Price controls can do more harm than good Editorial 3rd Sep’19 Livemint

Headline : Price controls can do more harm than good Editorial 3rd Sep’19 Livemint

Details :

Logic behind pricing of pharmaceutical products:

  • Many healthcare products such as pharmaceutical drugs require years of research and millions of dollars to develop.
  • Even after that, there is always the risk of a new medicine failing to pass human trials.
  • As an incentive for research and risks, such firms are granted patents for their formulations that let them charge high “monopoly” prices if and when they are launched.
  • The actual cost of making drugs, however, is typically only a tiny fraction of the retail price. So, once the initials costs have been recovered over the span of some years, these tend to yield bumper profits.

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Government caps life-saving drugs:

  • In case of life-saving drugs, a government would be justified in capping their prices in the public interest.
  • Ensuring the cheap availability of old but essential drugs is easily done without any adverse consequences for public health.
  • So long as their cost of production is lower than the price caps—which is usually the case—companies would keep selling them.

Proposed government price control on a new list of hygiene products:

  • The government is considering bringing essential products such as sanitary napkins and hand wash agents under its price control regime.

Correct objective but wrong method:

  • The objective is to make such products affordable to people at large, so that basic hygiene standards are upheld and nobody’s health suffers.
  • This is a noble cause, but the method that has been suggested to achieve the aim is not appropriate.

Companies should be able to price their products:

  • If the role of pricing products is taken away from companies in markets with vastly differing dynamics, the results could be poor.

Market will ensure correct pricing of products:

  • For example, sanitary pads sell in varying grades of quality, offering women with varied budgets a range of options.
  • The market for these products is not short of competition.
  • The competition between companies to increase sales is enough to guarantee that no single brand can get away with charging too much.
  • When there is demand for cheaper variants, a new entrant would fulfil it, which would push existing brands to contain costs and reduce prices.

Price caps lead to products going out of market:

  • A price cap imposed on a product can make it unremunerative for its manufacturers to sell, leaving them with no choice but to pull out of the market.
  • Seen in the case of coronary stents:
    • An example of this is visible in the Indian market for coronary stents used in heart surgeries.
    • Some makers of specialized and other premium stents have withdrawn their stents from Indian market in response to a state-ordered price ceiling.
    • Selling these at lower rates, they say, does not make commercial sense for them.
    • As a result, according to various surgeons, patients in need of superior stents are forced to make do with cheaper alternatives that risk exposing them to health complications.

Government intervention will discourage innovation:

  • In contrast to the market determination of prices, an arbitrary maximum retail price set by the government would distort the market by turning innovative products (that use expensive input materials) unprofitable.
  • If choice of premium products is not available, it would spell a net welfare loss for Indians.

Government can intervene by subsidizing customers:

  • As for the poor cannot afford even the cheapest available sanitary pads unaffordable, the government could intervene in other ways.
  • For example, it could use public funds to subsidize low-cost napkins for mass distribution.

Conclusion:

  • In general, it is best to rely on market forces to have people’s needs met.
  • The government’s heart may be in the right place, but price caps in open markets are likely to do more harm than good.

Importance:

GS Paper III: EconomySection : Editorial Analysis

International Organisations and Reports: Annual report of the Secretary-General on Children and Armed Conflict.

Headline : India protests over UN chief’s report

Details :

In News:

  • The United Nation has recently released its Annual report of the Secretary-General on Children and Armed Conflict.
  • India is disappointed with the UN Secretary-General Antonio Guterres for including in the report situations in India that are neither armed conflicts nor a threat to international security.

 

About Annual report of the Secretary-General on Children and Armed Conflict.

  • The present report covers the period from January to December 2018, was submitted pursuant to Security Council resolution 2427 (2018).

UN Resolution 2427In 2018, the UN Security Council adopted a resolution aimed at a framework for mainstreaming protection, rights, well-being and empowerment of children throughout the conflict cycle.

  • The report highlights global trends regarding the impact  of  armed  conflict  on  children  and  provides  information  on  violations committed as well as related protection concerns.
  • The present report also include a list of parties that, in violation of international law, engage in the recruitment and use of children, the killing and maiming of children, rape and other forms of sexual violence against children, attacks on schools and/or hospitals and attacks or threats of attacks against protected personnel,1and the abduction of children.

Highlights of the Report:

  • Violence against Children: More than 12,000 children were killed or maimed in around 20 conflict situations of 2018. Children continue to be used in combat, particularly in Somalia, Nigeria and Syria. They also continue to be abducted, to be used in hostilities or for sexual violence,
  • Sexual Violence against children: Some 933 cases of sexual violence against boys and girls were reported, but this is believed to be an under-estimate, due to lack of access, stigma and fear of reprisals.
  • Overall decrease in attacks on schools and hospitals: Attacks on schools and hospitals have decreased overall, but have intensified in some conflict situations, such as Afghanistan and Syria, which has seen the highest number of such attacks since the beginning of the conflict in the country.
  • Access to education: Mali provides the most serious example of children being deprived of access to education, and the military use of schools.
  • Detention and release of children involved in conflict: Rather than being seen as victims of recruitment, thousands of children around the world were detained for their actual or alleged association with armed groups in 2018 (in Syria and Iraq), the majority of children deprived of their liberty are under the age of five.
  • Increase in number of children benefiting from release and reintegration: The number of children benefiting from release and reintegration support, however, rose in 2018 to 13,600 (up from 12,000 in 2017).

Recommendations given:

  • All parties to conflict must refrain from directing attacks against civilians, including children, as peace remains the best protection for children affected by armed conflict.
  • Parties to conflict must protect children and put in place tangible measures to end and prevent these violations.
  • The nations to work with the UN to help relocate foreign children and women actually or allegedly affiliated with extremist groups, with the best interests of the child as the primary consideration.
  • Increased resources and funding to meet the growing needs, as more children are separated from armed groups.

 

About India in the report:

  • India was mentioned under a section of the report titled “Situations not on the agenda of the Security Council or other situations”.
  • The report mentions terrorist groups in Jammu & Kashmir and Maoist groups elsewhere that recruit child fighters, children killed in these areas, and sexual violence against them, although India is not in armed conflict.
    • According to the report, terrorist groups operating in Jammu and Kashmir and Maoists groups elsewhere have recruited children as fighters.
    • It also added that children continued to be killed or injured in operations by the security forces in Jammu and Kashmir and in areas of Maoist activity.
    • The report noted that there were reports of sexual violence against girls by security forces in Kashmir citing the Kathua rape case.

 

India’s Objections to the Report:

  • India has strongly expressed its disappointment over the report.
  • The section on “Situations on the agenda of the Security Council”, which conforms to its mandate, deals with countries like Afghanistan, Yemen, Libya and the Democratic Republic of Congo, which are in a civil war situation that overwhelms the nations. (This section also included Israel and Palestine territories.)
  • The inclusion of India and countries like Thailand and even Pakistan in an added section appears to be arbitrary because it places them on the same level as those countries covered by the Council mandate.
  • However, at the same time the report ignored countries in Central America, for example, where violence has led to an exodus of thousands of children escaping the brutalities.
  • Such attempt to expand mandate in a selective manner to certain situations only politicises and instrumentalises the agenda, obfuscating and diverting attention from the real threats to international peace and security.
Section : International Relation

Everything about About Intermediate-Range Nuclear Forces Treaty (INF)

Headline : US ends Cold War nuke treaty with aim of countering China

Details :

In News:
  • The USA has withdrawn from the landmark Intermediate-Range Nuclear Forces Treaty (INF) signed in 1987.
About INF Treaty
  • The missile crisis of 1970s and 80s represented the high-point of cold war, with both USA (and its NATO allies) on one side and USSR on the other, building up their nuclear arsenal.
  • In this backdrop, the landmark  Intermediate-Range Nuclear Forces Treaty was signed in 1987 aimed to arrest the global arms race of the time.
  • The INF treaty put an obligation on the parties (USA, NATO allies and Russia) to eliminate and permanently abjure all of their nuclear and conventional ground-launched ballistic and cruise missiles with ranges of 500 to 5,500 kilometers.
    • The INF treaty does not cover missiles launched from air or water.
  • As a result of the INF Treaty, the United States and the Soviet Union destroyed nearly 2,700 short-, medium-, and intermediate-range missiles by the treaty’s implementation deadline of 1991.
Background to US withdrawal:
  • Russian missile development:
    • The United States has since 2014 been alleging that Russia was in violation of its INF Treaty obligations.
    • It said that for years Moscow has been developing and fielding weapons that violate the treaty and threaten the US and its allies, particularly in Europe.
  • Chinese missile development:
    • The US officials said that China also was making similar noncompliant weapons, leaving the US alone in complying with the aging arms control pact.
    • Russia was also concerned about the treaty as it prevents it from possessing weapons that its neighbors, such as China, are developing and fielding.
News Summary:
  • With worries over Russian and Chinese missiles, the US suspended its own obligations under the INF Treaty in early 2019 and formally announced its intention to withdraw from the treaty.
  • Russia also announced that Russia will be officially suspending its treaty obligations as well.
  • With the expiry of 6 months since US announced its intention to withdraw, the US has now formally withdrawn from the INF Treaty.
Way ahead
US to develop intermediate range missiles:
  • After exiting the treaty, the US is free to develop weapons systems that were previously banned.
  • The US plans to test a new missile in coming weeks that would have been prohibited under the INF.
  • However, some experts say that the US is now years away from effectively deploying weapons previously banned under the INF agreement.
New START treaty under threat:
  • Arms control advocates worry that America’s exit from the INF treaty will lead the two nations (US and Russia) to also scrap the larger New START treaty, which expires in early 2021.
  • Trump hasn’t committed to extending or replacing New START, which beginning in 2018 imposed limits on the number of US and Russian long-range nuclear warheads and launchers.
Calls for inclusion of China in arms control agreements:
  • The US administration claims that with China’s growing arsenal of nuclear warheads, Beijing can no longer be excluded from nuclear arms control agreements.
  • Most experts now assess that China has the most advanced conventional missile arsenal in the world, based throughout the mainland.
  • US President Trump has expressed a desire to negotiate a trilateral arms control deal signed by the US, Russia and China.
About: START Treaties
START I:
  • START I (Strategic Arms Reduction Treaty) was a bilateral treaty between the US and the USSR (Union of Soviet Socialist Republics or Soviet, in short) on the reduction and limitation of strategic offensive arms.
  • The treaty barred its signatories from deploying more than 6,000 nuclear warheads atop a total of 1,600 inter-continental ballistic missiles (ICBMs) and bombers.
  • It had a duration of 15 years. Reductions mandated by the treaty were to be completed no later than 7 years after its entry into force, and parties were then obligated to maintain those limits during the next 8 years.
  • START includes an intrusive verification regime consisting of a detailed data exchange, extensive notifications, 12 types of on-site inspection, and continuous monitoring activities designed to help verify that signatories are complying with their treaty obligations.
  • It was signed in 1991, and entered into force in 1994 (delay in enforcement was due to break up of the Soviet Union).
  • Significance:
    • Start-I played an indispensable role in ensuring the predictability and stability of the strategic balance and serving as a framework for even deeper reductions.
    • By the time of the treaty’s expiration, the US and Russian strategic nuclear arsenals were significantly below those stipulated in the treaty.
  • Issues:
    • START I proved to be excessively complicated, cumbersome and expensive to continue, which eventually led the United States and Russia to replace it with a new treaty in 2010.
New START:
  • The New Strategic Arms Reduction Treaty (New START) was signed in 2010 in Prague and entered into force in 2011.
  • The treaty capped deployed strategic nuclear warheads and bombs at 1,550 while the deployed missiles and heavy bombers assigned to nuclear missions were limited to 700.
  • Both Russia and the United States announced that they met New START limitations by 2018, meeting the due date set by the treaty.
  • New START does not limit the number of non-deployed ICBMs and SLBMs, but it does monitor them and provide for continuous information on their locations and on-site inspections to confirm that they are not added to the deployed force.
  • Non-deployed missiles must be located at specified facilities away from deployment sites and labeled with “unique identifiers” to reduce concerns about hidden missile stocks.
  • New START’s verification regime includes relevant parts of START I as well as new provisions to cover items not previously monitored.
  • The treaty’s duration is ten years from entry into force (i.e till 2021) unless it is superseded by a subsequent agreement and can be extended for an additional five years.
Section : International Relation

Important Terms – Current Affairs

Mallakhamb

It is a traditional Indian sport in which a gymnast performs feats and poses in concert with a vertical wooden pole or rope. Mallakhamb originated in Maharastra, India, during the 12th century, as a form of training for wrestlers. Mallakhamba derives from the terms malla which denotes a wrestler and khamba which means a pole. Mallakhamba can therefore be translated to English as “pole gymnastics”. In 2013, the Indian state of Madhya Pradeshdeclared mallakhamba as the state sport.

Palar River

Palar is a river of southern India. It rises in Nandi Hills, India in Kolar district of Karnataka state and flows 93 kilometres (58 mi) in Karnataka, 33 kilometres (21 mi) in Andhra Pradesh and 222 kilometres (138 mi) in Tamil Nadu before its confluence into the Bay of Bengal. Tamil Nadu government has approached the Supreme Court seeking a permanent injunction against the newly bifurcated Andhra Pradesh from building new check dams and diversion structures meant to draw precious drinking water away from the parched areas of Tamil Nadu.Before reaching Tamil Nadu, the river flows for 33 km in Andhra Pradesh.

Non-lapsable Central Pool of Resources

It is a scheme is to ensure speedy development of infrastructure in the North Eastern Region by increasing the flow of budgetary financing for new infrastructure projects/schemes in the Region. Both physical and social infrastructure sectors such as Irrigation and Flood Control, Power, Roads and Bridges, Education, Health, Water Supply and Sanitation – are considered for providing support under the Central Pool, with projects in physical infrastructure sector receiving priority. Funds from the Central Pool can be released for State sector as well as Central sector projects/schemes.The idea is that the centrally allotted resources do not lapse with the end of the financial year and go back to the Finance Ministry.

Atal Pension Yojana
Atal Pension Yojana is a government-backed pension scheme in India targeted at the unorganised sector. Under Atal Pension Yojana, for every contribution made to the pension fund, Central Government would also co-contribute 50% of the total contribution or Rs.1,000 (US$15) per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years. The minimum age of joining APY is 18 years and maximum age is 40 years. The age of exit and start of pension would be 60 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more.

Hyperloop

Hyperloop is a proposed mode of passenger and freight transportation that would propel a pod-like vehicle levitating through a tube-like track at more than the speed of a jet-propelled airplane.The system could be the future of transport — travelling from New Delhi to Mumbai in 70 minutes , or three times faster than a commercial flight. Hyperloop will glide silently for miles at speeds of up to 620 mph (1,000 km/h) with no turbulence. Hyperloop One plans to use magnetic levitation in low-pressure tubes to transport people and goods. Hyperloop One, which builds pods or capsules and tracks based on Tesla CEO Elon Musk’s 2013 concept, has been in talks with the Indian government to develop the technology in the country. It is fuel-efficient and sustainable. The cost of laying lines would be high, though anti-pollution gains from the change should make up for the initial expenses. Also, 3D printing can help speed up the track-laying process to 100km a year. Andhra Pradesh has shown interest in setting up a test track of 30km.The Jharkhand government is interested in developing a fast-track route connecting the state’s industrial corridor — Ranchi, Dhanbad, Bokaro and Jamshedpur. Hyperloop One will help accelerate India’s growth towards building substantial infrastructure that is financially and environmentally sustainable. Experts claim that this new form of transformative transportation that is two to three times faster than the fastest high-speed rail, on-demand versus scheduled, environmental friendly with no direct emissions, and is less expensive than current high speed rail technology. Niti Aayog is involved in the talks for the project.

Rau’s IAS: Indian Polity and Governance Social Issues (Final Merged)

Indian Polity and Governance Social Issues (Final Merged)

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Electrifying India’s transport Editorial 7th May’19 TimesOfIndia

Headline : Electrifying India’s transport Editorial 7th May’19 TimesOfIndia

Details :

Rapid urbanization and transport problems:

  • India’s urban population will nearly double in the next decade.
  • More than half a billion people will live and work in Indian cities.
  • Travel within and between cities will grow exponentially.
  • This rapid growth poses several social, economic and environmental challenges.

Converting this into opportunities:

  • To convert these challenges into opportunities, India needs to prioritise shared and public modes of transportation and turn to new sunrise industries (like electric vehicles) that can help combat pollution, reduce congestion, strengthen energy security and also create jobs.

 

Initiatives aimed at transforming India’s mobility system:

  • Recently, the Union government approved two initiatives:
    • Fame-II: The second phase of the Faster Adoption and Manufacturing of Electric Vehicles scheme
    • National Mission on Transformative Mobility and Battery Storage

Focus on electrification:

  • Both these actions signal India’s commitment to transforming its mobility system, with focus on electrification as the primary technology pathway to achieve this transformation.
  • This focus presents India with a powerful opportunity to emerge as a leader in clean, connected and shared mobility solutions, battery manufacturing and renewable energy integration.
  • Renewably supplied electricity can deliver long-term, fixed cost power supply for mobility services throughout the economy, and solar energy can become a transportation fuel.

Benefits:

  • Energy security: From the perspective of energy security and competitive advantage too, new mobility solutions will reduce oil import costs, lower trade deficits, and limit vulnerability to oil supply disruptions and process shocks.
  • Environmental benefits: Shared, connected and clean mobility solutions will deliver a host of environmental benefits, including cleaner air so Indian citizens can breathe more easily.

 

Future of mobility in India:

  • Addressing the Global Mobility Summit, the Indian Prime Minister outlined a vision for the future of mobility in India based on 7Cs.
  • These 7 Cs include: Common, Connected, Convenient, Congestion-free, Charged, Clean and Cutting-edge.

Steps to achieve these objectives:

  1. Focus on shared electric transportation:
  • India’s per capita car ownership is quite low with fewer than 20 vehicles per 1,000 persons (5% of the people), as compared to 900 per 1,000 in the US and 800 per 1,000 in Europe.
  • India’s low per capita car ownership affords it the chance to pursue a different model from the western world.
  • Our emphasis must be on shared, connected and electric transportation.
  1. Focus on EVs in two and three wheelers segments: 
  • Two and three wheelers constitute almost 80% of India’s domestic automobile sales.
  • India must leverage this and provide impetus to electrification of these two segments to provide size and scale to India’s e-mobility efforts.
  1. Push public transportation:
  • India must push for public transportation to become the preferred mode of travel.
  • At present, India has only 1.2 buses per 1,000 people, which is far below the benchmarks of developing nations.
  • Only 63 of the 458 Indian cities have a formal city bus system and 15 cities have a bus or rail based mass rapid transport system.
  • Public transport must become the core focus area for municipalities and state governments.
  1. Creating an ecosystem for EVs:
  • As we shift from Internal Combustion Engine vehicles (which have 2,000 components) to Electric vehicles (which have 20 components), India must create a unique ecosystem to encourage and ensure Make in India as far as possible.
  • This would require measures, including Phased Manufacturing Programme (PMP) across the entire value chain, and an efficient fiscal and tax structure.
  • This ecosystem should also be able to attract global OEMs for manufacturing.
  1. Promote battery manufacturing:
  • Batteries account for almost 40% of the total purchase cost of EVs today.
  • Domestic battery manufacturing is a massive market opportunity for India to rapidly enable the transition to EVs.
  • India has the opportunity to pursue manufacturing of both battery cells and packs while importing only raw materials.
  • With this, India can capture nearly 80% of the total economic opportunity.
  • New battery technologies, like solid-state lithium ion batteries, sodium ion batteries and silicon-based batteries, are under development.
  • India needs to vigorously pursue research and development in these areas and have a clear roadmap for manufacturing on a mega scale.
  1. Creating charging infrastructure:
  • India’s cities must build charging infrastructure to remove worries over the range the EVs can travel.
  • The existing network of our marketing oil companies must be fully utilised to ensure charging facilities in urban areas and highways.

Other steps:

  • Innovation: India must therefore explore newer models of swapping batteries and pay as you go, and facilitate startups that are innovating and disrupting status quo in mobility.
  • Capacity building: Our IITs and engineering institutions must also include courses on new technologies as an essential component of their curriculum.
  • Policies by states: States must drive uptake of these solutions by dynamic models of charging a fee for polluting combustion vehicles, while providing rebates on electric vehicles, and tightening norms of fuel efficiency across vehicle segments.

 

Conclusion:

  • Forecasts indicate that EVs prices will drop and can reach price parity with ICE vehicles by 2024.
  • A recent report by Morgan Stanley has highlighted that half of India’s car fleet will be EVs and half of all miles driven will be on shared platforms by 2040.
    • This is on account of rapid spread of digitisation and mobile telephony and low per capita car usage in India.
  • This new sunrise area can emerge as the biggest catalyst of clean environment, lower trade deficit and new jobs for India.

 

Importance:

GS Paper III: Indian Economy

 

Related question:

India has committed to transforming its mobility system, with focus on electrification as the primary technology pathway to achieve this. Suggest steps towards achieving this transformation.

Section : Editorial Analysis

SC reserves verdict on changes to SC/ST law

Headline : SC reserves verdict on changes to SC/ST law

Details :

The News

  • Recently, the Supreme Court has reserved its judgment on a batch of petitions challenging the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Act of 2018.

 

The Scheduled Castes and Tribes (Prevention of Atrocities) Act, 1989

  • Objective: to prevent atrocities against scheduled castes and scheduled tribes.
  • A person accused of such a crime cannot get anticipatory bail, but soon after his arrest, he can get regular bail even in offences where the punishment is just six months.

 

Timeline

  • On 20 March 2018, Supreme Court gave its judgment banning registration of criminal cases and automatic arrests under the SC/ST Act and allowing anticipatory bail to those booked for committing atrocities against the SCs and the STs
  • The verdict triggered a nationwide protest by the Dalit community costing loss of lives and property.
  • The government filed a review petition and subsequently amended the 1989 Act back to its original form through the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Act of 2018.
  • Several petitions were filed last year challenging the amendments. However, the Supreme Court had refused to stay the implementation of the amendments.

 

Changes in Scheduled Castes and Tribes (Prevention of Atrocities) Act, 1989 after the March 20 Supreme Court Judgement

  • The top court banned registration of criminal cases and automatic arrests under the SC/ST Act.
  • The public servants cannot be prosecuted without the approval of the appointing authority and private citizens can be arrested only after an inquiry under the law.
  • A preliminary inquiry under the Act would be conducted by the Deputy Superintendent of Police to be certain that the allegations are not superficial.
  • The amendment in the law was a bid to protect honest public servants discharging bona fide duties from being blackmailed with false cases under the Act.
  • Earlier provisions in the Act provided for taking immediate action in respect of any complaint relating to harassment of a victim, informant or witness, etc. Any such complaint shall be tried separately from the main case and be concluded within two months.

 

The Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Act of 2018

  • The Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Amendment Act of 2018 nullified a controversial March 20 Supreme Court judgment.

For amendment Act : There had been no decrease in the atrocities committed on the SCs/STs despite the laws meant to protect their civil rights and they continue to face the same social stigma, poverty and humiliation. Thus it is necessary to safeguard their rights by restoring original act.

Against amendment act: Article 21, the fundamental right of an individual cannot be protected if an innocent is jailed on a complaint without its prior scrutiny.

 

 

Section : Polity & Governance

India and Pak Relation: In Brief : Cross-LoC trade, Intra Kashmir Trade Report

Headline : Explained: LoC trade, in perspective

Details :

Context of the topic:

  • Last week, the government of India suspended the cross-LoC trade, alleging misuse of the facility by individuals linked to terrorist groups

 

Theme of the topic:

  • The topic gives a brief account of information about the History of the cross-LoC trade and its objective.

 

Historical background of the Cross-LoC trade

  • The cross-LoC trade between Jammu and Kashmir and Pakistan Occupied Kashmir and also the cross LoC bus service, these two measures were started in 2005 as “Kashmir specific confidence building measures” and to improve India-Pakistan relations.
  • In October 2005, two crossing points, Srinagar-Muzaffarabad at Uri, and Poonch-Rawalakot at Chakan da Bagh, were opened for trade.

  • However, the Mumbai attacks, 2008 put a hold on India-Pakistan relations, but the cross-LoC trade remained unaffected by that.

 

Issues in trade

  • The agreement was for zero duty trade for a list of 21 items.
  • Traders on both sides struggled through currency and communication issues, which led to the formation of the Intra Jammu & Kashmir Chamber of Commerce & Industry (IJ&KCCI).

 

Trade Suspension:

  • Last week, the government of India cited malpractice and the involvement of terrorist groups in the trade and thus suspended the LoC trade.

 

The Intra Kashmir Trade Report:

  • In 2011, a report called Intra Kashmir Trade,was jointly prepared by the Delhi-based IPCS, Conciliation Resources of London, and the Islamabad-based Pakistan Institute of Legislative Development and Transparency.
  • According to the report, cross border trade could be insulated from the India-PAkistan relationship, and has been establishing a “bottom up” approach to peace-building.
  • Trade has also attracted divided families and some former combatants and thus provided them an alternative non-violent option for change and conflict transformation.

Note: The cross Loc trade holds much symbolic value in Jammu & Kashmir more than its value in currency terms.

Section : International Relation

Pakistan’s economy and IMF’s help

Headline : Either way, the news is bad Editorial 20th Apr’19 TheHindu

Pakistan’s economy in free-fall:

Pakistan’s economy is in ruins, with almost every indicator deteriorating substantially.

  • Inflation: Inflation, at 9.4%, is at its highest level in five-and-a-half years and is likely to rise to double digits for the months ahead.
  • Currency depreciation: The Pakistani rupee continues to lose value regularly, which adds to further inflation especially with the oil price on the way up.
  • Fiscal Deficit: The fiscal deficit is about to hit more than 6% of GDP, and even a cut in development expenditure will not stop this, as defence spending and interest payments continue to rise.
  • Exports: Pakistan’s exports have been stuck at around $26 bn for years, despite the 35% devaluation of the rupee over one year.
  • Debt: The government owes power producing companies huge amounts of money, and interest rates are also going up making the cost of business even more uncompetitive.
  • Falling GDP growth: The State Bank of Pakistan recently lowered the expectations of the GDP growth for the current fiscal year to an eight-year low, to around 3.5%, an estimate. The expected growth as per the IMF and the World Bank is a dismal 2.9% for the current fiscal year, and expected to fall further over the next three years.

Economic Mismanagement:

  • A major reason why the economy has taken such a sharp plunge, is the economic mismanagement by the government.
  • On top of that, political leaders have been high on rhetoric and display of pride rather than reaching out to IMF for a major structural adjustment loan.

 

Reaching out to the IMF now:

  • While Pakistan managed to secure some loans from friendly countries to avoid IMF (and thereby also avoid structural reforms to the economic management), it is not sustainable.
  • It is increasingly apparent that Pakistan now has to reach out to IMF.
  • Any IMF help will come with implementation of strict conditionalities and adjustment programme.

Earlier help came easy due to US backing:

  • This will be the 13th IMF rescue package for Pakistan’s governments and its elites in less than four decades.
  • Each time there is an economic crisis in Pakistan created due to mismanagement, the IMF and World Bank saved them, as U.S. supported it due to its geostrategic position and importance to them (especially vis-a-vis Afghanistan).

Now Pakistan isolated:

  • As global power shifts and the region changes, Pakistan’s position and importance in it have also fallen. The US has refused to support Pakistan’s economy especially in light of its support to terrorist groups operating from its soil.

 

IMF help will come with strict oversight on economic management:

  • Under the new IMF programme, Pakistan is expecting to receive between $6-$10 bn.
  • However, the IMF will also ensure austerity, stabilisation and will cut the growth rate further.
  • It will insist on further devaluation of the rupee, causing greater inflation, and will insist on raising utility prices.
  • Thus, things will get worse for Pakistanis (in the short term), including further economic slowdown, fewer jobs and high and rising inflation.

IMF will also force Pakistan to open up on its debt-heavy deals with China:

  • Another major problem in making a deal this time has been the IMF’s insistence that Pakistan reveal the financial deals made with China, including financial loans, as well as the $60 billion China-Pakistan Economic Corridor (CPEC).

 

Conclusion:

  • If Pakistan doesn’t take the IMF loan, it is in a mess as its economy is in deep trouble.
  • If it takes the loan from IMF, it will again be in a mess due to strict conditionalities imposed by the IMF.

 

Importance:

GS Paper II: International Relations

 

Section : Editorial Analysis

In Brief: Undertrials and Covicts: Fundamental Right, Right to equality, Right to Constitutional Remedies

Headline : Plea in SC on voting rights of undertrials and convicts

Details :

The News

  • Recently a plea has been filed in the Supreme Court under Article 32 challenging an electoral law denying undertrials and convicts their right to vote.

 

Provision violating the right to equality

  • Section 62(5) of the Representation of People Act of 1951 : The provision deprives any person confined to a prison of the right to vote at any election.
  • Issues:
    • In addition to convicts (a person found guilty of a criminal offence and serving a sentence of imprisonment), the law prohibits voting right to even under-trials (a person who is being held in custody awaiting trial for a crime ) , whose innocence or guilt has not been conclusively determined.
    • Moreover, a convicted person on bail still enjoys his voting right.
  • Since Section 62(5) deprive any confined person of the right to vote in an arbitrary manner, it violates the rights to equality(Article 14) and vote (Article 326).

Note: Section 62(5) of the RPA, exempt a person held under preventive detention.

Article 14: Article 14 of the Constitution of India provides for equality before the law or equal protection within the territory of India.

Article 326: Article 326 of the Constitution provides for elections to the House of the People and to the Legislative Assemblies of States to be on the basis of universal adult suffrage.

 

About Right to Constitutional Remedies (Article 32)

  • Article 32 gives right to an individual to move to the Supreme Court for the enforcement of fundamental rights, including the writs of:
    • Habeas corpus
    • Mandamus
    • Prohibition
    • Certiorari
    • Quo warento
  • It has been referred as the “soul of the constitution and very heart of it” by Dr. Ambedkar.
  • Supreme Court has included it in basic structure doctrine, which cannot be abridged or taken away even by the way of Constitutional amendment.
  • However, the right is suspended at the time of national emergency (Article 359).

Note: The High Courts also have the power to issue writs under article 226.

Section : Polity & Governance