IAS Gyan

Daily News Analysis


9th April, 2020


1. Kerala experts for 3-phased easing of curbs


-An expert committee headed by former Chief Secretary K.M. Abraham has recommended a phased relaxation of the lockdown to contain COVID-19 for areas outside the seven hotspot districts in the State from April 15.

Reference: https://www.thehindu.com/news/national/kerala/how-areas-outside-hotspots-get-relaxation/article31289767.ece



1. For better use: On MPLADS funds

-The suspension of the Members of Parliament Local Area Development Scheme (MPLADS) for two years to boost the funding available for the COVID-19 fight is a step in the right direction.

-The immediate benefit now is the freeing up of about ₹7,900 crores over a two-year period so that it can be spent on boosting the health infrastructure needed to combat the pandemic.

-The transfer of these sums to the Consolidated Fund of India would help judicious deployment anywhere in the country. GoI should see to it that allocations are non-discriminatory.

-Limitations of MPLADS:

--Past experience has been that some members do not utilise their full entitlement and that there is a gap between recommendation made by members and implementation by the administration under this scheme.

--It also goes against the separation of powers. It allows individual legislators to encroach on the planning and implementation duties of the administration.

--Jurists have pointed out that the Constitution does not confer the power to spend public money on an individual legislator.

--Experts have also called it out for weak monitoring.

--The Supreme Court, while declining to strike down the scheme, called for a robust accountability regime.

--The CAG has flagged instances of financial mismanagement and inflation of amounts spent.

--The Second Administrative Reforms Commission recommended its abrogation altogether, highlighting the problems of the legislator stepping into the shoes of the executive.

--The current suspension gives some scope for a reconsideration of the scheme in its totality.

About MPLADS: It is a scheme formulated by GoI on 23 December 1993 that enables the members of parliaments (MP) to recommend developmental work in their constituencies with an emphasis on creating durable community assets based on locally felt needs.

Reference: https://www.thehindu.com/opinion/editorial/for-better-use-the-hindu-editorial-on-mplads-funds/article31293067.ece


2. Needed, greater decentralisation of power

-Over the course of the last few weeks during COVID19 pandemic, one of the striking features of governance has been the signal role played by State Chief Ministers across India.

-Equally, though, as much as State governments have taken up positions of leadership, they have repeatedly found themselves throttled by the limitations of the extant federal arrangement.

Centre for Policy Research has pointed out at least three specific limitations.

--Inability of States to access funds and thereby structure their own welfare packages.

--Curbs imposed by a public finance management system that is mired in officialdom. This has prevented States from easily and swiftly making payments for the purchase of health-care apparatus such as ventilators and personal protective equipment.

--Colossal disruption of supply chains not only of essential goods and services but also of other systems of production and distribution, which has placed States in a position of grave economic uncertainty.

-These limitations demonstrate an urgent need to decentralise administration, where States — and local bodies acting through such governments — are allowed greater managerial freedom. Under such a model, the Union government will command less but coordinate more.

Constitution creates two distinct levels of government: one at the Centre and the other at each of the States.

-The Seventh Schedule to the Constitution divides responsibilities between these two layers.

-The Union government is tasked with matters of national importance, such as foreign affairs, defence, and airways.

-Responsibilities vested with the States are issues concerning public health and sanitation, agriculture, public order, and police etc.

-This federal architecture is fortified by a bicameral Parliament, achieved not only through a simple demarcation of two separate houses, but through a creation of two distinct chambers that choose their members differently: a House of the People [Lok Sabha] comprising directly elected representatives and a Council of States [Rajya Sabha] comprising members elected by the legislatures of the States.

-In formulating this scheme of equal partnership, the framers were also conscious of a need to make States financially autonomous.

-Therefore, while the Centre, for example, was accorded the power to tax all income other than agricultural income and to levy indirect taxes in the form of customs and excise duties, the sole power to tax the sale of goods and the entry of goods into a State was vested in the State governments.

-However, while it is invariably at the level of the States that real development has fructified, the Union has repeatedly displayed a desire to treat States, as the Supreme Court said in S.R. Bommai v. Union of India, as mere “appendages of the Centre”.

-Time and again, efforts have been made to centralise financial and administrative power, to take away from the States their ability to act independently and freely.

-Consider the widely hailed decision to accept the 14th Finance Commission’s recommendation for an increase in the share of the States in total tax revenues from 32% to 42%. While, in theory, this ought to have enabled the States to significantly increase their own spending, in reality this has not happened. Gains made by the States have been entirely offset by a simultaneous decline in share of grants and by a concomitant increase in the States’ own contribution towards expenditures on centrally sponsored schemes.

-The creation of a Goods and Services Tax regime, which far from achieving its core purpose of uniformity has rendered nugatory the internal sovereignty vested in the States. 

-The tension today is so palpable that a number of States are reported to have written to the Union Finance Ministry highlighting that more than four months’ worth of Goods and Services Tax compensation to the States — reportedly totaling about a sum of ₹40,000 crore — remains unreleased.

-The Union government has also introduced a slew of legislation as money bills, in a bid to bypass the Rajya Sabha’s sanction, even though these laws scarcely fit the constitutional definition.

-Similarly, the role of the Governors has been weaponised to consolidate political power.

-The most egregious among the moves made is the gutting of Article 370 and the division of Jammu and Kashmir into two Union Territories without securing consent from the State Legislative Assembly.

-Perhaps a crisis of the kind that COVID-19 has wrought will show us that India needs greater decentralisation of power; that administration through a single central executive unit is unsuited to its diverse and heterogeneous polity.

-We cannot continue to regard the intricate niceties of our federal structure as a nettlesome trifle. In seeing it thus, we are reducing the promise of Article 1 of the Constitution, of an India that is a Union of States, to an illusory dream.

Reference: https://www.thehindu.com/opinion/lead/needed-greater-decentralisation-of-power/article31293086.ece



1. Financing the pandemic rescue package

-The priority for India is to ensure that it overcomes the COVID-19 pandemic and kick-starts GDP growth rather than fix the weaknesses in the macro economy: a high fiscal deficit of 7.49% and government indebtedness that was 69% of GDP in 2019.


-When COVID-19 cases began to increase, the Government of India (GoI) swung into action by announcing a 21-day national lockdown and a ₹1.7-lakh crore (approximately $22.59 billion) rescue package.

-Available in the state disaster relief fund is ₹60,000 crore, comprising ₹30,000 crore of outstanding balance and the Central government’s allocation of a similar amount for FY2021.

-Hence, the GoI needs to raise an additional ₹1.1-lakh crore, i.e., 65% of the rescue package outlay.

-Its financing strategy should be to raise long-term funds at cost effective rates, with flexible repayment terms that allow it to take tactical advantage of market movements.

GDP-linked bonds

--The GoI may issue listed, Indian rupee denominated, 25-year GDP-linked bonds that are callable from, say, the fifth year. The coupon (interest) on a GDP-linked bond is correlated to the GDP growth rate and is subject to a cap.

--The issuer, the GoI, is liable to pay a lower coupon during years of slower growth and vice-versa.

--The callable feature from the fifth year till maturity allows the GoI to effect partial repayments during high growth years and when it earns non-recurring revenues such as proceeds from disinvestment of public sector enterprises (PSEs).

--The listing of bonds provides investors an exit option.

--Costa Rica, Bulgaria and Bosnia-Herzegovina issued the first pure GDP-linked bonds in the 1990s. Argentina and Greece issued warrant-like instruments similar to GDP-linked bonds in 2005 and 2012 respectively. India could learn from their experience.

--Publishing reliable and timely GDP data is a prerequisite for the successful issue of GDP-linked bonds, which the GoI may use to part-finance the COVID-19 rescue package and to diversify its borrowing sources.

RBI dividends

--The Reserve Bank of India (RBI) has allocated ₹1 lakh crore to carry out long-term repo operations in tranches and has reduced the repo rates by 75 basis points to 4.4% to help banks augment their liquidity in the wake of the pandemic.

--Recognizing the RBI’s liquidity requirements, the GoI must refrain from asking the RBI to pay more dividends that it can viably pay. During the five years ending on June 30, 2019, the RBI paid the GoI 100% of its net disposable income, with its FY2019 dividends more than trebling to ₹1.76 lakh crore from ₹50,000 crore in FY2018.

--The Bimal Jalan panel constituted in 2019 to review the RBI’s economic capital framework opined that the RBI may pay interim dividends only under exceptional circumstances and that unrealised gains in the valuation of RBI’s assets ought to be used as risk buffers against market risks and may not be paid as dividends.

--The GoI may finance the COVID-19 rescue package by issuing GDP-linked bonds, tapping PSEs’ excess liquidity and monetising non-core assets. Further, it is in India’s self-interest to allow a robust and independent RBI to defend the financial sector’s stability.

About LTRO

--In the last monetary policy, instead of cutting the policy rates, the Reserve Bank of India (RBI) introduced a tool called long-term repo operation (LTRO) to inject liquidity in the system, as well as to ensure transmission of rates.

--Under LTRO, RBI provides longer term (one- to three-year) loans to banks at the prevailing repo rate. As banks, get long-term funds at lower rates, their cost of funds falls. In turn, they reduce interest rates for borrowers. LTRO helped RBI ensure that banks reduce their marginal cost of funds-based lending rate, without reducing policy rates.

--LTRO also showed the market that RBI will not only rely on revising repo rates and conducting open market operations for its monetary policy, but also use new tools to achieve its intended objectives.

Reference: https://www.thehindu.com/opinion/op-ed/financing-the-pandemic-rescue-package/article31292615.ece



1. It’s time for the Red Berets

-The World Health Organisation (WHO) is not equipped to fight a pandemic of this proportion. Its responsibility is to monitor threats to public health and inform and advise the member states.

-The fight against COVID-19 has to be on a war footing. For this we need a composite force that has the capabilities of massive sanitisation, testing, hospitalisation and providing support systems.

-The only UN body which has the training for assembling fighting forces for emergencies is the Department of Peace Operations.

-The UN Security Council (UNSC) stands paralysed because of petty battles on the name of the pandemic, its origin and the need for transparency. It should hold an emergency meeting and authorise the UN Secretary General to put together a force under Chapter VII of the UN Charter.

-The mandate of the Charter should be interpreted to emphasise that this is the greatest threat to international peace and security.

-Member states should be requested to send not only troops, but also police, health workers and equipment.

-As for the cost, the responsibility for the deployment of forces for peacekeeping, peace building and peace enforcement is that of the permanent members.

-Only a UN force which can enforce social distancing and lockdowns can prevent a catastrophe.

-Most Chapter VII resolutions determine the existence of a threat to the peace, a breach of the peace, or an act of aggression in accordance with Article 39, and make a decision explicitly under Chapter VII.

-A UNSC Resolution is considered to be ‘a Chapter VII resolution’ if it makes an explicit determination that the situation under consideration constitutes a threat to the peace, a breach of the peace, or an act of aggression, and/or explicitly/ implicitly states that the UNSC is acting under Chapter VII in the adoption of some or all operative paragraphs.

-The UN stands discredited today as the UNSC has not been able to meet. It may take place, now that China has vacated the Security Council chair and Dominican Republic has taken over.

-Several resolutions are in circulation, but none under Chapter VII.

-The first step will be to pass a resolution to take action to end the crisis and authorise the Secretary General to request member states to make personnel available.

-Meanwhile, another resolution must spell out the modalities of the operation.

-The UN peacekeeping forces are called Blue Berets because of the colour of the caps that they wear.

-The health force can have caps of another colour, probably red. The launch of the Red Berets will be a historic action to be taken at a critical moment.

-The UN’s relevance will be established and there will be concrete action taken to end the pandemic.

About UNSC: The United Nations Security Council is one of the six principal organs of the United Nations, charged with ensuring international peace and security, recommending that the General Assembly accept new members to the United Nations, and approving any changes to its charter.

--Its powers include the establishment of peacekeeping operations and international sanctions as well as the authorization of military actions through resolutions – it is the only body of the United Nations with the authority to issue binding resolutions to member states.

--The great powers that were the victors of World War II – the Soviet Union (now represented by Russia), the United Kingdom, France, the former Republic of China (now represented by the People's Republic of China), and the United States – serve as the body's five permanent members.

--These can veto any substantive resolution, including those on the admission of new member states or nominees for the office of Secretary-General.

--In addition, the council has 10 non-permanent members, elected on a regional basis to serve a term of two years. The body's presidency rotates monthly among its members.

--Headquarters: New York, New York, United States

--Founded: 24 October 1945

Reference: https://www.thehindu.com/opinion/op-ed/its-time-for-the-red-berets/article31292234.ece


1. Apex wildlife panel holds virtual conference clears infra projects

-The Standing Committee of the National Board for Wildlife had its first ever video-conferencing meet, where infrastructure projects in 11 States were cleared.

-Two were infrastructure proposals related to setting up power transmissions line and constructing a highway in Goa, which would “boost tourism.

-Other projects included the Nagpur-Mumbai superhighway, a small-scale stone mining project in Kota, Rajasthan; an underground pumped storage facility for generating hydroelectricity; an Indian railways project to make a railway bridge in Madhya Pradesh and Telangana, irrigation projects in Uttarakhand and Telangana and defence projects in Uttarakhand.

-Projects that encroach into forests or protected reserves require NBWL nod as part of the government’s environmental clearance process.

-Projects are appraised at a State level and then subsequently presented to a large committee of wildlife experts, the Chief Wildlife Wardens of States, top officials in the Union Environment Ministry and Forest Ministry and, the Environment Minister.

About National Board for Wild Life: It is a “Statutory Organization” constituted under the Wildlife Protection Act, 1972. Theoretically, the board is “advisory” in nature and advises the Central Government on framing policies and measures for conservation of wildlife in the country.

Reference: https://www.thehindu.com/news/national/apex-wildlife-panel-holds-virtual-conference-clears-infra-projects/article31292163.ece


2. Poaching, not virus, is the bigger threat, says tiger expert

-Wildlife scientist Ullas Karanth, an expert on tiger conservation, has cautioned that a spurt in poaching during the lockdown period poses a greater threat to wildlife than the coronavirus (COVID-19).

-The warning came after the advisory issued by the National Tiger Conservation Authority (NTCA) and the Wildlife Division of the Ministry of Environment, Forests and Climate Change for immediate preventive measures to stop the spread of the virus from humans to animals and vice-versa in national parks, sanctuaries and tiger reserves.

-The advisory came after a tiger at the Bronx zoo in the U.S. tested positive for the novel coronavirus.

About National Tiger Conservation Authority (NTCA): It is a statutory body of the Ministry, with an overarching supervisory / coordination role, performing functions as provided in the Wildlife (Protection) Act, 1972.

Reference: https://www.thehindu.com/sci-tech/energy-and-environment/poaching-not-coronavirus-is-the-bigger-threat-says-tiger-expert/article31292709.ece



1. Coronavirus lockdown: Invoke Essential Commodities Act to curb black marketing, Home Secretary tells States

-Union Home Secretary wrote to all State Chief Secretaries to ensure the availability of essential goods by invoking the provisions of the Essential Commodities (EC) Act 1955.

-Offences under the EC Act are criminal offences and may result in imprisonment of seven years or fine or both.

-The State and Union Territory governments may also consider detention of offenders under the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980, Ministry of Home Affairs (MHA) said.

-These measures include fixing of stock limits, capping of prices, enhancing production, inspection of accounts of dealers and other such actions, a statement by the MHA said. Loss of production

-Earlier, with an order issued under the Disaster Management Act, 2005, the MHA had allowed manufacture/production, transport and other related supply-chain activities in respect of essential goods such as foodstuff, medicines and medical equipment.

About ECA, 1955: The ECA was enacted in 1955. It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities. It declares 'essential' in order to make them available to consumers at fair prices.

Reference: https://www.thehindu.com/news/national/coronavirus-lockdown-invoke-essential-commodities-act-to-curb-black-marketing-home-secretary-tells-states/article31287034.ece