OTHER BACKWARD CLASSES
1. Context
The Supreme Court on orally observed that reservation must not be based on religion while hearing an appeal filed by the State of West Bengal against a Calcutta High Court judgment striking down its policy to include several castes, largely Muslim communities, in the State’s Other Backward Classes (OBC) list
2. About the sub-categorization of OBCs
- The concept of sub-categorization of OBCs involves creating sub-groups within the larger OBC category for reservation purposes.
- Currently, OBCs are granted 27% reservation in jobs and education under the central government.
- However, there has been a debate over the equitable distribution of these benefits among the various OBC communities.
- Some argue that a few affluent communities within the Central List of OBCs have disproportionately secured the majority of the reservation benefits.
- Creating sub-categories aims to ensure a fairer distribution of representation among all OBC communities.
3. The Rohini Commission's Brief
- To examine the extent of inequitable distribution of reservation benefits among the OBC castes or communities included in the Central List.
- To devise a scientific approach for sub-categorization within the OBCs, including defining the mechanism, criteria, norms, and parameters.
- To identify respective castes, communities, sub-castes, or synonyms in the Central List of OBCs and classify them into their respective sub-categories.
- To study the Central List of OBCs and rectify any repetitions, ambiguities, inconsistencies, and errors.
- The Commission's progress has faced various challenges, including the absence of data on the population of different communities to compare their representation in jobs and education.
- Initially, the Commission had requested an all-India survey to estimate the caste-wise population of OBCs but later decided against it.
- Additionally, the government has remained silent on the collection of OBC data in the Census, despite demands from OBC groups.
4. The Extent of OBC Recruitment in Central Jobs
- As part of its findings, the Commission analyzed data from the preceding five years on OBC quota-based central jobs and admissions to central higher education institutions.
- It revealed that a disproportionate number of jobs and educational seats went to a small fraction of OBC sub-castes, with 37% of the total OBC communities having no representation in jobs and educational institutions.
- Regarding OBC representation in central jobs, as of March 17, the data showed that 20.26% of Group A to Group C employees were OBCs.
- However, the representation drops to 16.88% in Group A, where the reservation for OBCs is 27%.
Image Source: The Indian Express
5. The Way Forward
- Despite the challenges faced, the Commission has made significant progress, including drafting a report on sub-categorization.
- However, the final report is yet to be submitted. The extended tenure will provide the Commission with additional time to address the complexities of OBC sub-categorization and propose measures to achieve equitable distribution of reservation benefits among all OBC communities.
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For Prelims: Rohini Commission, OBCs, Central List
For Mains:
1. Discuss the role of the government in addressing the demand for the enumeration of OBCs in the Census and its potential impact on OBC representation and welfare." (250 Words)
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Previous Year Questions
1. Who was appointed as the head of the OBC Sub-categorisation Commission?
(Maharashtra Talathi 2019)
A. Justice Geeta Mittal
B. Justice Manjula Chellur
C. Justice Tahilramani
D. Justice G. Rohini
Answer: D
2. Which of the following pairs of list and contents is/are correctly matched? (UPSC CAPF 2019)
1. State list Public health and sanitation
2. Union list Citizenship, naturalisation and aliens
3. Concurrent list Legal, medical and other
Select the correct answer using the code given below:
A. 1 only B. 1, 2 and 3 C. 2 and 3 only D. 3 only
Answer: B
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Source: The Indian Express
NATIONAL FOOD SECURITY ACT
1. Context
The Supreme Court orally remarked that a long-term response to problems of food security was to generate employment, even as advocate Prashant Bhushan said the National Food Security Act (NFSA) continued to be driven by figures from the 2011 Census.
2. About the food inflation rate in India
- As of September 5, 2023, the food inflation rate in India is 8.88%.
- This is based on the All-India Consumer Price Index for Agricultural Products (CPI-AP), which measures the change in prices of a basket of food items consumed by rural and urban households.
- The CPI-AP food inflation rate was 7.03% in June 2023 and 5.38% in July 2022.
3. The reasons for cereal inflation
There are several reasons why cereal inflation is high in India. These include:
- The Russia-Ukrainian war has disrupted global wheat exports. India is a major importer of wheat, and the war has led to a shortage of wheat in the global market, which has pushed up prices.
- A poor monsoon season in India has damaged crops. The monsoon season is crucial for agriculture in India, and a poor monsoon season can lead to lower crop yields, which can also push up prices.
- Higher transportation costs: The cost of transporting food has been rising due to higher fuel prices. This has also contributed to the rise in cereal prices.
- Lower domestic production: The production of cereals in India has been declining in recent years. This is due to several factors, including the lack of investment in agriculture, the ageing farmer population, and climate change.
- Government policies: The government has imposed export restrictions on wheat and rice, which has limited the supply of these cereals in the market and pushed up prices.
3. National Food Security Act, 2013
- The National Food Security Act, 2013 (NFSA) is an Act of the Parliament of India that aims to provide food and nutritional security in the human life cycle approach, by ensuring access to an adequate quantity of quality food at affordable prices for people to live a life with dignity and for matters connected therewith or incidental thereto.
- The Act was enacted on July 5, 2013, and came into force on September 1, 2013.
- It covers two-thirds of the population of India, which is about 813 million people.
3.1. Salient features
- The Public Distribution System (PDS) is now governed by provisions of the National Food Security Act, 2013 (NFSA).
- Coverage under PDS is de-linked from the erstwhile 'poverty estimates'.
- The Act provides coverage for nearly 2/3rd of the country's total population, basis Census 2011 population estimates.
- 75% of the Rural and 50% of Urban population is entitled to receive highly subsidised foodgrains under two categories of beneficiaries Antodaya Anna Yojana (AAY) households and Priority Households (PHH).
- State/UT-wise coverage is determined by the erstwhile Planning Commission (now NITI Ayog) based on the 2011-12 Household Consumption Expenditure survey of NSSO.
- The Act entitles 35 kg of foodgrain per AAY Household per month, whereas 5 Kg of foodgrain per PHH Person per month.
- Identification of beneficiaries/households under NFSA is done by the respective State/UT Government, which is required to frame its own criteria.
- Highly subsidised Central Issue Prices of Re.1, Rs.2 and Rs.3 for Coarse-grains, Wheat and Rice respectively, kept unchanged till June 2019.
- No reduction in foodgrains allocation to any State/UT under NFSA. Allocation gaps if any, are covered with Tide-Over allocation
- Eldest woman of the beneficiary household (18 years or above) is considered as 'Head of Family' to issue ration cards.
- Grievance redressal mechanisms, through State Food Commissions, DGROs, and Vigilance Committees at different levels are provisioned for Women's Empowerment.
- Provisions for disclosure of records relating to PDS operations, placing of beneficiaries' list in public domain/portals, for enhanced transparency
- Assistance to States/UTs for meeting expenditure on intra-state transportation & handling of foodgrains and FPS Dealers' margin
3.2. The eligibility criteria
Rural areas:
- Households with an annual income of less than Rs. 10,000 per annum.
- Households with at least two adult members who are unable to work due to old age, disability, or illness.
- Households that depend on agriculture for their livelihood and have an annual income of less than Rs. 5000 per annum.
- Households that have been identified as Below the Poverty Line (BPL) by the state government.
Urban areas:
- Households with an annual income of less than Rs. 15,000 per annum.
- Households with at least two adult members who are unable to work due to old age, disability, or illness.
- Households that depend on non-agricultural activities for their livelihood and have an annual income of less than Rs. 10,000 per annum.
- Households that have been identified as Below Poverty Line (BPL) by the state government.
4. Conclusion
- All NFSA beneficiaries, before January 2023, were getting 10 kg of rice or wheat per month practically free of cost.
- Since that more or less met their entire requirement the last national sample survey of 2011-12 revealed the per capita cereal consumption at 11.22 kg for rural and 9.28 kg for urban India they hardly had to buy grain from the open market.
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For Prelims: National Food Security Act, inflation, Below Poverty Line, All-India Consumer Price Index for Agricultural Products, Russia-Ukrainian war, Public Distribution System, Antodaya Anna Yojana, Priority Households, Planning Commission, NITI Ayog,
For Mains:
1. Evaluate the impact of poor monsoon seasons and climate change on cereal production in India. How can these challenges be addressed to ensure food security for the population? (250 Words)
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Previous Year Questions
1. With reference to the provisions made under the National Food Security act, 2013 consider the following statements: (UPSC 2018)
1. The families coming under the category of 'below poverty line (BPL)' only are eligible to receive subsidized food grains.
2. The eldest woman in a household, of age 18 years or above, shall be the head of the household for the purpose of issuance of a ration card.
3. Pregnant women and lactating mothers are entitled to a 'take-home ration' of 1600 calories per day during pregnancy and or six months thereafter.
Which of the statements given above is/are correct?
A. 1 and 2 B. 2 only C. 1 and 3 D. 3 only
Answer: B
2. With reference to the National Food Security Act, which of the following statement is/are correct? (UPPSC 2019)
I. It will cover up to 75 percent rural and 50 percent urban population.
II. Special focus on nutritional support to women and children.
III. Eldest woman of above 18 years of age will be head of household.
Select the correct answer using the codes given below:
A. I and II are correct
B. II and III are correct
C. I, II and III are correct
D. None of these
Answer: C
3. In a given year in India, official poverty lines are higher in some States than in others because (UPSC 2019)
A. Poverty rates vary from State to State
B. Price levels vary from State to State
C. Gross State Product varies from State to State
D. Quality of public distribution varies from State to State
Answer: B
4. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
A. Controlling the inflation in India is the responsibility of the Government of India only
B. The Reserve Bank of India has no role in controlling the inflation
C. Decreased money circulation helps in controlling the inflation
D. Increased money circulation helps in controlling the inflation
Answer: C
5. With reference to India, consider the following statements: (UPSC 2010)
1. The Wholesale Price Index (WPI) in India is available on a monthly basis only.
2. As compared to Consumer Price Index for Industrial Workers (CPI(IW)), the WPI gives less weight to food articles.
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
6. Consider the following statements: (UPSC 2020)
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
A. 1 and 2 only B. 2 only C. 3 only D. 1, 2 and 3
Answer: A
7. Who among the following is the head of the standing committee on economic statistics set up by Ministry of Statistics and Programme Implementation (MOSPI)? (SSC CGL 2020)
A. Krishnamurthy Subramanian
B. Manmohan Singh
C. Pronab Sen
D. Raghuram Rajan
Answer: C
8. As per Ministry of Statistics and Programme Implementation, which state of India has the highest per capita income as of Sep 2019? (SSC CPO 2019)
A. Goa B. Punjab C. Tamil Nadu D. Gujarat
Answer: A
9. The Department for Promotion of Industry and Internal Trade (DPIIT) has revised the base year index of Eight Core Industries having a combined weight of about 40.27 percent in the Index of Industrial Production. Which one of the following is not one of the Eight Core Industries? (CDS 2022)
A. Coal
B. Refinery products
C. Rubber products
D. Cement
Answer: C
10. Read the following passage and answer the question that follows. Your answers to these items should be based on the passage only. (UPSC 2021)
Policymakers and media have placed the blame for skyrocketing food prices on a variety of factors, including high fuel prices, bad weather in key food producing countries, and the diversion of land to non-food production. Increased emphasis, however, has been placed on a surge in demand for food from the most populous emerging economics. It seems highly probable that mass consumption in these countries could be well poised to create a food crisis.
With reference to the above passage, the following assumptions have been made:
1. Oil producing countries are one of the reasons for high food prices.
2. If there is a food crisis in the world in the near future, it will be in the emerging economies. Which of the above assumptions is/are valid?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: D
11. India has experienced persistent and high food inflation in the recent past. What could be the reasons? (UPSC 2011)
1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30.
2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
3. The food supply chain has structural constraints.
Which of the statements given above are correct?
A. 1 and 2 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3
Answer: B
12. With reference to inflation in India, which of the following statements is correct? (UPSC 2015)
A. Controlling the inflation in India is the responsibility of the Government of India only
B.The Reserve Bank of India has no role in controlling the inflation
C. Decreased money circulation helps in controlling the inflation
D. Increased money circulation helps in controlling the inflation
Answer: C
13. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)
1. The Agreement was signed by all the member countries of the UN and it will go into effect in 2017
2. The Agreement aims to limit greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2°C or even 1.5°C above pre-industrial levels.
3. Developed countries acknowledged their historical responsibility in global warming and committed to donate $ 1000 billion a year from 2020 to help developing countries to cope with climate change.
Select the correct answer using the code given below:
A. 1 and 3 only B. 2 only C. 2 and 3 only D. 1, 2 and 3
Answer: B
14. The Public Distribution System, which evolved as a system of management of food and distribution of food grains, was relaunched as _______ Public Distribution System in 1997. (SSC JE EE 2021)
A. Evolved B. Transformed C. Tested D. Targeted
Answer: D
15. Under the Antyodaya Anna Yojana, up to what quantity of rice and wheat can be purchased at a subsidised cost? (FCI AG III 2023)
A. 35 kg B. 40 kg C. 30 kg D. 25 kg E. 50 kg
Answer: A
16. Among the following who are eligible to benefit from the "Mahatma Gandhi National Rural Employment Guarantee Act"? (UPSC 2011)
A. Adult members of only the scheduled caste and scheduled tribe households.
B. Adult members of below-poverty line (BPL) households.
C. Adult members of households of all backward communities.
D. Adult members of any rural household.
Answer: D
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UNIVERSITY GRANTS COMMISSION (UGC)
1. Context:
The University Grants Commission (UGC) has finalised the ‘Draft Guidelines for Implementation of Recognition of Prior Learning (RPL) in Higher Education’ to provide access to education and to enable the concept of life-long education. RPL is defined in the guidelines as a formal mechanism used to evaluate a person’s existing knowledge, skills, and experience gained through formal, non-formal, or informal learning.
2. University Grants Commission (UGC)
The University Grants Commission (UGC) is a statutory body in India that was established to oversee and maintain the standards of higher education. It was formed in 1956 under the University Grants Commission Act of 1956 and operates under the Ministry of Education, Government of India
The primary functions of the UGC include:
- Allocating funds to universities and colleges.
- Formulating and implementing academic standards for higher education institutions.
- Monitoring and maintaining the quality of teaching, research, and examinations in universities.
- Providing guidance and coordination among universities and colleges in the country.
- Supporting and promoting innovations and improvements in the education system
3. Appointment, Tenure, Eligibility
University Grants Commission (UGC) Appointment, Tenure, and Eligibility
| Position | Appointment Method | Tenure | Minimum Eligibility |
|---|---|---|---|
| Chairperson | Appointed by the President of India | 5 years, extendable for another 5 years (subject to review) | Distinguished academician with: * Minimum 10 years of experience as Professor in a University system or 10 years in equivalent position at a reputed research/academic administrative organization. * Eminence in higher education. * No connection with the concerned university or its colleges. |
| Member | Appointed by the President of India | 5 years, extendable for another 5 years (subject to review) | Renowned scholar/expert with: * Proven track record in teaching/research/administration in relevant field. * Minimum 10 years of experience as Professor/equivalent in a University/College/Institute of national importance. * Demonstrated commitment to higher education development. |
| Vice-Chancellor (University) | Appointed by Executive Council of the University | 5 years, extendable for another 5 years | Distinguished academician with: * Minimum 10 years of experience as Professor in a University system or 10 years in equivalent position at a reputed research/academic administrative organization. * Eminence in the sphere of higher education. * No connection with the concerned university or its colleges. |
| Dean (Faculty) or Director (School/Institute) | Appointed by Executive Council of the University/Governing Council of the Institute | 5 years, extendable for another 5 years | Eminent scholar with: * Minimum 10 years of experience as Professor in relevant field. * Exceptional research record and contributions to the discipline. * Strong administrative and leadership skills. |
| Professor | Through Selection Committee constituted by the University | Up to 5 years (initially), extendable based on performance review | Ph.D. in relevant subject with: * Proven track record of research publications in peer-reviewed journals. * Significant contribution to the discipline. * Experience in research supervision. |
| Associate Professor | Through Selection Committee constituted by the University | Up to 5 years (initially), extendable based on performance review | Ph.D. in relevant subject with: * Good academic record and publications. * Minimum 8 years of teaching/research experience in relevant field. |
| Assistant Professor | Through Selection Committee constituted by the University | Up to 5 years (initially), extendable based on performance review | Master's degree with at least 55% marks and Ph.D. in relevant/allied/cognate discipline OR Master's degree with NET/SLET/SET qualification. |
4. University Grants Commission - Statutory Provisions
The University Grants Commission (UGC) operates under statutory provisions outlined primarily in the University Grants Commission Act, 1956. Here are some of the key statutory provisions governing the UGC:
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University Grants Commission Act, 1956: This is the primary legislation that established the UGC. It defines the roles, functions, powers, and responsibilities of the Commission. It also outlines the composition of the UGC, appointment procedures, and its authority to allocate funds to universities and colleges.
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UGC (Institutions Deemed to be Universities) Regulations, 2016: These regulations provide guidelines for institutions seeking the status of "Deemed to be University." They specify the criteria, application process, and conditions for granting this status.
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UGC (Minimum Standards of Instruction for the Grant of the First Degree through Non-formal/Distance Education) Regulations, 2017: These regulations specify the minimum standards for offering programs through distance education mode, ensuring quality education delivery.
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UGC (Open and Distance Learning) Regulations, 2017: These regulations govern the standards and norms for open and distance learning programs offered by universities and institutions in India.
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UGC (Establishment and Maintenance of Standards in Private Universities) Regulations, 2003: These regulations outline the norms and standards for the establishment and functioning of private universities, ensuring quality education.
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UGC (Prevention, Prohibition, and Redressal of Sexual Harassment of Women Employees and Students in Higher Educational Institutions) Regulations, 2015: These regulations mandate higher educational institutions to establish mechanisms for preventing and addressing sexual harassment.
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UGC (Promotion of Equity in Higher Educational Institutions) Regulations, 2012: These regulations aim to promote equity in higher education, focusing on providing opportunities to disadvantaged sections of society.
5. University Grants Commission - Powers and Functions
The University Grants Commission (UGC) in India is entrusted with several powers and functions aimed at promoting and regulating higher education in the country.
Some of its key powers and functions include:
- UGC allocates funds to universities and colleges for their development, improvement, and maintenance
- Provides financial assistance to encourage and support research activities in various academic disciplines
- UGC establishes and maintains academic standards in higher education to ensure quality across universities and colleges
- Develops frameworks and guidelines for curriculum development in different academic programs
- UGC recognizes universities in India and provides approval for the establishment of new universities
- Monitors the quality of education, teaching, research, and examinations in universities to ensure adherence to set standards
- UGC promotes and supports research activities by providing grants, fellowships, and scholarships to students and faculty members
- Facilitates coordination and cooperation among universities and other higher educational institutions
- Advises the Central and State governments on matters related to higher education policies, regulations, and development
- Provides guidance, assistance, and recommendations to universities for enhancing their academic and research standards
- Conducts assessments and accredits higher education institutions to ensure and improve quality
- Undertakes periodic reviews and assessments to maintain and enhance the quality of education
- Implements programs and initiatives to promote access to higher education for underprivileged and marginalized sections of society
- Develops and revises regulations and guidelines governing various aspects of higher education, such as distance education, deemed universities, private universities, etc
- Collects, analyzes, and maintains data related to higher education for policy formulation and decision-making purposes
6.Institutions which grant Degree
In India, degrees are granted by various types of institutions that are recognized and authorized to award them.
These institutions include:
- Central Universities: Established by an Act of Parliament and are under the purview of the central government.
- State Universities: Established by state governments within their respective states.
- Deemed Universities: Granted the status of "Deemed to be University" by the University Grants Commission (UGC)
- Many colleges are affiliated with universities and offer undergraduate and postgraduate programs. The degrees awarded by these colleges are conferred by the affiliated university
- Some colleges have been granted autonomy by the University Grants Commission or the respective university. These colleges have the authority to design their curriculum and conduct examinations, and they award degrees on their own
- Certain institutes, like the Indian Institutes of Technology (IITs), National Institutes of Technology (NITs), Indian Institutes of Management (IIMs), and others designated as Institutes of National Importance, have the authority to award degrees
- Institutions like Indira Gandhi National Open University (IGNOU) and others recognized by the Distance Education Bureau (DEB) offer distance education programs and award degrees
These institutions adhere to the guidelines and regulations set by regulatory bodies like the University Grants Commission (UGC), All India Council for Technical Education (AICTE), Bar Council of India (BCI), Medical Council of India (MCI), and others to maintain the quality and standards of education while awarding degrees in their respective fields of expertise
7. Challenges regarding the University Grants Commission
The University Grants Commission (UGC) in India, despite its significant role in regulating and fostering higher education, faces several challenges:
Insufficient Funding: The allocated funds might not always meet the growing needs of universities and colleges, impacting infrastructure development, research, and educational quality
Ensuring Quality: Maintaining and assuring consistent quality across a diverse range of institutions, especially in rapidly evolving fields, can be challenging.
Accreditation Processes: Some institutions struggle to meet accreditation criteria, impacting their ability to offer recognized degrees
Rapid Changes in Education: Keeping regulations updated and aligned with the evolving educational landscape, including emerging technologies and global standards, poses a challenge
Global Rankings: Enhancing the global competitiveness of Indian higher education institutions in terms of rankings and international collaborations is an ongoing challenge
Industry-Relevant Skills: Aligning educational programs with industry needs to enhance employability requires continuous curriculum updates and industry collaboration
8. University Grants Commission - Historical Background
The University Grants Commission (UGC) in India has a rich historical background that traces back to the pre-independence era and has evolved significantly over time:
Pre-Independence Era:
- 1920s-1940s: Before India gained independence, the idea of a body to oversee and promote higher education emerged. The need for such an institution was discussed during the 1920s and 1930s.
Post-Independence Formation:
- 1947: After India gained independence in 1947, discussions intensified regarding the establishment of a commission to oversee higher education and allocate funds to universities and colleges.
- 1950: The UGC was initially set up as an ad-hoc committee to oversee the allocation of grants to universities and colleges.
- 1956: The University Grants Commission Act was passed on December 28, 1956, establishing the UGC as a statutory body. This formalized its role in overseeing and promoting higher education.
Evolution and Functions:
- Early Years: Initially, the UGC focused on disbursing grants and fostering the development of universities and colleges.
- Expanding Role: Over time, the UGC's role expanded to encompass setting academic standards, promoting research, and advising the government on higher education policies.
- Regulatory Functions: It started playing a more regulatory role by formulating guidelines and regulations for various aspects of higher education.
Milestones and Amendments:
- 1960s-1970s: The UGC underwent amendments to accommodate changes in the higher education landscape and to enhance its effectiveness.
- Subsequent Decades: The UGC continued to evolve, adapting to the changing needs of higher education, introducing reforms, and addressing emerging challenges.
9. Way forward
Throughout its history, the UGC has adapted to the changing educational scenario in India, expanding its functions and responsibilities to meet the evolving needs of higher education. It remains a key institution in the Indian education system, contributing significantly to the development and enhancement of higher education across the country
Source: The Hindu
FOREIGN DIRECT INVESTMENT (FDI)
1. Context
India’s foreign exchange reserves registered a $1.51 billion weekly rise to touch $658.09 billion on November 29. This reversed eight straight weeks of decline, from the all-time-high $704.89 billion reached on September 27.
2. FDI in India
- India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
- Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
- Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
- While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy
3. Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise
Key Aspects:
- FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
- FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
- Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
- FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
- FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.
4.FDI Routes in India
India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed
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Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.
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Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.
4.1. Examples
- Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
- For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
- In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
- Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
- FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
- In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
- In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
- In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route
4.2.Sectors where FDI Prohibited
- FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
- FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
- FDI is not allowed in the lottery business, except for state-run lotteries
- FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
- Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
- While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
- FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate
5. Foreign Portfolio Investors (FPIs)
Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest
Key Aspects:
- FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
- FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
- FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
- FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
- FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.
6.Foreign Portfolio vs. Foreign Direct Investment
| FPI (Foreign Portfolio Investment) | FDI (Foreign Direct Investment) |
| FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses | FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations. |
| FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments. | FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period. |
| FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns. | FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives. |
| FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets | FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure |
| FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI. | FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries |
| FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations. | FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures |
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For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
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Previous Year Questions
1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)
Which one of the following statements best represents an important difference between the two?
A.FII helps bring better management skills and technology, while FDI only brings in capital
B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market
D.FII is considered to the more stable than FDI
Answer (B)
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Source: indianexpress
NATIONAL HUMAN RIGHTS COMMISSION (NHRC)
1. Context
On the eve of Human Rights Day, The National Human Rights Commission (NHRC), India plays a vital role in advancing human rights discourse, drawing on India’s rich civilisational ethos of empathy, compassion, and respect for human dignity. The Commission remains committed to promoting human rights both within India and across the globe, working closely with other National Human Rights Institutions, particularly in the Global South. Through its capacity building initiatives, the NHRC draws upon its extensive experience in addressing various human rights concerns over the past three decades
2. What is the National Human Rights Commission (NHRC)?
- The National Human Rights Commission (NHRC) is a statutory body established in India in 1993 under the Protection of Human Rights Act, 1993.
- It serves as an autonomous public institution tasked with the protection and promotion of human rights across the country.
- The NHRC investigates complaints of human rights violations, conducts inquiries, and recommends remedial action to the government.
- It also plays a role in promoting awareness of human rights and providing education on related issues.
- The commission consists of a chairperson and several members appointed by the President of India, and it operates at both the central and state levels
3. History of NHRC
- The National Human Rights Commission (NHRC) was established in India on October 12, 1993, under the Protection of Human Rights Act, 1993.
- This Act was enacted to fulfill the obligations India undertook by becoming a signatory to the Vienna Declaration and Programme of Action, which called for the establishment of national institutions for the promotion and protection of human rights.
- The NHRC was founded with the aim of addressing human rights violations and promoting awareness and respect for human rights across the country. It operates as an autonomous body, independent of the government, to ensure impartiality and effectiveness in its functioning.
- Since its inception, the NHRC has played a crucial role in investigating complaints of human rights violations, conducting inquiries, and making recommendations to the government for remedial action. It also engages in advocacy, education, and awareness programs to promote a culture of human rights in India.
- Over the years, the NHRC has evolved and expanded its scope to address various human rights issues, including those related to civil, political, economic, social, and cultural rights. It operates at both the central and state levels, with a chairperson and members appointed by the President of India.
- The NHRC's history is marked by its efforts to uphold the principles of justice, equality, and dignity enshrined in the Indian Constitution and international human rights instruments
4. NHRC Composition
The composition of the National Human Rights Commission (NHRC) includes a chairperson and several members appointed by the President of India. According to the Protection of Human Rights Act, 1993, the NHRC consists of:
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Chairperson: The chairperson is appointed by the President of India and must be a retired Chief Justice of the Supreme Court or a serving or retired Judge of the Supreme Court.
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Members: The NHRC can have up to four members, including a member who is or has been a Judge of the Supreme Court, a member who is or has been the Chief Justice of a High Court, and two other members who have knowledge or practical experience in matters relating to human rights.
These appointments aim to ensure the independence, expertise, and credibility of the NHRC in addressing human rights issues effectively. The members serve fixed terms as specified by the Act, and they collectively contribute to the commission's efforts to protect and promote human rights across the country
5.Appointment of NHRC Members
The appointment of members to the National Human Rights Commission (NHRC) follows a process outlined in the Protection of Human Rights Act, 1993. Here's an overview of the appointment procedure:
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Selection Committee: A Selection Committee is constituted to recommend candidates for appointment as Chairperson and members of the NHRC. The Selection Committee is chaired by the Prime Minister of India and includes the following members:
- The Speaker of the Lok Sabha (House of the People) or the Deputy Speaker, in case the Speaker is unable to attend.
- The Minister in charge of the Ministry of Home Affairs in the Government of India.
- The Leader of the Opposition in the Lok Sabha.
- The Leader of the Opposition in the Rajya Sabha (Council of States) in the absence of the Leader of the Opposition in the Lok Sabha
6.Functions & Powers of NHRC
The National Human Rights Commission (NHRC) of India is empowered with various functions and powers to protect and promote human rights across the country.
Here are some of its key functions and powers:
- The NHRC is authorized to inquire into complaints of human rights violations received from individuals or groups. It can investigate violations committed by public servants or by any authority or person acting under the government's authority
- The Commission has the power to monitor human rights violations, including through suo moto action, where it can initiate an inquiry based on media reports, complaints, or its own knowledge
- Following investigations or inquiries, the NHRC can make recommendations to the concerned authorities for remedial action, prosecution, or compensation to victims of human rights violations
- The NHRC engages in activities to raise awareness about human rights issues through seminars, workshops, publications, and other educational programs
- It advises the government on policies and measures to promote and protect human rights effectively
- The NHRC can intervene in court proceedings related to human rights violations, either as a party or as amicus curiae (friend of the court)
- The Commission conducts research and studies on human rights issues to better understand the challenges and formulate appropriate responses
- Based on its findings and experiences, the NHRC can recommend legislative reforms to strengthen human rights protection in the country
- The NHRC collaborates with international human rights organizations and participates in international forums to promote human rights globally
- The NHRC has the authority to visit and monitor places of detention, such as prisons and juvenile homes, to ensure that inmates' human rights are respected
7. Limitations of NHRC
National Human Rights Commission (NHRC) of India plays a significant role in protecting and promoting human rights, it also faces several limitations, including:
- The NHRC lacks direct enforcement authority. It can investigate human rights violations, make recommendations, and issue guidelines, but it cannot enforce its decisions or ensure their implementation. Its recommendations are non-binding, and compliance by government agencies or other authorities is voluntary.
- The process of investigation and resolution of complaints by the NHRC can be lengthy and time-consuming, leading to delays in providing justice to victims of human rights violations. This delay can undermine the effectiveness of the NHRC in addressing urgent and serious violations
- The NHRC operates with limited resources, including budgetary allocations and staffing. This constraint can affect its capacity to handle a large number of complaints effectively and conduct thorough investigations into human rights violations
- The NHRC's jurisdiction is limited to investigating human rights violations committed by public servants or authorities acting under the government's authority. It may not have jurisdiction over violations by non-state actors or in certain areas like the armed forces, where separate mechanisms exist
- There have been instances where political pressures or interference have affected the independence and impartiality of the NHRC. Political influence can hinder its ability to address human rights violations objectively and without bias
- Many people, especially in rural areas and marginalized communities, may not be aware of the NHRC's existence or how to access its services. This lack of awareness and accessibility can prevent victims of human rights violations from seeking redress through the commission
- Even when the NHRC makes recommendations for remedial action or compensation, there may be instances where these recommendations are not implemented fully or effectively by the concerned authorities
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For Prelims: National Human Rights Commission
For Mains: Emerging Human Rights Challenges, Role and Functions of the National Human Rights Commission (NHRC)
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Previous Year Questions
1.Other than the Fundamental Rights, which of the following parts of the Constitution of India reflect/reflects the principles and provisions of the Universal Declaration of Human Rights (1948)? (UPSC CSE 2020)
Select the correct answer using the code given below: (a) 1 and 2 only Answer: (d) 2.Consider the following: (UPSC CSE 2011)
Which of the above is/are Human Right/Human Rights under “Universal Declaration of Human Rights”? (a) 1 only Answer: (d)
1.Though the Human Rights Commissions have contributed immensely to the protection of human rights in India, yet they have failed to assert themselves against the mighty and powerful. Analysing theirstructural and practical limitations, suggest remedial measures. (UPSC CSE Mains GS 1 2021) |
Source: The Hindu
