IASbaba's Daily Current Affairs Analysis

IAS UPSC Prelims and Mains Exam – 6th April 2019

(MAINS FOCUS)

ECONOMY

TOPIC: General studies 2

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

India will be more growth-oriented in FY20

Context:

Last six to twelve months, it has been a tough year for India:

Markets have shown a lot of volatility and moved sideways.
Growth momentum has started subsiding (as new reforms have impacted the normal business flow partially).
Asset quality challenges have continued to exacerbate.
Flows from foreign investors have dried up and overall liquidity has also been tight.

As we enter FY20, key questions remain –

Can India accelerate and broad-base the growth momentum?
Can India re-establish itself as a premier investment destination for overseas investors?

Note: In below article we will assess where India is heading?

Major Reforms to be key drivers of the growth

As mentioned above, new reforms impacted normal business as lot of stakeholders had to struggle adjusting to the changes and resources were wasted in transitioning.
Several seminal reforms were enacted in the last few years including significant structural changes like GST, IBC and RERA.
Each of these reforms have seen a fair amount of success but also thrown up some challenges which need some work.

Goods and Services Tax (GST)

GST has helped significantly enhance productivity and efficiency by removing barriers to goods movement across state lines and creating a seamless national market.
GST has also helped bring a larger section of the society under the tax bracket.
At the same time, challenges persist around the complex compliance requirements that GST entails even today. This is something which must be actively targeted.
Also, despite the recent rationalisation, there is further scope to reduce the number of slabs in GST.

Insolvency and Bankruptcy Code (IBC)

IBC has plugged a gaping loophole in the economy.
The absence of a strong bankruptcy law was a glaring miss for our corporate legal framework.
IBC has solved most of the shortcomings of the previous laws.
Thanks to strict regime of IBC, banks are seeing promoters come up and repay loans to avoid going to NCLT.
However, there are still some changes needed. The insolvency and bankruptcy regulatory ecosystem is concerned about the possible misuse of a provision of the law that allows lenders to withdraw insolvency proceedings against corporate debtor.
There is a need to draw a red line after which withdrawal of insolvency proceedings should not be allowed.

Real Estate (Regulation and Development) Act (RERA)

RERA was another significant reform undertaken over the last two years.
While its impact has been seen to a lesser extent than GST and IBC, the compliance levels among developers have seen a tangible shift.
As the industry goes into some consolidation, economists expect the RERA compliant, customer-centric developers to do well.

All in all, the above reforms from the last few years are now taking concrete shape. They are now past the initial stage where a lot of stakeholders struggled adjusting to the changes and resources were wasted in transitioning.

These reforms are expected to give required push to the economy and should be a key driver of the FY20 growth trajectory.

Tackling asset quality challenges

Asset quality challenges have been plaguing the economy for some years now.

Most of this was an outcome of the haphazard lending followed in the post-2008 era.
However, RBI’s pro-activism in getting these recognised from 2016 onwards has helped identify a large chunk of the problem.
With IBC in action and banks actively providing for the assets recognised, the above challenges will be limited.

As a result, bank credit is expected to start gaining traction once again as the capital can be used for growth purposes.

This will help drive money to the productive sections of the economy and drive growth.

Flows from foreign investors

A study of FII flows over the last 20 years clearly shows that weak FII inflows/FII outflows are usually followed by bumper FII inflows as the attractive valuations become an ideal investment opportunity. (Because, FII outflows are counter-cyclical in nature.)
FIIs are expected to gain traction only once the election process concludes.
Economists expect a strong boost to foreign flows, particularly if a stable government takes power.

Conclusion:

Apart from above, the interim budgetary measure announced recently should help boost rural consumption and drive growth in the economy.
Both the government and the regulator have done well to address current concerns and drive the economy towards an expansionary economic policy.
An expansionary monetary and expansionary fiscal policy should give a huge fillip to growth and animal spirits.

With several factors at play, all converging towards a growth booster, it is highly likely that we see a much stronger and much more growth-oriented India this year.

Connecting the dots:

Do you think India can re-establish itself as a premier investment destination for overseas investors? Elucidate your opinion.
What is the significance of the Insolvency and Bankruptcy Code and Real Estate (Regulation and Development) Act (RERA)? Why are they needed in India?
What do you understand by the term “Expansionary policy”? How does it help in making India more growth-oriented?

NATIONAL

TOPIC: General studies 2

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures.

RTI and Judiciary

Context:

One of the landmark legislations in India which changed the nature of governance and brought an unprecedented transparency and accountability was the Right to Information Act (RTI) passed in 2005.
Right to information has been seen as the key to strengthening participatory democracy and ushering in people centred governance – a master key to good governance.
However, there are certain areas where there is a debate about whether the RTI Act should be applied or not. One such institution is the higher judiciary.

Do you know?

In 2010, the Central Information Commission (CIC) had ordered on a petition that, all correspondence between the collegium and government about the appointment of the three SC judges should be disclosed under the RTI Act.
This order was challenged by Central Public Information Office of SC after rejecting the request of the petitioner. Ever since, the case has been pending in the apex court.
Incidentally, the apex court which had initially resisted to even disclosing the assets and liabilities of the judges, later decided to make voluntary disclosures on the court’s website.

Section 8(1)(j) of RTI,Act

RTI is not absolute, it is balanced out with right to privacy of public servant and with necessarily check on disclosure of such information which can cause damage to national security or would cause embarrassment to the Government in its functioning or would be prejudicial to national interest.
In this context, Section 8(1)(j) of RTI, Act prohibits the sharing of personal information that has no nexus to public activity or which amounts to an unwarranted invasion of privacy unless the larger public interest justifies such a disclosure.
However, the Act left this power to Public Information Officer (PIO) to cancel request on this ground on its discretion with very limited accountability.

Whether judges are required to publicly disclose their assets under the RTI Act?

Recently, a Constitution Bench of the Supreme Court has finally concluded hearing a crucial appeal, which raise questions whether judges are required to publicly disclose their assets under the RTI Act in light of Section 8(1)(j).

Argument in favour for disclosure of asset by Judges:

In a landmark judgments in PUCL (2003) and Lok Prahari v. Union of India (2018), the court rubbished the privacy claims of the political class while forcing them to publicly disclose not just their assets but also the sources of their income.
Section 44 of the Lokpal Act, 2013, requires all public servants (this includes judges) to disclose their assets but is silent on whether the disclosure should be to the competent authority or the general public. This provision has already been the subject of an amendment in 2016.

Argument against for disclosure of asset by Judges:

Accountability of Judiciary and Public Servant vs Political Class: Public disclosure of political class is done with the view of the right to freedom of expression of voters under Article 19 to express their choice of vote. On the other hand judiciary and public servant are not directly accountable to public but accountable to Constitution and Laws by Parliament.
Disclosure of Asset to CJI: Judges of the Supreme Court had complied with the terms of a resolution adopted in 1997, in which all judges had committed to disclosing information about their assets and liabilities to the Chief Justice of India (CJI) well before the enactment of RTI. SC held that ‘there is no question on the integrity and neutrality of the CJI. Hence transparency must not be seen as panache, it must be balanced with trust, privacy and national interest.’
In Girish Ramchandra Deshpande v. Central Information Commissioner, 2012, the Supreme Court ruled that the assets of the bureaucrat could not be revealed to an applicant under the RTI Act unless there was a showing of a larger public interest. Hence there is no blanket ban, if the person seeking such information could demonstrate a “larger public interest” such as wrongdoing or impropriety on the part of the public official, the information could be disclosed.

Conclusion:

The foundation of RTI is being true to power. If the purpose is to seek truth in exercise of all power then the question is not about all kinds information has to be put in public domain.
Complete information in public domain does not mean good governance. It is also about the mindset and approach towards transparency.
RTI is a tool through which the institutions become accountable to the people of a country. How the further actions of constitutional bench will take place is a matter of wait and watch.

Connecting the dots:

Has RTI been successful in bringing transparency into governance? Critically evaluate.
The Judiciary must be brought under the purview of the Right to Information Act to address the lack of transparency in its processes and functioning. Do you agree? Critically examine.