SPECIAL INTENSIVE REVISION (SIR)
- The Special Intensive Revision (SIR) of the Electoral Rolls is an important exercise undertaken by the Election Commission of India (ECI) to ensure that the voter lists (electoral rolls) are accurate, updated, and inclusive before any major election or as part of the annual revision cycle.
- In simpler terms, the SIR is a comprehensive verification and correction process of the electoral rolls — aimed at including eligible voters, removing ineligible ones, and rectifying errors in the existing list.
- It is called “special” because it involves an intensified, house-to-house verification and greater public participation compared to the routine annual summary revision
- The purpose of the Special Intensive Revision is to maintain the purity, accuracy, and inclusiveness of India’s democratic process. Clean and updated voter rolls are essential for free, fair, and credible elections, as they prevent issues like bogus voting, disenfranchisement, and duplication.
- In summary, the Special Intensive Revision (SIR) is a focused, large-scale voter verification campaign conducted by the Election Commission to ensure that the electoral rolls are error-free, inclusive, and reflective of the current eligible voting population. It plays a crucial role in strengthening the integrity and transparency of India’s electoral system
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During the Special Intensive Revision, Booth Level Officers (BLOs) visit households to verify voter details such as name, address, age, and photo identity. This exercise helps identify:
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- Article 324(1) of the Indian Constitution empowers the Election Commission of India (ECI) with the authority to oversee, guide, and manage the preparation of electoral rolls as well as the conduct of elections for both Parliament and the State Legislatures.
- As per Section 21(3) of the Representation of the People Act, 1950, the ECI holds the right to order a special revision of the electoral roll for any constituency, or part of it, at any time and in a manner it considers appropriate.
- According to the Registration of Electors’ Rules, 1960, the revision of electoral rolls may be carried out intensively, summarily, or through a combination of both methods, as directed by the ECI.
- An intensive revision involves preparing an entirely new roll, while a summary revision deals with updating or modifying the existing one
| Aspect | Special Intensive Revision (SIR) | National Register of Citizens (NRC) |
| Purpose | To verify, update, and correct the electoral rolls so that all eligible voters are included and ineligible names are removed | To identify legal citizens of India and detect illegal immigrants |
| Authority / Governing Body | Conducted by the Election Commission of India (ECI) | Conducted under the Ministry of Home Affairs (MHA) |
| Legal Basis | Based on Article 324(1) of the Constitution, Section 21(3) of the Representation of the People Act, 1950, and the Registration of Electors' Rules, 1960. | Governed by the Citizenship Act, 1955 and the Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules, 2003 |
| Scope | Focuses only on Indian citizens aged 18 years and above who are eligible to vote | Covers all residents of India (or a particular state) to determine their citizenship status |
| Nature of the Exercise | A regular, recurring administrative exercise carried out to maintain accurate voter lists | A special, large-scale verification exercise conducted under specific legal or political mandates. |
| Relation to Citizenship | Does not determine citizenship — only eligibility to vote | Directly determines citizenship status |
One of the major concerns is the erroneous deletion of eligible voters from the rolls.
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Mistakes during house-to-house verification or data entry may lead to legitimate voters—especially migrants, daily-wage workers, and marginalized communities—being left out.
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Such exclusions can directly affect voter participation and undermine the democratic process.
Despite the intensive verification, fake or duplicate names often remain due to poor coordination or outdated records.
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Deaths, migrations, or multiple registrations in different constituencies are not always updated accurately.
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This raises questions about the accuracy and credibility of the electoral rolls.
The SIR is a large-scale field operation requiring trained personnel, coordination among departments, and robust data systems.
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Booth Level Officers (BLOs) are often overburdened with multiple duties and may not have sufficient time or training for thorough verification.
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Limited digital infrastructure in rural areas can also hamper real-time data updates.
Electoral roll revisions, especially when conducted close to elections, can spark political allegations of bias or manipulation.
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Parties may accuse each other or the Election Commission of targeting specific communities or constituencies.
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Even unintentional errors can lead to trust deficits in the electoral process.
Addressing these concerns is vital to maintain trust in the Election Commission and uphold the credibility of India’s democratic system
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For Prelims: Special Intensive Revision (SIR), National Register of Citizens (NRC), Election Commission of India (ECI)
For Mains: GS II - Indian Polity
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Previous year Question1. Consider the following statements: (UPSC 2017)
1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognized political parties.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 only
C. 2 and 3 only
D. 3 only
Answer: D
2. Consider the following statements : (UPSC 2021)
1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In the 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies.
3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. 1 and 3
D. 2 and 3
Answer: B
Mains
1.To enhance the quality of democracy in India the Election Commission of India has proposed electoral reforms in 2016. What are the suggested reforms and how far are they significant to make democracy successful? (UPSC CSE 2017)
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NO CONFIDENCE MOTION
1. Context
2. No confidence motion
- A no-confidence motion, also known as a motion of no confidence or a vote of no confidence, is a significant parliamentary mechanism used in democratic systems to express the legislature's lack of confidence in the government or a specific member of the government.
- A no-confidence motion can be moved only in the Lok Sabha and by any member of the House.
- The member has to give a written notice of the motion before 10 am and at least 50 members have to accept the motion. The Speaker will then decide the date for the discussion of the motion.
- It serves as a crucial tool for holding elected officials accountable for their actions and decisions.
3. Initiating a No Confidence Motion
- The process of initiating a no-confidence motion typically begins with the opposition parties.
- They may present a formal proposal in the legislative chamber, backed by a specific number of lawmakers' signatures.
- In some cases, dissatisfied members from the ruling party might also initiate such a motion.
- The primary purpose is to ascertain whether the government or a particular minister still commands the majority support in the legislature.
4. Debate and Voting Process
- Once the no-confidence motion is tabled, a debate follows, during which lawmakers discuss the reasons for their lack of confidence in the government's performance.
- This debate allows the government to present its side and attempt to persuade lawmakers to vote in their favor.
- Following the debate, a vote is held, and if the motion garners a majority of votes against the government or minister, it is considered successful.
5. Impact on Governance
- A successful no-confidence motion carries significant consequences.
- In some parliamentary systems, it leads to the resignation of the government, triggering the dissolution of the parliament and necessitating new elections.
- Alternatively, the opposition parties may be invited to form a new government if they can demonstrate sufficient support.
6. Responsible Use and Political Stability:
- While the no-confidence motion is a powerful democratic tool, its frequent or frivolous use can create political instability and hinder effective governance.
- Therefore, lawmakers must exercise discretion, focusing on critical issues and genuine concerns.
- Responsible use of the no-confidence motion ensures that the government remains accountable to the people and that the country's stability is maintained.
7. Significance of No confidence motion
The no-confidence motion holds significant importance in a democratic system, and its significance lies in the following aspects:
- Government Accountability: The no-confidence motion serves as a powerful mechanism to hold the government accountable for its actions, decisions, and policies. It allows the legislature to express its lack of confidence in the government's performance, ensuring that the executive branch remains answerable to the elected representatives and the public.
- Checks and Balances: In a democratic setup, the separation of powers is vital to prevent the concentration of authority. The no-confidence motion is one of the key instruments that the legislature can employ to check the powers of the government. It helps maintain a system of checks and balances, ensuring that no single branch of government becomes too dominant.
- Democratic Oversight: The no-confidence motion reinforces the principle of democratic oversight. It enables the elected representatives to actively monitor the government's performance and initiate action if they believe the government is not living up to its mandate or is engaged in misconduct.
- Crisis Resolution: In times of political crises or governance failures, the no-confidence motion can be used as a means to address the situation. If the government is unable to provide effective leadership or address pressing issues, the legislature can signal its lack of confidence, prompting necessary changes in the government or leading to new elections.
- Encourages Responsible Governance: The possibility of facing a no-confidence motion encourages the government to govern responsibly and make decisions that are in the best interest of the people. It acts as a motivator for the government to deliver on its promises and avoid policies that may be unpopular with the majority.
- Promotes Public Debate: The no-confidence motion triggers debates and discussions in the legislature, providing a platform for lawmakers to express their views and concerns openly. This fosters a healthy democratic environment where different perspectives are heard and considered.
8. Previous instances of No-confidence motion
- Since Independence, 27 no-confidence motions have been moved in Lok Sabha.
- The first no-confidence motion was moved against Prime Minister Jawaharlal Nehru by Congress leader Acharya Kripalani in August 1963, immediately after losing to China in the 1962 war. The motion, however, was defeated.
- Indira Gandhi as Prime Minister faced the most number of no-confidence motions - 15. She survived each of the 15 floor tests. Former West Bengal CM Jyotirmoy Basu of the CPI(M) has moved four no-confidence motions.
- Narasimha Rao had to face three no-confidence motions, Morarji Desai two, and Jawaharlal Nehru, Rajiv Gandhi, Atal Bihari Vajpayee, and Narendra Modi have all faced one each.
- The last no-confidence motion was in 2003 when the then Congress President Sonia Gandhi moved the motion against Vajpayee.
- The duration of the longest debate on a no-confidence motion was 24.34 hours against Lal Bahadur Shastri, who has had to prove the majority of the House thrice.
- Most no-confidence motions have been defeated except in 1979 when Prime Minister Morarji Desai had to quit and in 1999 when the Vajpayee government lost power after their ally AIADMK pulled out of the coalition.
- In 2018, the Narendra Modi-led NDA government survived the no-confidence motion in the Lok Sabha by 195 votes. While 135 members supported the motion, 330 MPs rejected it.
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For Prelims: No-confidence motion, Lok Sabha, Checks and Balances, Indian National Developmental Inclusive Alliance (INDIA).
For Mains: 1. Discuss the concept of a "No Confidence Motion" in a parliamentary democracy. Explain its purpose and significance in holding the government accountable for its actions and decisions. (250 words).
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Previous year Question1. Consider the following statements regarding a No-Confidence Motion in India: (UPSC 2014)
1. There is no mention of a No-Confidence Motion in the Constitution of India.
2. A Motion of No-Confidence can be introduced in the Lok Sabha only
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
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SMALL INDUSTRIES
| Classification of Industries |
| Classification/ Industry type | Micro | Small | Medium |
| Investment | Not more than Rs.1 crore | Not more than Rs.10 crore | Not more than Rs.50 crore |
| Annual Turnover | Not more than Rs. 5 crore | Not more than Rs. 50 crore | Not more than Rs. 250 crore |
- Expansion of Entrepreneurial Activities: The innovative approaches adopted by small industries have contributed to the growth of entrepreneurial ventures. This expansion has brought more economic sectors into the fold, offering a broader range of goods and services that cater to both domestic and international markets.
- Industrialization of Rural and Underdeveloped Areas: Small industries have helped reduce regional disparities, promoting a more equitable distribution of wealth and income throughout the nation.
- Employment Creation: Small industries are crucial to India's economic development, as they generate significant employment opportunities at a much lower capital investment compared to large-scale industries
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Village Small Industries (VSI)
The term "Village and Small Industry (VSI)" is commonly used to refer to unorganized traditional sectors and small-scale industries. The VSI sector is composed of seven sub-sectors: handicrafts, handlooms, Khadi and Village Industries, coir, sericulture, power looms, and small-scale industries
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- Prime Minister’s Employment Generation Programme (PMEGP): The aim of this program is to create employment opportunities by establishing new micro-enterprises, projects, and self-employment initiatives across rural and urban areas of the country. The Khadi and Village Industries Commission (KVIC) serves as the national nodal agency responsible for implementing the scheme, while its execution at the state level is managed by State KVIC offices, State Khadi and Village Industries Boards (KVIB), District Industries Centres (DIC), Coir Board (for coir-related activities), and Banks.
- Collateral-Free Credit Provision for MSMEs: Banks and other financial institutions, including NBFCs, are mandated to provide collateral-free credit to Micro and Small Enterprises. The scheme ensures that up to ₹5 crore (effective from April 1, 2023) per borrowing unit is covered for collateral-free credit facilities (term loans and/or working capital) extended to micro and small enterprises by eligible lending institutions.
- A Scheme for Promotion of Innovation, Rural Industry & Entrepreneurship (ASPIRE): The ASPIRE program has been approved for continuation from 2021-2022 to 2025-2026 with a budget allocation of ₹194.87 crore. Updated guidelines issued on January 28, 2022, focus on the following objectives:
- Reducing unemployment and generating jobs,
- Promoting an entrepreneurial culture in India,
- Encouraging innovation to enhance the competitiveness of the MSME sector.
- Entrepreneurship and Skill Development Programmes (ESDP): This program is designed to inspire youth from diverse social backgrounds, including women, SC/ST communities, disabled individuals, ex-servicemen, and those below the poverty line, to consider careers in self-employment or entrepreneurship.
- Scheme of Fund for Regeneration of Traditional Industries (SFURTI): The scheme aims to create competitive, sustainable employment opportunities for traditional industries and artisans by organizing them into clusters. It also seeks to enhance the marketability of products produced by these clusters, upgrade the skills of traditional artisans, provide better tools and equipment, strengthen cluster governance with active stakeholder participation, and foster innovative products, advanced technologies, processes, market intelligence, and new models of public-private partnerships.
- MSME Champions Scheme: This program, set to run from 2021-2022 to 2025-2026, is divided into three components:
- MSME-Sustainable (ZED) Certification Scheme
- MSME-Competitive (Lean) Scheme
- MSME-Innovative (for Incubation, IPR, and Design) Scheme
- Greening MSME: SIDBI has introduced the "Greening MSME" initiative, which offers financial assistance up to a maximum of ₹20 crore to MSMEs for adopting energy-efficient and environmentally sustainable technologies
- Access to Finance: Access to funding is a major challenge for Indian MSMEs, with the total financing gap expected to reach $400 billion. While closing this gap will take time, targeted green finance initiatives in areas like waste management, electric vehicles, energy efficiency, and renewables can support MSME growth in these sectors.
- Interest Rates: The Central Government should lower interest rates and make consumer finance, housing loans, and vehicle loans more accessible to stimulate market demand.
- Climate Commitments and Transitioning to Low-Carbon: Small enterprises are limited to adhering to environmental regulations, while global supply chains increasingly shift to greener processes and products. There is currently no strategic plan to help MSMEs manage the risks associated with this transition.
- Unorganized Nature: Due to its fragmented structure and the predominance of micro-sized businesses, the MSME sector is one of the most vulnerable in the Indian economy. The COVID-19 pandemic has highlighted this vulnerability, with millions of MSMEs facing closure due to decreased demand caused by lockdowns.
- Green Transition of MSMEs: MSMEs are more exposed to policy and demand uncertainties, often with greater downside risks. Even if they recognize the benefits of going green, most lack the financial and technical capacity to invest in new initiatives. However, certain government programs can help address these barriers.
- Incentives and Penalties: Encouraging Small and Medium Enterprises (SMEs) to exceed mere compliance can be achieved by taxing negative externalities and offering subsidies or tax breaks for green investments. Updating environmental legislation should also consider the risks posed by different industries, and these policies should be assessed for their impact on MSMEs before widespread implementation
MSMEs should embrace best practices like implementing low-energy strategies, adopting renewable energy sources, improving waste management, ensuring women's safety, and making timely wage payments.
Governments, business associations, civil society organizations, and other stakeholders can play a proactive role in promoting awareness, sharing best practices, and providing training and resources. Financial incentives, such as tax breaks, subsidies, grants, and low-interest loans, can be offered by governments and investors to encourage MSMEs to adopt sustainable practices or invest in sustainable technologies.
Larger companies can support MSMEs in adopting sustainable practices by offering training, technical support, and financial assistance
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For Prelims: Current events of national and international importance For Mains: GS III - Indian Economy |
Previous year Questions1. Consider the following statements with reference to India: (UPSC 2023)
1. According to the 'Micro, Small and Medium Enterprises Development (MSMED) Act, 2006', the 'medium enterprises' are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore.
2. All bank loans to the Micro, Small, and Medium Enterprises qualify under the priority sector.
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: B
2. Which of the following can aid in furthering the Government's objective of inclusive growth? (UPSC 2011)
1. Promoting Self-Help Groups
2. Promoting Micro, Small and Medium Enterprises
3. Implementing the Right to Education Act
Select the correct answer using the codes given below:
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: D
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NON PERFORMING ASSET (NPA)
A Non-Performing Asset (NPA) refers to a classification used by financial institutions, primarily banks, to categorize loans or advances that are in default or are in arrears on scheduled payments of principal or interest. In simpler terms, when a borrower fails to make interest or principal payments for a certain period of time, typically 90 days or more past the due date, the loan is classified as a non-performing asset.
NPAs are detrimental to banks and financial institutions as they indicate a risk of default and can lead to financial losses. These assets can hamper the lender's ability to generate income through interest and can also impact their capital adequacy and liquidity.
Financial institutions employ various strategies to manage and recover NPAs, such as restructuring loans, loan recovery processes, selling off bad debts to asset reconstruction companies, or writing off the non-recoverable amount from their books
3. NPA (Non-Performing Assets) –Classifications
Non-performing assets (NPAs) are classified based on the period for which the loan remains overdue and the likelihood of recovery. The classifications typically involve three categories:
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Substandard Assets: These are assets that have remained non-performing for less than or equal to 12 months. They are characterized by the bank or financial institution experiencing a potential loss if full repayment occurs. Substandard assets have a higher risk of turning into bad loans.
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Doubtful Assets: These assets have remained in the non-performing category for more than 12 months. There is a significant risk associated with these assets, where the full repayment of the loan is highly uncertain. However, there might still be some potential, albeit remote, for recovery.
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Loss Assets: When the assets' loss has been identified by the bank or financial institution or an external auditor, and these assets have very little chance of recovery, they are classified as loss assets. These assets are considered uncollectible and of such little value that their continuance as assets is not warranted, and the entire outstanding balance is written off.
These classifications are crucial for banks and financial institutions to assess the health of their loan portfolios and take appropriate measures to manage and mitigate risks associated with NPAs
Bank fraud and Non-Performing Assets (NPAs) are two distinct issues in the banking sector, although they can sometimes be interconnected.
Bank Fraud: Bank fraud involves deliberate deception or dishonest actions carried out by individuals or groups, intending to gain an unfair or unlawful advantage, causing financial loss to the bank or its customers. Fraud can take various forms, such as embezzlement, forgery, loan fraud, identity theft, money laundering, or manipulating financial statements. It's essentially a criminal act involving deceit, misrepresentation, or illegal activities that lead to financial losses for the bank.
Non-Performing Assets (NPAs): NPAs refer to loans or advances that have stopped generating income for the bank because the borrower has defaulted on repayment. When a borrower fails to pay interest or principal for a specified period, typically 90 days or more, the loan is classified as an NPA. NPAs can arise due to various reasons such as economic downturns, borrower insolvency, mismanagement, or inadequate risk assessment by the lending institution.
While these issues are distinct, there can be situations where bank fraud contributes to the creation of NPAs. For instance, if a fraudulent loan is issued based on false documents or misrepresented information, it might result in the borrower defaulting on payments, eventually turning the loan into an NPA
5. What are the impacts of Non-Performing Assets (NPA)
Non-Performing Assets (NPAs) can have significant impacts on banks, the economy, and the overall financial ecosystem.
Here are some of the key effects:
- NPAs erode a bank's profitability as they stop generating income through interest payments. This affects the bank's ability to lend further and impacts its overall financial health. A high level of NPAs can weaken a bank's capital base, affecting its ability to absorb losses and maintain stability
- Banks with high NPAs become cautious about lending, especially to risky sectors or borrowers, leading to a credit crunch. This restricted lending can hamper economic growth as businesses and individuals find it challenging to secure credit for expansion or investment
- High NPAs can dent depositor and investor confidence in the banking system. Customers might withdraw deposits or shift to more stable institutions, causing liquidity issues for the affected bank
- NPAs can have broader economic repercussions. When banks face financial strain due to NPAs, their ability to support economic growth through lending diminishes. This can affect employment, investments, and overall economic development
- Regulators monitor and impose stricter norms on banks with high levels of NPAs to ensure financial stability. Banks might face regulatory penalties or restrictions, impacting their operations and growth prospects
- Banks might need additional capital infusion to cover the losses arising from NPAs. This can strain the bank's resources or necessitate seeking external funding, impacting shareholders and overall financial planning
Controlling Non-Performing Assets (NPAs) is crucial for the financial health of banks and the stability of the financial system. Several measures can be implemented to manage and control NPAs effectively:
Prudent Lending Practices: Implementing robust credit appraisal and risk assessment mechanisms before disbursing loans can prevent potential NPAs. Thoroughly evaluating borrower creditworthiness, financial stability, and collateral can mitigate risks.
Early Detection and Monitoring: Early identification of potential NPAs is crucial. Banks should closely monitor repayment schedules and intervene at the first signs of distress. Timely action can prevent assets from slipping into the NPA category.
Loan Restructuring and Rescheduling: Offering viable borrowers alternative repayment structures can help them meet their obligations. Loan restructuring involves altering repayment terms, interest rates, or extending the tenure to make repayments more manageable.
Asset Quality Review (AQR): Conducting regular asset quality reviews helps in identifying stressed assets early on. This enables banks to take proactive measures to prevent assets from turning into NPAs.
Asset Reconstruction Companies (ARCs): Collaborating with ARCs allows banks to transfer NPAs to specialized entities that focus on recovering these assets. It helps banks clean up their balance sheets and concentrate on core operations.
Strengthening Recovery Mechanisms: Banks should have robust recovery mechanisms in place, including legal recourse and debt recovery tribunals, to expedite the recovery of NPAs. Effective recovery minimizes losses for the bank.
Loan Recovery through Securitization and Asset Sale: Selling NPAs to other entities or securitizing them can provide liquidity and reduce the burden on banks. However, this should be balanced with ensuring fair value realization.
Prudential Norms and Regulatory Compliance: Adhering to prudential norms set by regulatory authorities helps in maintaining healthy asset quality. Compliance with regulations ensures timely recognition and provisioning for NPAs.
Debt Recovery Tribunals (DRTs) and SARFAESI Act: Utilizing legal mechanisms like DRTs and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act expedites the recovery process and acts as a deterrent against defaulting borrowers
7. Way forward
Implementing these measures collectively and consistently can aid in controlling NPAs, maintaining a healthy loan portfolio, and preserving the stability of the banking sector.
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For Prelims: Current events of Economy in Indian Scenario, RBI measurement to Control Non Performing Assets (NPAs) For Mains: General Studies III: Non Performing Asset (NPAs), Bad Bank |
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Previous Year Questions 1.Consider the following statements: Non-performing assets (NPAs) decline in value when (UPSC ESE 2018) 1. Demand revives in the economy. 2. Capacity utilization increases. 3. Capacity utilization, though substantive, is yet sub-optimal. 4. Capacity utilization decreases consequently upon merger of unit. Which of the above statements are correct? A.1, 3 and 4 only B.1, 2 and 4 only C.1, 2 and 3 only D.1, 2, 3 and 4 Answer (C) |
Source: Indianexpress
FREE TRADE AGREEMENT
1. Context
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.
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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)
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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
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ARTICLE 371
Part XXI of the Indian Constitution is titled "Temporary, Transitional and Special Provisions". It contains articles that deal with
- Special provisions for certain states: These provisions address the specific needs and circumstances of various states, aiming to ensure their smooth integration into the Indian Union and protect the interests of their population. This includes articles like:
- Article 371, which grants special provisions to 12 Indian states, including six Northeastern states. These provisions cover aspects like the allotment of funds for development, reservation in public employment and educational institutions, and special representation in the state legislature.
- Article 370, which was abrogated in 2019, previously granted special autonomous status to the state of Jammu and Kashmir.
- Temporary provisions: These provisions were meant to be temporary arrangements to facilitate the smooth transition from the pre-independence system to the new constitutional framework. However, some of these provisions, like those related to the distribution of legislative powers between the Centre and states, continue to be relevant even today.
- Transitional provisions: These provisions helped bridge the gap between the old and new legal systems and ensured a smooth transfer of power and authority.
3. Article 371 of the Constitution
Article 371 of the Indian Constitution is the first of a series of articles under Part XXI titled "Temporary, Transitional and Special Provisions". These articles provide special provisions for specific states, addressing their unique needs and circumstances.
Article 371 itself empowers the Parliament to
- Establish separate development boards for specific regions within the states of Maharashtra (Vidarbha and Marathwada) and Gujarat (Saurashtra and Kutch).
- Ensure equitable allocation of funds for development expenditure across these regions.
- Mandate the placement of a report on the functioning of these development boards before the respective state legislative assemblies every year.
4. Articles 371 to 371-J
Articles 371A to 371J have been introduced under Part XXI, each addressing the specific needs and circumstances of various states.
Nagaland (Article 371A, 13th Amendment Act, 1962)
- Parliament can't legislate in matters of Naga religion or social practices, the Naga customary law and procedure, administration of civil and criminal justice involving decisions according to Naga customary law and ownership and transfer of land and its resources, without the concurrence of the Legislative Assembly.
- This provision was inserted in the Constitution after a 16-point agreement between the Centre and the Naga People's Convention in 1960, which led to the creation of Nagaland in 1963.
- Also, there is a provision for a 35-member regional council for the Tuensang district, which elects the Tuensang members in the Assembly.
- A member from the Tuensang district is the Minister for Tuensang Affairs: The Governor has the final say on Tuensang-related matters.
- President may provide for the constitution and functions of a committee of elected members from the Hill areas in the Assembly; entrust "special responsibility" to the Governor to ensure its proper functioning.
- The Governor has to file a report every year on this to the President.
- The president must ensure "equitable opportunities and facilities" in "Public employment and education to people from different parts of the state";
- he may require the state government to organise "any class or classes of posts in the civil service of or any class or classes of civil posts under, the State into different local cadres for different parts of the State" and allow them.
- The President has similar powers vis-a-vis admissions in any university or state government-run educational institution.
- Also, he may provide for the setting up of an administrative tribunal outside the jurisdiction of the High Court to deal with issues of appointment, allotment or promotion in state civil services.
- Article 371E allows for the establishment of a university in Andhra Pradesh by a law of Parliament. But this is not a "special provision".
- The members of the Legislative Assembly of Sikkim shall elect the representative of Sikkim in the House of the People.
- To protect the rights and interests of various sections of the population of Sikkim, Parliament may provide for the number of seats in the Assembly, which may be filled only by candidates from those sections.
- The governor shall have "Special responsibility for peace and for an equitable arrangement for ensuring the social and economic advancement of different sections of the population".
- All earlier laws in territories that formed Sikkim shall continue and any adaptation or modification shall not be questioned in any court.
- The Governor has a special responsibility for law and order and "he shall, after consulting the Council of Ministers, exercise his judgment as to the action to be taken".
- Should a question arise over whether a particular matter is one in which the Governor is "required to act in the exercise of his judgment, the decision of the Governor in his discretion shall be final" and "shall not be called in question"?
- "equitable allocation of funds for developmental expenditure over the said region"
- "equitable allocation of funds for developmental expenditure over the said region"; and
- "equitable opportunities and facilities" for people of this region in government jobs and education.
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For Prelims: Part XII of the Constitution, Article 371, Special Provisions, Ladakh
For Mains:
1. Discuss the significance of Article 371 in the Indian Constitution and its role in addressing the unique needs and circumstances of certain states. Evaluate its effectiveness in ensuring the smooth integration of these states into the Indian Union while safeguarding their interests. (250 Words)
2. Imagine you are a policymaker involved in the decision-making process regarding Ladakh's demand for special protection. Outline the key factors you would consider before formulating a recommendation and suggest potential alternative solutions that could address the concerns of the Ladakhi people. (250 words)
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Previous Year Questions
1. The status of "Special Category States" is given to certain states to target the fund flow for better-balanced growth. Which of the following states fall under this category? (UPSSSC Lower PCS Prelims 2016)
1. Rajasthan
2. Uttarakhand
3. Bihar
4. Jammu & Kashmir
5. Himachal Pradesh
6. Jharkhand
Select the correct answer using the codes given below:
A. 1, 5 and 6 B. 2, 4 and 5 C. 3, 5 and 6 D. 1, 3 and 6
2. With reference to the Fourteenth Finance Commission, which of the following statements is/are correct? (UPSC 2015)
1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent.
2. It has made recommendations concerning sector-specific grants.
Select the correct answer using the code given below.
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
3. Based on the Sixth Schedule of Indian Constitution, with respect to the tribal areas of Assam, Meghalaya, Tripura and Mizoram Which of the following can the Governor of a State do? (DSSSB PRT General Section Officer 2019)
1. Can create a new autonomous district
2. The area of atonomous district can be increased
A. 1 Only B. 2 Only C. Both 1 and 2 D. Neither 1 nor 2
4. If a particular area is brought under the Fifth Schedule of the Constitution of India, which one of the following statements best reflects the consequence of it? (UPSC 2022)
A. This would prevent the transfer of land of tribal people to non-tribal people.
B. This would create a local self-governing body in that area.
C. This would convert that area into a Union Territory.
D. The State having such areas would be declared a Special Category State.
5. Article _____ of the Constitution of India deals with provisions related to the administration and control of Scheduled Areas and Scheduled Tribes. (SSC CGL 2020)
A. 222(1) B. 244(1) C. 244(2) D. 222(2)
6. The National Commission for Backward Classes (NCBC) was formed by insertion of Article ______ in the Constitution of India. (SSC CGL 2020)
A. 328B B. 338A C. 338B D. 328A
7. When did the Constitution of Jammu and Kashmir come into force? (UPSC CAPF 2016) A.26th January 1957 B. 15th August 1947 C. 25th July 1956 D.14th November 1947
8. State Legislature of Jammu and Kashmir can confer special rights and privileges on permanent residents of J and K with respect to - (MPSC 2019) Find the correct options below. (a) Employment under State Government (b) Settlement in the state (c) Acquisition of immovable property (d) Right to Scholarship (e) Right to entry into heritage sites A. (a), (b), (c), (d), (e) B. (a), (b), (c), (d) C. (a), (b), (c) D. (a), (b) Answers: 1-A, 2-A, 3-C, 4-A, 5-B, 6-B, 7-A, 8-B
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Source: The Indian Express
