IASbaba’s Daily Current Affairs – 15th November, 2016
ECONOMY
TOPIC:
General Studies 3
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Inclusive growth
General Studies 2
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Signs of revival of economy- Encouraging the growth momentum
Being in the middle of fiscal year 2016-17, it gives a brief idea about where the economy is heading.
The analysis of the trend is as usual plagued by conflicting sets of data.
National income data– first quarter (April-June)- GDP grew at 7.1% and value added in manufacturing grew by 9.1%
Index of Industrial Production (IIP)– first quarter (April-June)- manufacturing fell by 0.6%
Central Statistical Office– it now uses IIP to measure a small segment of manufacturing and corporate data for estimating 75% of the manufacturing sector.
Thus, there is a need to cross check the data one relies upon. At the same time, an attempt can be made to find out if the current year will be better than the last year by looking at the performance of different segments.
Agricultural production
This segment is expected to do better by considering the problems faced by it from supply side as its performance is purely based on monsoon.
In the short run, rainfall is an important factor influencing agricultural production.
India received 97% of the long period average (LPA) of the rainfall this monsoon
This is somewhat lower than what was originally predicted but better than previous year’s monsoon which was only 86% of the LPA.
The Southwest Monsoon rainfall in the current year is 100 mm higher than last year, which is approximately 13% higher than last year.
Based on a study of impact of rainfall on agricultural production, there should be an increase in value added in agricultural and allied activities by 2.7%.
Demand side perspective
Here, four elements need to be examined:
Private consumption expenditure
A major factor contributing the push is the implementation of recommendation 7th pay commission.
With its implementation, government’s salary and pension expenditure are expected to rise by 20%.
However, as the recommendations were made effective from August 2016, the impact on the production of consumption goods is expected to be seen in the second half. (Eg. Purchase of two wheelers)
Government expenditure particularly on investment
The total government expenditures have been 52% of the budgeted expenditure in the first half.
This year has shown rise in capital expenditure by 4.6% over previous year.
Such increases in capital expenditure is encouraging as they lead to greater investment.
It has to be noted that the larger share of public investments come from public sector enterprises.
For now, the road and railways are seemingly doing well in this area.
In past several years, corporate investment has been roughly one-third of total Gross Fixed Capital Formation. Hence, this is a critical area to be considered for any signs of economic revival.
Capital Formation= net additions of capital stock such as equipment, buildings and other intermediate goods.
Gross Fixed Capital Formation refers to the net increase in physical assets (investment minus disposals) within the measurement period.It does not account for the consumption (depreciation) of fixed capital, and also does not include land purchases. It is a component of expenditure approach to calculating GDP.
The RBI has been also making forecast of corporate investments based on methodology outlined by former RBI governor C. Rangarajan.
The bulk of investment expenditures in any year are the result of the projects initiated in the previous two to three years.
However, there had been slowdown in new projects undertaken in past few years, hence it is unlikely that investment expenditures by the corporate sector in 2016-17 can be higher than in 2015-16.
An RBI study shows that substantial investment in the projects initiated in 2016-17 will be required to equal previous year’s total investment expenditures.
In 2015-16, the total cost of projects initiated with institutional assistance was Rs.954 billion and Rs.878 billion in 2014-15. This is minimal in comparison to Rs. 2,754 billion in 2006-07.
External demand
The external demand is largely a reflection of the world economy which is at present showing sluggish recovery where all forecasts are showing slowdown in world growth rate in 2016.
The world trade is slowing. Even India’s exports started declining in 2015-16 with 15.5% declination.
The most contributing reason to decline trade was fall in the value of oil exports.
But there is an expectation of slight improvement in 2017. In latest September report, the exports grew by 4.03%. Along with it, India has a comfortable current account this year due to sharper decline in imports.
However, not much stimulus is expected by way of external demand.
A good start
The Indian economy appears to have attained certain stability as prices have been so far under control.
Both CPI and WPI inflation has remained below 5% which have been influenced largely by improved agricultural production.
Though, the fiscal deficit is high at the moment, it has been under control. In addition, the current account deficit has been low. On a low side, the banking sector is under stress for a long time.
However, in toto, these favourable factors point towards sustained economic growth.
Certain reforms like amendment to Insurance Act to facilitate larger foreign investment, enactment of Bankruptcy act, regulator for the real estate sector and possibility of GST implementation are legislations in right direction whose impact will be seen in sometime.
IASbaba’s views
The Indian economy is showing encouraging signs with good monsoons, improved agricultural performance and resultant increase in rural demand, increased government capital expenditure and rise in private consumption expenditure due to implementation of 7th Pay Commission. Though there are minor setbacks such as stagnation in corporate investments and not-encouraging external environment, the growth rate of GVA (gross value added) at basic prices is expected to be at 7.6% (7.2% in 2015-16). However, this momentum has to be maintained by nullifying the disruptions caused due to demonetisation, as early as possible.
Connecting the dots:
The Indian economy is showing a sense of revival. Do you agree? Substantiate
The banking sector continues to remain in stress for long though other sectors are showing some improvement. How can economy flourish in such environment? Critically analyse.
CONSTITUTION / POLITY
TOPIC: General Studies 2
Separation of powers between various organs, dispute redressal mechanisms and institutions.
Structure, organization and functioning of the Executive and the Judiciary Ministries and Departments of the Government.
Indian Constitution- historical underpinnings, evolution, features, amendments, significant provisions and basic structure.
Collegium System – Past and Present
What is Collegium System?
A system of appointment and transfer of judges which is a result of a series of judgments called “Judges Cases”.
Collegium is a body of senior apex court judges responsible for appointment and transfer of judges of the Supreme Court and High Court.
The collegium was a product of the interpretations of constitutional provisions by the Supreme Court in the three ‘Judges Cases’.
It is not a result of an Act of Parliament or by a provision of the Constitution.
Judges of the higher judiciary are appointed only through the collegium system and the government’s say comes in once the names have been decided by the collegium.
The government can object to the candidature of any of the names recommended and seek clarifications concerning the same. However, if the collegium decides on the same again the government is bound to appoint them as judges.
Members of the Collegium
Supreme Court Collegium
The Supreme Court collegium is headed by the CJI.
Comprises four more senior most judges of the Supreme Court.
High Court collegium
The High Court collegium is led by its Chief Justice of the respective High Court
Comprises four more senior most judges of that High Court.
Names recommended for appointment by a High Court collegium reaches the government only after approval by the CJI and the Supreme Court collegium.
Constitutional Provisions
Article 124(2) and Article 217 of the Constitution of India provide for appointment of Judges of the Supreme Court and High Courts.
Article 124(2): Appointment of Judges of Supreme Court
Appointment by the President
In consultation with judges of Supreme Court and High Court in the States as he deems fit
Eligible to hold office up to the age of 65 years
Chief Justice of India (CJI) shall be consulted in case of appointment of judges other than the CJI
Article 217: Appointment of Judges of High Court
Appointed by the President
In consultation with the CJI, Governor of the State,
CJI of the high court shall be consulted in case of appointment of judges other than the CJI
Judicial Provisions – Judges Case
First Judges Case: S P Gupta Vs Union of India
The primacy of the CJI in matters of appointment and transfers was questioned.
The term “consultation” used in Articles 124 and 217 did not mean concurrence.
This implied that although the President will consult the concerned persons as mentioned in the Constitution but he was not bound by their advice / recommendation
The judgment made the Executive more powerful in the process of appointment of judges of High Courts.
Second Judges Case: The Supreme Court Advocates-on-Record Association Vs Union of India
Overruled the decision in First Judges Case.
Devised the ‘Collegium System’
Gave primacy to the CJI in matters of appointment and transfers and highlighted that the term consultation would not diminish the primary role of the CJI.
The CJI should make recommendations in consultation with his two senior most colleagues.
Third Judges Case: Presidential Reference by President K R Narayanan
The purpose was to give meaning of the term “consultation” under Article 143.
Supreme Court came out with the present form of Collegium System.
The recommendation should be made by the CJI and his four senior most colleagues, instead of two.
Criticism of the Collegium System
It is non-transparent system without any official mechanism or secretariat lawfully enacted by the Parliament.
There is no provision regarding the collegium system or such a body in the Constitution.
It lays down no prescribed norms regarding eligibility criteria or even the selection procedure.
No information regarding its meetings, procedures and methods is there in the public domain.
Lawyers also suffer from lack of knowledge whether their names have been considered for elevation as a judge.
It is a system where the members of the judiciary are serving their own ends.
Judicial primacy in making appointments is not a part of the basic structure.
This method gives excess powers to the judiciary and does not give genuine broad minded lay persons to be a part of the process of selection.
National Judicial Appointments Commission
Justice M N Venkatachaliah Commission in 2033 recommended the formation of National Judicial Appointments Commission (NJAC) to replace the collegium system.
The present government tried to give shape to the NJAC by way of the 99th Constitutional Amendment.
Supreme Court, through a five judge constitutional bench, declared the NJAC as unconstitutional.
The bench claimed that NJAC would have taken away the primacy of the judiciary in the process of appointments and transfers.
NJAC would have comprised of the CJI, his two senior-most colleagues, the Law Minister, and two eminent persons, who would be jointly appointed by the Prime Minister, the Leader of the Opposition and the CJI.
Alternative – Memorandum of Procedure
The judiciary and the government have decided to draft a new Memorandum of Procedure (MoP) to guide future appointments.
This will address the concerns regarding lack of eligibility criteria and transparency, establishment of a Secretariat and a complaints mechanism.
The MoP is still not finalised due to lack of consensus on various matters between the government and the judiciary.
Analysis
In absence of agreement the appointments are still being made by the collegium system. However, this has led to an impasse between the government and the judiciary. This has an impact on the deliverance of justice since it is leading to delay in filling vacancies in the judiciary. The judiciary-government face-off cannot go on indefinitely and they should finalise the MoP at the earliest possible. Both judiciary and government need to interact in a direct manner to come to a resolution. This will ease the increasing pressure on the judiciary with respect to the number of pending litigations.
Connecting the dots
Critically analyse the collegium system of appointment of judges.
Discuss an alternative strategy to resolve the judiciary government conflict regarding judicial appointments and transfers. Use examples of existing systems of judicial appointments adopted in other countries around the world in support of your answer.
