GOVERNOR'S POWER
1. Context
Days after the Supreme Court expressed “serious concern” about Governors not acting on Bills, Tamil Nadu Governor R N Ravi on Thursday returned 10 pending Bills to the state government. The DMK-led government, which has had public disagreements with Ravi several times over the past year, has called a special Assembly session
2. About Governor
- Part VI of the Constitution deals with the states and lists out the role and responsibility of the Governor of states.
- Article 153 provides for a Governor of every state and is the constitutional head of the state.
- The executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution (Article 154).
- Governor performs the same duties as of President, but as the executive head of a State; the work remains the same as of the office of the President of India.
- A Governor is a nominated head and not an elected representative.
- Dual Role of the Governor as head and representative
- Constitutional head of state; and
- Link between Union and State governments. - His dual role makes him a key functionary in the Indian Constitutional system.
3. Powers of Governor
- Under Article 161 the Governor has the following powers –the power to grant pardons, reprieves, respites, or remissions of punishment; the power to suspend, remit or commute the sentence of any person convicted of any offence against any law relating to a matter to which the executive power of the State extends.
- The Governor makes all executive decisions on behalf of the state government (Article 166(1)).
- The Governor appoints the Chief Minister and other cabinet members. They serve at the pleasure of the Governor (Article 164).
- He may create rules for the efficient execution of a state government's work and its distribution among the ministers. (Article 166(3))
- He appoints the state's advocate general and determines his tenure and conditions of service.
- He has the authority to recommend to the President the declaration of a state of constitutional emergency.
- He may request from the Chief Minister any information about the administration of the state's affairs, as well as legislative suggestions (Article 167).
- The governor appoints the state election commissioner and establishes his term of office and working conditions (Article 243K).
4. Friction points between the States and Governor
- In recent years. these have been largely about the selection of the party to form a government, the deadline for proving the majority, sitting on Bills, and passing negative remarks on the state administration.
- Kerala’s government was dismissed based on a report by the Governor. Several state governments have been dismissed since then, including 63 through President’s Rule orders issued by Governors between 1971 and 1990.
- Kerala Governor in 2020 turned down a request to summon a special sitting of the Assembly to debate the three central farm laws.
- In 2018 J&K Governor dissolved the Assembly amid indications that various parties were coming together to form the government. This paved the way for the Centre to later bifurcate the state into two Union territories, by considering the Governor as the government.
- In 2019 Maharashtra Governor quietly invited the BJP leader and administered his oath as CM. This government lasted just 80 hours. Six months later, the governor refused to nominate CM to the Legislative Council.
- Following the Karnataka polls in 2018, Governor Vajubhai Vala invited the BJP to form the government and gave B S Yeddyurappa 15 days to prove the majority. Challenged by Congress and JDS in the Supreme Court, it was reduced to three days.
5. Reasons for the friction between the Governor and the state governments
- There is no provision for impeaching the Governor, who is appointed by the President on the Centre's advice. While the Governor has a 5-year tenure, he can remain in office only until the pleasure of the President.
- There are no guidelines for the exercise of the Governor's powers, including for appointing a CM or dissolving the Assembly. There is no limit set for how long a Governor can withhold assent to a Bill.
- According to the Constitutional expert, although the Constituent Assembly envisaged the governor to be apolitical. But the truth is, politicians, become Governors and then resign to fight elections.
- The CM is answerable to the people. But the Governor is answerable to no one except the Centre. This is the fundamental defect in the Constitution.
6. Reforms Suggested
Several Panels, the Administrative Reforms Commission of 1968 and the Sarkaria Commission of 1988 have recommended reforms such as
- selection of the Governor through a panel comprising the PM, the Home Minister, the Lok Sabha Speaker, and the CM.
- Apart from fixing his tenure for five years
- Recommendations have also been made for a provision to impeach the Governor by the Assembly.
For Prelims & Mains
|
For Prelims: Governor, Chief Minister, Article 153, Article 154, Article 164, and Article 243K.
For Mains: 1. In the context of friction between the state governments and the Governor explain the role and powers of the Governor and what reforms have been suggested so far to end the tussle between the state governments and the Governor.
|
|
Previous Year Questions
Which of the following are the discretionary powers given to the Governor of a State? (UPSC CSE 2014)
1. Sending a report to the President of India for imposing the President’s rule 2. Appointing the Ministers 3. Reserving certain bills passed by the State Legislature for consideration of the President of India 4. Making the rules to conduct the business of the State Government Select the correct answer using the code given below
A. 1 and 2 Only
B. 1 and 3 Only
C. 2, 3 and 4
D. 1, 2, 3, 4
Answer (B)
2.Which one of the following suggested that the Governor should be an eminent person from outside the State and should be a detached figure without intense political links or should not have taken part in politics in the recent past? (UPSC CSE 2019)
A.First Administrative Reforms Commission (1966)
B.Rajamannar Committee (1969)
C.Sarkaria Commission (1983)
D.National Commission to Review the Working of the Constitution (2000)
Answer (C)
|
Source: The Indian Express
GLOBAL SOUTH
1. Context
India will host the 2nd Voice of Global South Summit Friday in a virtual format, in what will be the second time since January this year. The second summit will start with an Inaugural Leaders’ Session chaired by the Prime Minister Narendra Modi in the morning.
2. The need for the ‘Global North’ and the ‘Global South
- For a long time in the study of international political systems, the method of categorising countries into broad categories for easier analysis has existed.
- The concepts of ‘East’ and ‘West’ is one example of this, with the Western countries generally signifying greater levels of economic development and prosperity among their people and Eastern countries are considered as being in the process of that transition.
- Another similar categorisation is of First World, Second World and Third World countries, referring to countries associated with the Cold war-era alliances of the US, the USSR, and non-aligned countries, respectively.
- At the centre of these concepts is the World Systems approach introduced by sociologist Immanuel Wallerstein in 1974, emphasising an interconnected perspective of looking at world politics.
- He said there are three major zones of production: core, peripheral and semiperipheral.
- The core zones reap profits, being the owners of cutting-edge technologies in countries like the US or Japan.
- Peripheral zones, on the other hand, engage in less sophisticated production that is more labour-intensive. In the middle are countries like India and Brazil.
3. The need for new terms
- In the Post-Cold War world, the First World/Third World classification was no longer feasible, because when the Communist USSR disintegrated in 1991, most countries had no choice but to ally at some level with the capitalist US the only remaining global superpower.
- Other classifiers have also seen criticism. The East/West binary was seen as often
perpetuating stereotypical thinking about African and Asian countries. - Categorising incredibly diverse countries into a monolith was felt to be too simplistic.
Also, the idea that some countries were ‘developed’ while others were not was thought to be too wide a classification, inadequate for accurately discussing concerns.
| Writing in 2014 from the perspective of his organisation’s philanthropic activities, Bill Gates said of the ‘developing’ tag, “Any category that lumps China and the Democratic Republic of Congo together confuses more than it clarifies. Some so-called developing countries have come so far that it’s fair to say they have developed. A handful of failed states are hardly developing at all. Most countries are somewhere in the middle.” |
4. Importance of Global South
- What sets the terms Global North and South apart are that first, they are arguably more accurate in grouping like countries together, measuring similarly in terms of wealth, indicators of education and healthcare, etc.
- Another commonality between the South countries is that most have a history of colonisation, largely at the hands of European powers.
- Secondly, this classification trains more focus on the Global South. When leaders such as Jaishankar mentioned, they are also pointing to the region’s historical exclusion from prominent international organisations such as the permanent members of the United Nations Security Council.
- As bodies like the UN and the IMF are involved in major decision-making that affects the world in terms of politics, economy and society, the exclusion is seen by these countries as contributing to their slower growth.
- As a result, the idea that the South can together advocate for common causes has
come up, as underlined by the External Affairs Minister.
| Interestingly, when Jaishankar criticised the expectation of India to take a stance on the Ukraine war and rebuke Russia in June this year, China’s state-owned newspaper Global Times praised the comments. This is where the idea of ‘SouthSouth’ cooperation comes in. |
- Why the concept is being reiterated now partly because of the economic emergence of some of these South countries, such as India and China, in the last few decades.
- Many consider the world to now be multipolar rather than one where the US alone dominates international affairs.
- The progress achieved by many Asian countries is also seen as challenging the idea that the North is ideal.
- As Samuel P Huntington wrote in his 1996 book ‘The Class of Civilizations and the Remaking of Global Order, “East Asians attribute their dramatic economic development not to their import of Western culture but rather to their adherence to their own culture.”
5. Criticism of the classification
- Some of the earlier terms’ criticisms apply here, too, such as the argument that the term is too broad.
- In the ongoing debate about North countries paying for funding green energy, having historically contributed to higher carbon emissions, many in the Global North have objected to China and India’s exclusion from this, given their increasing industrialisation.
- There is also the question of whether the South simply aims to replace the North and the positions it occupies, again continuing a cycle in which a few countries accumulate crucial resources.
- Much controversy currently surrounds the question of whether elites of the global South and ‘rising powers’ genuinely have the intention to challenge the dominant structures of global capitalist development.
- In the rise of Asia, the continued neglect of Africa has been questioned as well.
- China is increasingly making inroads here through the Belt and Road Initiative for developing infrastructure.
- But whether that results in a win-win situation for both parties or focuses on profit for only China remains to be seen.
For Prelims & Mains
|
For Prelims: G20, Global South, Global North, Cold war, Post-Cold War, UNSC, UN, IMF, Russia and Ukraine War, SouthSouth Cooperation
For Mains:
1. What is Global South? Discuss the significance and impact of Global South in India. (250 Words)
|
Previous Year Questions
|
For Prelims
1. In which one of the following groups are all the four countries members of G20? (UPSC 2020) (a) Argentina, Mexico, South Africa and Turkey 1. Ans: (a) For Mains
1. “The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization. But the Doha round of negotiations seem doomed due to differences between the developed and the developing countries.” Discuss in the Indian perspective. ( UPSC 2016)
|
Source: The Indian Express
PARLIAMENTARY COMMITTEES
1. Context
The Parliamentary Committee on Home Affairs has suggested that adultery should be re-instituted as a crime in the Bharatiya Nyaya Sanhita (BNS), 2023, the proposed law to replace the Indian Penal Code (IPC), 1860
2. What are the Committees of Parliament?
- The legislative process commences with the introduction of a Bill in either house of Parliament. However, this process can be intricate, and due to the limited time available for in-depth discussions, it often becomes challenging.
- Furthermore, the growing political polarization and the narrowing of the political center have led to increasingly heated and inconclusive debates within Parliament.
- Consequently, a substantial portion of legislative matters is effectively addressed within the framework of Parliamentary Committees.
- A Parliamentary Committee is a group of Members of Parliament (MPs) appointed or elected by the House, or nominated by the Speaker.
- These committees operate under the Speaker's guidance and subsequently present their findings and recommendations either to the House or directly to the Speaker.
- The roots of the Parliamentary Committee system can be traced back to the British Parliament. Their legitimacy is derived from Article 105, which outlines the privileges of MPs, and Article 118, which empowers Parliament to establish regulations governing its processes and business conduct.
3. What are the various Committees of Parliament?
- Parliamentary Committees can be categorized into distinct groups, including Financial Committees, Departmentally Related Standing Committees, Other Parliamentary Standing Committees, and Ad hoc Committees. These classifications serve specific purposes within the legislative process.
- The Financial Committees, namely the Estimates Committee, Public Accounts Committee, and the Committee on Public Undertakings, were originally established in 1950. They were designed to enhance financial oversight and accountability within Parliament.
- In 1993, the formation of seventeen Departmentally Related Standing Committees was undertaken to bolster the scrutiny of parliamentary activities.
- The primary objectives were to provide members with more extensive involvement in the examination of significant legislation and to expand the scope of parliamentary review. Subsequently, the number of these committees was raised to 24, each consisting of 31 members, with 21 being from the Lok Sabha and 10 from the Rajya Sabha.
- Ad hoc Committees, on the other hand, are constituted for specific, time-bound purposes. Once these committees have fulfilled their designated tasks and presented their findings to the House, they are dissolved.
- Notable examples include Select and Joint Committees on Bills, as well as committees like the Railway Convention Committee and the Committee on Food Management and Security in Parliament House Complex, which fall within the Ad hoc Committee category.
- Additionally, Parliament has the authority to establish a Joint Parliamentary Committee (JPC) with a particular focus, featuring members from both Houses.
- These committees are responsible for in-depth examinations of specific subjects or Bills. Alternatively, any of the two Houses can establish a Select Committee comprising members from that respective House.
- Typically, these JPCs and Select Committees are chaired by Members of Parliament from the ruling party and are disbanded upon the submission of their reports.
4. How are the Committees constituted?
- There are a total of 16 Departmentally Related Standing Committees for the Lok Sabha and eight for the Rajya Sabha, with each Committee comprising members from both Houses. The leadership of these committees is typically drawn from the respective House they belong to.
- Notable Lok Sabha committees include those covering areas like Agriculture, Coal, Defence, External Affairs, Finance, Communications and Information Technology, Labour, Petroleum & Natural Gas, and Railways.
- Similarly, prominent Rajya Sabha committees encompass Commerce, Education, Health & Family Welfare, Home Affairs, and Environment.
- Each House also has other Standing Committees, including the Business Advisory Committee and the Privileges Committee, whose members are nominated by the Presiding Officer of the respective House. Ministers are generally not eligible for election or appointment to Financial Committees and specific Departmentally Related Committees.
- The decision to refer a matter to a Parliamentary Committee lies with the Presiding Officers, although this choice is commonly made in consultation with party leaders within the House.
- The appointment of committee heads follows a similar process, with the convention typically being that the main Opposition party's nominee assumes the role of the PAC (Public Accounts Committee) chairman. However, recent restructuring has seen a shift from this pattern.
- The committee heads are responsible for scheduling meetings, setting the agenda, and preparing the annual report.
- They can make decisions aimed at efficiently managing the committee. During meetings, the chairperson presides and can determine which individuals should be summoned before the panel.
- An invitation to appear before a Parliamentary Committee carries the same weight as a court summons. If someone is unable to attend, they must provide reasons, which the committee may or may not accept.
- However, the chairman usually requires the support of the majority of members to summon a witness.
- Members of Parliament typically serve on Parliamentary Committees for a one-year term, and the composition of these committees generally remains consistent in terms of party representation.
5. How important are the recommendations of the Committees?
- The reports produced by Departmentally Related Standing Committees are advisory in character.
- While they are not legally binding on the government, they do hold substantial influence. Historically, governments have often embraced the recommendations provided by these committees and integrated them into the legislation after it returns to the House for deliberation and approval.
- Additionally, these committees analyze policy matters within their respective Ministries and offer suggestions to the government.
- The government is obligated to provide feedback regarding its acceptance of these recommendations.
- As a result, the Committees present Action Taken Reports, which outline the government's progress in implementing each recommendation.
6.Way forward
Parliamentary committees in India provide a crucial mechanism for the legislative branch to scrutinize the executive branch (the government), hold it accountable, and conduct in-depth examinations of various aspects of governance and policy. They play a vital role in ensuring transparency, accountability, and effective governance in a democratic system
|
For Prelims: Standing Committees, Ethics Committees, Adhoc Committees
For Mains: Parliamentary Committees of Indian Parliament
|
|
Previous Year Questions
1. Consider the following statements: The Parliamentary Committee on Public Accounts (UPSC CSE 2013)
1. consists of not more than 25 members of the Lok Sabha.
2. scrutinizes appropriation and finance accounts of the Government.
3. examines the report of the Comptroller and Auditor General of India.
Which of the statements given above is/are correct?
A. 1 Only
B. 2 and 3 Only
C. 3 only
D. 1, 2 and 3
Answer (B)
|
Source: Indianexpress
BDS MOVEMENT
1. Context
An article published in a German newspaper last week accused Indian poet and curator Ranjit Hoskote of “anti-Semitism” and sympathising with the BDS (Boycott, Divestment, Sanctions) movement. Hostoke then resigned from the Finding Committee for Documenta 16, the 2027 edition of one of the world’s most prestigious art exhibitions that is held in Germany, over the accusation
2. What is the BDS Movement?
In 2005, over 170 Palestinian groups initiated a movement to rally global support for the rights of the Palestinian people. Describing itself as an "inclusive, anti-racist human rights movement," the movement explicitly opposes all forms of discrimination, including anti-Semitism and Islamophobia.
Inspired by the anti-apartheid movement in South Africa, the BDS movement advocates for nonviolent pressure on Israel until it adheres to international law. It outlines three demands:
- Ending Israel's occupation and colonization of Arab lands, including dismantling the Wall.
- Acknowledging the full equality rights of Arab-Palestinian citizens in Israel.
- Upholding, protecting, and promoting the rights of Palestinian refugees to return to their homes and properties as stipulated in UN Resolution 194.
The term "the Wall" refers to the barrier dividing Israeli and Palestinian territories in the West Bank. While Israel cites security reasons for its construction, Palestinians argue it enables further annexation of their lands. The International Court of Justice previously ruled that Israel must immediately halt construction of the wall, citing violations of international obligations.
UN Resolution 194, adopted in 1948 during the Israeli-Arab conflict after Israel's establishment, addressed the displacement of over 700,000 Palestinians, known as the naqba. It asserted the right of refugees willing to live peacefully with their neighbors to return to their homes as soon as feasible. The resolution also mandated compensation for those opting not to return, to be provided by the responsible governments or authorities.
3. BDS aiming goals
- The BDS movement advocates for boycotts as a means of disengaging from Israel's government, as well as from its affiliated sporting, cultural, and academic institutions, and from companies, both Israeli and international, involved in violating Palestinian human rights.
- For instance, it highlights Puma's sponsorship of the Israel Football Association, which includes teams situated in Israel's illegal settlements on Palestinian land, urging a boycott of the company. Additionally, divestment campaigns target banks, local councils, churches, pension funds, and universities, calling for the withdrawal of investments from Israel.
- Sanctions campaigns aim to compel governments to uphold their legal responsibilities in ending Israeli apartheid and advocate for the suspension of Israel's participation in international forums like UN bodies and FIFA.
- Strategically, the BDS movement concentrates on a limited selection of companies and products to maximize impact. It criticizes extensive lists circulating on social media, deeming them counterproductive and potentially ineffective, as they diverge from this focused and impactful approach.
4. Israel government about BDS
- Previously, Israel’s Prime Minister Benjamin Netanyahu has linked BDS to anti-semitism — the ideology that espouses hatred towards Jewish people and discriminates against them
- I think the eeriest thing, the most disgraceful thing is to have people on the soil of Europe talking about the boycott of Jews,” Netanyahu said in 2014. “In the past, antisemites boycotted Jewish businesses and today they call for the boycott of the Jewish state
- The founders of the BDS movement.. want to see the end of the Jewish state. They’re quite explicit about it. And I think it’s important that the boycotters must be exposed for what they are. They’re classical antisemites in modern garb. And I think we have to fight them
- BDS has responded to the allegations by saying that criticism of Israel’s “violations of international law” should not be confused with anti-Semitism. “Israel is a state, not a person. Everyone has the right to criticize the unjust actions of a state,”
- In 2015, Israeli Minister Gilad Erdan was given the charge of a unit against the economic boycott of Israel. He said in 2018 that the movement was not a threat. However, its constant invocation by the government led to some in Israel criticising the approach, saying officials were further highlighting the BDS. US government officials have also criticised BDS over the years, including former Secretary of State Mike Pompeo
5. Economic impact of BDS
In recent years, a few brands and celebrities have refused to continue working in Israel or perform there as part of tours. These include the US ice cream brand Ben and Jerry’s and Pink Floyd member Roger Waters.
But many such boycotts also flow from a longstanding policy of Arab states to boycott Israel. Whether they were driven by this newer movement is difficult to assess. Therefore, measuring the impact of a somewhat scattered movement on an entire state’s economy is hard to say
BDS acknowledges this on its website, saying, “Of course, support for Israel remains deeply entrenched, but the BDS movement is showing that it can become a hugely powerful tool in ending western support for Israeli apartheid and settler colonialism.”
Source: Indianexpress
FREE TRADE AGREEMENT
1. Context
India and the U.K. are still negotiating a trade agreement that was initially supposed to be ready by Diwali of 2022. External Affairs Minister (EAM) S. Jaishankar has expressed hope that the two countries will be able to find a mutually beneficial "landing point" for the deal.
2. About the Free Trade Agreement
- A Free Trade Agreement (FTA) is an agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs, quotas, and subsidies.
- FTAs can also include provisions on other issues, such as investment, intellectual property, and labour standards.
- The goal of an FTA is to promote trade and economic growth between the signatory countries.
- By reducing or eliminating trade barriers, FTAs can make it easier for businesses to export their goods and services to other countries, which can lead to increased production, employment, and innovation.
3. Types of Free Trade Agreement
- Bilateral Free Trade Agreement (BFTA) involves two countries, aiming to promote trade and eliminate tariffs on goods and services between them. It establishes a direct trade relationship, allowing for a more focused and tailored agreement between the two nations.
- Multilateral Free Trade Agreement (MFTA) Involving three or more countries, an MFTA seeks to create a comprehensive trade bloc, promoting economic integration on a larger scale. It requires coordination among multiple parties, addressing diverse economic interests and fostering a broader regional economic landscape.
- Regional Free Trade Agreement (RFTA) involves countries within a specific geographic region, aiming to enhance economic cooperation and integration within that particular area. It focuses on addressing regional economic challenges and fostering collaboration among neighbouring nations.
- Preferential Trade Agreement (PTA) involves a reciprocal reduction of tariffs and trade barriers between participating countries, granting preferential treatment to each other's goods and services. It allows countries to enjoy trading advantages with specific partners while maintaining autonomy in their trade policies with non-participating nations.
- Comprehensive Economic Partnership Agreement (CEPA) is a broad and advanced form of FTA that goes beyond traditional trade barriers, encompassing various economic aspects such as investment, intellectual property, and services. It aims for a more comprehensive economic partnership, encouraging deeper integration and collaboration between participating countries.
- Customs Union While not strictly an FTA, a Customs Union involves the elimination of tariffs among member countries and the establishment of a common external tariff against non-member nations. It goes beyond standard FTAs by harmonizing external trade policies, creating a unified approach to trade with the rest of the world.
- Free Trade Area (FTA) with Trade in Goods (TIG) and Trade in Services (TIS): Some FTAs specifically emphasize either trade in goods or trade in services, tailoring the agreement to the specific economic strengths and priorities of the participating countries. This approach allows nations to focus on areas where they have a comparative advantage, fostering specialization and efficiency.
4. India's Free Trade Agreements
India is a member of several free trade agreements (FTAs) and is currently negotiating others. India's FTAs have helped to reduce trade barriers and promote trade and economic growth. They have also helped to attract foreign investment and create jobs.
- The South Asian Free Trade Agreement (SAFTA) was signed in 1995 by the seven countries of the South Asian Association for Regional Cooperation (SAARC). SAFTA aims to reduce or eliminate tariffs on trade between the member countries.
- The India-Bangladesh FTA was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Sri Lanka FTA was signed in 1999 and came into force in 2000. It is a comprehensive FTA that covers goods, services, and investments.
- The India-ASEAN Free Trade Agreement was signed in 2002 and came into force in 2010. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Korea Comprehensive Economic Partnership Agreement (CEPA) was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Japan Comprehensive Economic Partnership Agreement(CEPA) was signed in 2022 and came into effect in 2023. It is a comprehensive FTA that covers goods, services, and investments.
- The India-UAE Comprehensive Partnership Agreement (CEPA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) was signed in 2010 and aims to enhance economic ties by addressing trade in goods and services, as well as investment and other areas of economic cooperation.
- The India-Thailand Free Trade Agreement was signed in 2003 and focuses on reducing tariffs and promoting trade in goods and services between India and Thailand.
- The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has been operational since 2005, this agreement covers trade in goods and services, as well as investment and intellectual property.
- The India-Nepal Trade Treaty While not a comprehensive FTA, India and Nepal have a trade treaty that facilitates the exchange of goods between the two countries.
- The India-Chile Preferential Trade Agreement was signed in 2006 and aims to enhance economic cooperation and reduce tariffs on certain products traded between India and Chile.
5. India - UK Free Trade Agreement
5.1. Background
- Both countries have agreed to avoid sensitive issues in the negotiations.
- The interim (early harvest agreement) aims to achieve up to 65 per cent coverage for goods and up to 40 per cent coverage for services.
- By the time the final agreement is inked, the coverage for goods is expected to go up to "90 plus a percentage" of goods.
- India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade.
- While the commencement of negotiations does mark a step forward in the otherwise rigid stance adopted and when it comes to trade liberalisation, experts point to impediments and the potential for legal challenges going ahead.
5.2. GATT (General Agreement on Trade and Tariffs)
- The exception to the rule is full-scale FTAs, subject to some conditions.
- One rider, incorporated in Article XXIV.8 (b) of GATT, stipulates that a deal should aim to eliminate customs duties and other trade barriers on "Substantially all the trade" between the WTO member countries that are signatories to an FTA.
- For this Agreement, a free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
- It is often beneficial to negotiate the entire deal together, as an early harvest deal may reduce the incentive for one side to work towards a full FTA.
- These agreements are not just about goods and services but also issues like investment.
- If you are trying to weigh the costs and benefits, it is always better to have the larger picture in front of you.
- In the case of the early harvest agreement inked with Thailand, automobile industry associations had complained that relaxations extended to Bangkok in the early harvest had reduced the incentive for Thailand to work towards a full FTA.
- Early harvest agreements may serve the function of keeping trading partners interested as they promise some benefits without long delays, as India becomes known for long-drawn negotiations for FTAs.
- Government emphasis on interim agreements may be tactical so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.
|
For Prelims: Free Trade Agreement, India-U.K, Bilateral Free Trade Agreement, G-20 Summit, Agenda 2030, Covid-19 Pandemic, SAARC, General Agreement on Trade and Tariffs, Comprehensive Economic Partnership Agreement, Multilateral Free Trade Agreement, Regional Free Trade Agreement, Preferential Trade Agreement, Customs Union,
For Mains:
1. Evaluate the potential impact of the India-UK FTA on the Indian economy, considering both positive and negative aspects (250 Words)
2. Critically evaluate the significance of Free Trade Agreements (FTAs) in promoting trade and economic growth, considering their potential benefits and drawbacks. (250 Words)
|
|
Previous Year Questions
1. Consider the following countries:
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the free-trade partners' of ASEAN? (UPSC 2018)
A. 1, 2, 4 and 5 B. 3, 4, 5 and 6 C. 1, 3, 4 and 5 D. 2, 3, 4 and 6
Answer: C
2. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC 2018) (a) Industrial output fails to keep pace with agricultural output. Answer: C 3. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)
Which of the above are the objectives of this Act? (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: A 4. A “closed economy” is an economy in which (UPSC 2011) (a) the money supply is fully controlled Answer: D 5. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022)
1. It is an initiative endorsed by the G20 together with the Paris Club. 2. It is an initiative to support Low Income Countries with unsustainable debt. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer: C
|
Source: The Hindu
RUPEE EXCHANGE RATE
1. Context
The Indian rupee breached the psychologically significant exchange rate level of 80 to a US dollar in early trade . It recovered some ground to close at 79.90.
2. What is the rupee exchange rate?
The rupee's exchange rate with the dollar signifies the quantity of rupees needed to purchase one US dollar. This metric is crucial not only for acquiring American goods but also for engaging in trade involving other commodities and services, like crude oil, which is conducted in US dollars. When the rupee depreciates, the cost of importing goods and services increases. However, for those exporting products and services, particularly to the United States, the depreciation enhances the competitiveness of India's offerings by making them more affordable for foreign buyers
Exchange rate for 1 Indian Rupee (INR) is as follows:
- United States Dollar (USD): 0.012011 INR
- Euro (EUR): 0.011223 INR
- British Pound (GBP): 0.009784 INR
- Australian Dollar (AUD): 0.018827 INR
- Singapore Dollar (SGD): 0.016343 INR
- Swiss Franc (CHF): 0.010845 INR
- Malaysian Ringgit (MYR): 0.056619 INR
- Japanese Yen (JPY): 1.824210 INR
3. Effects on rupee
- If the rupee experiences a faster depreciation rate than its long-term average, it surpasses the dotted line, and vice versa.
- Over the past couple of years, the rupee has demonstrated greater resilience than the long-term trend, but the current decline indicates a correction.
- When considering a diverse range of currencies, data indicates that the rupee has strengthened or appreciated against this basket.
- To clarify, while the US dollar has strengthened against various major currencies, including the rupee, the rupee, in contrast, has strengthened compared to many other currencies like the euro. For example, forex reserves have decreased by over $50 billion between September 2021 and now. Over these 10 months, the rupee's exchange rate with the dollar has declined by 8.7%, from 73.6 to 80.
- To provide context, historically, the rupee typically depreciates by around 3% to 3.5% in a year. Moreover, many experts anticipate further weakening of the rupee in the next 3-4 months, potentially falling to as low as 82 to a dollar.
4. What is rupee depreciation?
Rupee depreciation refers to a decrease in the value of a country's currency, specifically the Indian rupee in this context, in comparison to other currencies. It means that more units of the domestic currency are required to purchase a fixed amount of foreign currency, usually the US dollar. Depreciation can occur due to various factors, including changes in supply and demand for the currency in the foreign exchange market, economic conditions, inflation rates, and geopolitical events
When the rupee depreciates, it has several implications:
Import Costs: Imported goods and services become more expensive, as it takes more rupees to buy the same amount of foreign currency needed for these transactions. This can contribute to inflationary pressures in the economy.
Export Competitiveness: On the positive side, a depreciated rupee can make the country's exports more competitive in the global market. Foreign buyers find the country's products and services relatively cheaper, potentially boosting export volumes.
External Debt: Countries with significant external debt denominated in foreign currencies may face increased repayment burdens when their domestic currency depreciates. Servicing debt in stronger foreign currencies becomes more expensive.
Inflation: Depreciation can contribute to inflationary pressures by increasing the cost of imported goods and raw materials.
5. Effects on the Indian economy
- Due to a substantial portion of India's imports being priced in dollars, these imports will become more expensive.
- An illustrative example is the higher cost associated with the crude oil import bill. The increased expense of imports, in turn, will contribute to the expansion of the trade deficit and the current account deficit.
- This, in consequence, will exert pressure on the exchange rate. On the export side, the situation is more complex, as noted by Sen.
- In bilateral trade, the rupee has strengthened against many currencies. In exports conducted in dollars, the impact is contingent on factors such as how much other currencies have depreciated against the dollar.
- If the depreciation of other currencies against the dollar is greater than that of the rupee, the overall effect could be negative.
6. Way forward
Defending the rupee will simply result in India exhausting its forex reserves over time because global investors have much bigger financial clout. Most analysts believe that the better strategy is to let the rupee depreciate and act as a natural shock absorber to the adverse terms of trade
|
For Prelims: Inflation, Deflation, Depreciation, Appreciation
For Mains: General Studies III: How does Depreciation of rupee affect Indian economy
|
|
Previous Year Questions
1. Which one of the following groups of items is included in India's foreign exchange reserves? (UPSC CSE 2013)
A.Foreign-currency assets, Special Drawing Rights (SDRs) and loans from foreign countries B.Foreign-currency assets, gold holdings of the RBI and SDRs
C.Foreign-currency assets, loans from the World Bank and SDRs
D.Foreign-currency assets, gold holdings of the RBI and loans from the World Bank
Answer (B)
2.Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee? (UPSC CSE 2019)
A.Curbing imports of non-essential goods and promoting exports
B.Encouraging Indian borrowers to issue rupee-denominated Masala Bonds
C.Easing conditions relating to external commercial borrowing
D.Following an expansionary monetary policy
Answer (D)
|
Source:indianexpress
FEDERAL FRICTIONS
1. Context
Disputes between the Centre and States in India regarding economic policies have a long history, but recent years have witnessed an increase in both frequency and intensity, transforming these disagreements into persistent frictions within the federal system.
2. Changing Economic Landscape
- The economic context of Centre-State relations has evolved significantly since the 1980s and 1990s.
- Ongoing economic reforms since 1991 have relaxed controls on investments, granting some autonomy to States.
- However, the dependency of State governments on the Centre for revenue receipts has limited their absolute autonomy, leading to a more hardened stance on both sides and eroding the foundations of cooperative federalism.
- Beyond resource sharing, conflicts have emerged in areas such as the homogenization of social sector policies, regulatory institutions' functioning, and the powers of central agencies.
- While these policy domains ideally fall under the discretion of States, central bodies often attempt to exert influence, creating tension.
3. Central Dominance
The Centre's expanding span of activities has led to three important economic consequences:
- Crowding Out of States in Investments: The Centre's dominance in investments has led to underinvestment by States. For instance, the Centre's capex on roads has increased at a CAGR of 32.3% since 2015-16, while States' growth has been just 11.2%.
- Peculiar Form of Fiscal Competition: The enhanced fiscal space of the Centre has led to a form of fiscal competition between the Centre and States. This competition diverts focus from regional competition and challenges welfare provisioning.
- Inefficiencies of Parallel Policies: Federal abrasions lead to duplication of policies, as exemplified by pension reforms. The emergence of parallel schemes stems from a trust deficit in the federal system, with long-term economic consequences.
4. Implications of Central Dominance
- The Centre's expanding span of activities has led to crowding out States in terms of investments. Infrastructure development, exemplified by PM Gati Shakti, centralizes planning, limiting State flexibility and resulting in underinvestment.
- Fiscal competition between the Centre and States has emerged, diverting focus from regional competition. The Centre, with enhanced fiscal space, outspends States, leading to challenges in welfare provisioning.
- Federal abrasions contribute to inefficiencies as either the Centre or States duplicate each other's policies. The example of pension reforms illustrates how parallel schemes emerge due to a trust deficit in the federal system, with long-term consequences for the economy.
Interdependence between the Centre and States is crucial for the implementation of laws and policies, particularly in concurrent spheres. Preserving this interdependence is essential for managing the diverse, developing society of India.
5. Conclusion
Addressing the growing frictions in Centre-State relations is vital for fostering cooperative federalism, ensuring efficient policy implementation, and promoting balanced economic development across regions. Finding common ground and building trust between the Centre and States is crucial for the sustainable growth of the Indian economy.
|
For Prelims: Fedreal system, Centre-State Relations, Concurrent list, GDP, economic reforms of 1991, cooperative federalism, PM Gati Shakti, For Mains:
1. Discuss the factors that have contributed to the increase in frequency and intensity of disputes between the Centre and States regarding economic policies in India. (250 Words)
2. Explain the concept of 'cooperative federalism' and discuss its significance in the context of India's federal structure. (250 Words)
|
|
Previous Year Questions
1. In the context of India, which one of the following is the characteristic appropriate for bureaucracy? (UPSC 2020) A. An agency for widening the scope of parliamentary democracy
B. An agency for strengthening the structure of federalism
C. An agency for facilitating political stability and economic growth
D. An agency for the implementation of public policy
Answer: D
2. Which one of the following in Indian Polity is an essential feature that indicates that it is federal in character? (UPSC 2021)
A. The independence of judiciary is safeguarded
B. The Union Legislature has elected representatives from constituent units
C. The Union Cabinet can have elected representatives from regional parties
D. The Fundamental Rights are enforceable by Courts of Law
Answer: A
3. Constitutional government means (UPSC 2021) (a) a representative government of a nation with federal structure
(b) a government whose Head enjoys nominal powers
(c) a government whose Head enjoys real powers
(d) a government limited by the terms of the Constitution
Answer: D
4. Which one of the following is not a feature of Indian federalism? (UPSC 2015) (a) There is an independent judiciary in India.
(b) Powers have been clearly divided between the Centre and the States,
(c) The federating units have been given unequal representation in the Rajya Sabha.
(d) It is the result of an agreement among the federating units.
Answer: D
5. Local self-government can be best explained as an exercise in (UPSC 2015) (a) Federalism
(b) Democratic decentralization
(c) Administrative delegation
(d) Direct democracy
Answer: B 6. The power of the Supreme Court of India to decide disputes between the Centre and the States falls under its (UPSC 2012) (a) advisory jurisdiction
(b) appellate jurisdiction
(c) original jurisdiction
(d) writ jurisdiction
Answer: C 7. The distribution of powers between the Centre and the States in the Indian Constitution is based on the scheme provided in the (UPSC 2012) (a) Morley-Minto Reforms, 1909
(b) Montagu-Chelmsford Act, 1919
(c) Government of India Act, 1935
(d) Indian Independence Act, 1947
Answer: C
8. Consider the following statements
Which of the statements given above is/are correct? (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Answer: B 9. The Prime Minister ‘Gati Shakti’ scheme is launched by the Government of India for which type of infrastructure development from the following? (SSC CPO 2022) A. Schools and education B. Hospitals C. Agricultural production D. Transport Answer: D 10. Read the following statements related to PM Gati Shakti Yojana and select the correct statement from the given options. (Rajasthan Police Constable 2022) A. It is a national scheme for multi-modal connectivity.
B. It brings 16 ministries under a single digital platform.
C. This program will integrate rail, inland waterways, and ports apart from economic sectors.
D. This program will use ISRO imagery developed by the Bhaskaracharya National Institute of Space Applications and Geo-informatics.
1. A, B, C and D only 2. A and B only 3. A, B and D only 4. A, C and D only Answer: A 11. "Cooperative Federalism" in Centre - State relations is recommended for the first time by (APPSC Group 1 2017) A. Sarkaria Commission
B. Rajamannar Commisson
C. Venkatachaliah Commission
D. M.M. Punchhi Commission
Answer: A 12. With reference to the Indian economy after the 1991 economic liberalization, consider the following statements: (UPSC 2020) 1. Worker productivity (Rs. per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
2. The percentage share of rural areas in the workforce steadily increased.
3. In rural areas, the growth in the non-farm economy increased.
4. The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 3 and 4 only C. 3 only D. 1, 2 and 4 only Answer: C Mains 1. Explain the significance of the 101st Constitutional Amendment Act. To what extent does it reflect the accommodative spirit of federalism? (UPSC 2023)
2. From the resolution of contentious issues regarding the distribution of legislative powers by the courts, ‘Principle of Federal Supremacy’ and ‘Harmonious Construction’ have emerged. Explain. (UPSC 2019)
3. Did the Government of India Act, 1935 lay down a federal constitution? Discuss. (UPSC 2016)
4. The concept of cooperative federalism has been increasingly emphasized in recent years. Highlight the drawbacks in the existing structure and the extent to which cooperative federalism would answer the shortcomings. (UPSC 2015)
|
Source: The Hindu
