronics, between 50-60% of the products and 70-80% of the components are imported.
• India’s imports of electronic goods grew 31% between April and October 2017 to $29.8 billion. Meanwhile, the trade deficit reached close to $100 billion during the April-November period of 2017, against $67 billion in the same eight-month period a year ago.
• India’s share in the global electronics market was a minuscule 1.6% of the market in 2015 that is currently valued over $1.75 trillion.

If the situation doesn’t change, a report by Deloitte, expenses on electronics imports could surpass those on oil imports by 2020.

An opportunity for India:

• China, with its rising labour costs, will soon not be the global manufacturing hub it is today.
  This is an opportunity for countries like India, the Philippines, Thailand, etc., to attract companies to move their plants to their country.
  Despite its low costs of labour, India might lose this race if it doesn’t reform the key sectors of the economy.
• Between 2000 and 2015, hardware production in India increased from Rs31,100 crore to Rs1.02 trillion. Meanwhile, information technology (IT) services revenue increased from Rs37,750 crore to Rs8.4 trillion. This shows that India is capable of producing globally competitive products.
• With a large domestic market and a number of trained engineers, India can clearly improve its electronics manufacturing supply chain.

Dealing with the problem:

• The government has listed the electronics industry as a priority sector under its Make In India campaign.
• There are various government schemes to encourage domestic manufacturing which provide tax and tariff concessions, investment subsidies, preferential market access in government procurement and export subsidy.
• The government recently increased the import duty on various electronic items like smartphones, LED bulbs and microwave ovens.

Issues and solution:

• The inverted tax structure for electronic goods.
  Due to a limited base of local component suppliers, manufacturers are dependent on importing parts.
  The positive custom duties on the components (or parts) used in electronic products make it expensive for domestic manufacturers to compete with foreign competitors who can access the components at lower prices.
  Solution:
  The solution is to bring the duties on components down to the level of the product. Some parts might be used for multiple products that may have different duties, but it’s important to rule in favour of simple rules and apply the rate-cut regardless of use.
• Foreign direct investment (FDI) in electronics is less than 1% of the total FDI inflow.
  Reasons being-
  Onerous labour laws.
  Delays in land-acquisition.
  The uncertain tax regime.
  Solution:
  In order to inspire confidence, laws need to be liberal and predictable. In the case of taxation, it is important to clearly establish the tax liabilities under different circumstances in full detail.
  A possible experiment could be special economic zones like the Dubai International Financial Centre—Dubai’s normal civil and commercial laws do not apply in this area and a British chief justice ensures the practice of British common law.
• The procedures for cross-border trade work against the competitiveness of Indian producers as shown by the Doing Business rankings—India ranks 146 in the category of trading across borders due to the high costs of compliance. The numerous forms, fees, inspections and the associated time discourage domestic producers from exporting and keep them out of the international supply chain.

The way forward should be to increase the country’s general competitiveness in the export market instead of pursuing sectoral policies.  Instead of preserving our market for domestic manufacturers, the goal should be to capture a larger piece of the global market.

Conclusion:

Policy reforms favoring electronic sector, boosting it through competition, is the need of the hour as the industry has the potential to provide millions of jobs, directly and indirectly. 

Connecting the dots:

• Policy reforms favoring electronic sector, boosting it through competition, is the need of the hour. Discuss.

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