DAILY CURRENT AFFAIRS (AUGUST 08, 2022)

THE INDIAN POLITY AND GOVERNANCE

1. EXPLAINED: WHY THE GOVT HAS WITHDRAWN THE PERSONAL DATA PROTECTION BILL

THE CONTEXT: The government has withdrawn the Personal Data Protection Bill from Parliament as it considers a “comprehensive legal framework” to regulate the online space, including bringing separate laws on data privacy, the overall Internet ecosystem, cybersecurity, telecom regulations, and harnessing non-personal data to boost innovation in the country.
THE EXPLANATION:
Why is this development significant?
• The government has taken this step after nearly four years of the Bill being in the works. It had gone through multiple iterations, including a review by a Joint Committee of Parliament (JCP), and faced major pushback from a range of stakeholders including big tech companies such as Facebook and Google, and privacy and civil society activists.
• The tech companies had, in particular, questioned a proposed provision in the Bill called data localisation, under which it would have been mandatory for companies to store a copy of certain sensitive personal data within India, and the export of undefined “critical” personal data from the country would be prohibited. The activists had criticised, in particular, a provision that allowed the central government and its agencies blanket exemptions from adhering to any and all provisions of the Bill.
• The delays in the Bill had been criticised by several stakeholders, who had pointed out that it was a matter of grave concern that India, one of the world’s largest Internet markets, did not have a basic framework to protect people’s privacy.
• “The withdrawal of the Data Protection Bill, 2019 is concerning, for a belated regulation is being junked. It’s not about getting a perfect law, but a law at this point,”. “It has been close to 10 years since the (Justice) A P Shah Committee report on privacy, five years since the Puttaswamy judgment (right to privacy) and four years since the (Justice B N) Srikrishna Committee’s report — they all signal urgency for a data protection law and surveillance reforms. Each day that is lost causes more injury and harm.”

Why has the Bill been withdrawn?
• A data protection law for India has been in the works since 2018, when a panel led by Justice Srikrishna, a retired judge of the Supreme Court, drew up a draft version of a Bill. The draft was reviewed by the JCP, which submitted its recommendations along with a draft Bill in November 2021.
• In a note circulated to Members of Parliament, Union IT Minister Ashwini Vaishnaw explained the reason behind the withdrawal of the Bill: “The Personal Data Protection Bill, 2019 was deliberated in great detail by the Joint Committee of Parliament. 81 amendments were proposed and 12 recommendations were made towards a comprehensive legal framework on the digital ecosystem. Considering the report of the JCP, a comprehensive legal framework is being worked upon. Hence, in the circumstances, it is proposed to withdraw ‘The Personal Data Protection Bill, 2019’ and present a new Bill that fits into the comprehensive legal framework.”

What did the JCP recommend?
• The JCP tabled its report after 78 sittings spread over 184 hours and 20 minutes, and after having received half a dozen extensions. It proposed 81 amendments to the Bill finalised by the Srikrishna panel, and 12 recommendations including expanding the scope of the proposed law to cover discussions on non-personal data — thereby changing the mandate of the Bill from personal data protection to broader data protection. In its most basic form, non-personal data are any set of data that does not contain personally identifiable information.
• The JCP’s report also recommended changes on issues such as regulation of social media companies, and on using only “trusted hardware” in smartphones, etc. It proposed that social media companies that do not act as intermediaries should be treated as content publishers — making them liable for the content they host.

So what could the revamped Bill look like?
• Specific provisions or contours of the upcoming new Bill are not known. But a senior official said that on the question of data localisation, the government is considering whether to add it to the planned new version of the Information Technology Act, and whether to allow cross-border data flows only to “trusted geographies”. “The thinking is that the data should be stored in a region that is trusted by the Indian government, and that data should be accessible in the event of a crime,” the official said.
• According to senior government officials, the new data protection Bill will do away with some recommendations by the JCP such as including “trusted hardware”, and local storage of some kinds of personal data within the boundaries of India. Instead, it will add these ideas to the larger framework for the Internet ecosystem, which will replace the Information Technology Act of 2000. All these separate laws, it is learnt, will be presented at the same time.
• The new Bill could also do away with classification of personal data from the perspective of data localisation, and only use classification for awarding damages to people whose personal data may have been compromised by an entity.

When is the revamped Bill expected to be ready?
• Minister of State for Electronics and IT Rajeev Chandrasekhar said the government will table the new legislation in Parliament “very quickly”.
• “The government has today withdrawn the Personal Data Protection Bill that was formulated in 2018 and re-written by the JCP in 2021,” A comprehensive approach to the laws will be undertaken by the government and we will come back to Parliament very quickly after following the process of consultation”.
• According to sources in the IT Ministry, the government is aiming to bring the legislation in Parliament’s Winter Session. A senior official said that the new Bill would incorporate the broader ideas of data protection as recommended by the JCP, and would be in line with the Supreme Court’s landmark privacy judgment of 2017. Given the significant number of amendments suggested by the JCP, it was necessary to comprehensively redraw the contours of the proposed law.

THE INTERNATIONAL ISSUES

2. WHAT ARE LIVE-FIRE EXERCISES, RECENTLY CONDUCTED BY CHINA?

THE CONTEXT:In a massive show of strength, China began its live-fire exercise near Taiwan on August 4 2022, launching at least 11 ballistic missiles into the country’s coast, a day after US House speaker Nancy Pelosi visited Taiwan.
THE EXPLANATION:
• Taiwan’s defence ministry announced that multiple Chinese ships and planes had once again crossed the median line of the Taiwan Strait, which separates the two countries. Calling the military exercises “highly provocative,” the defence ministry states that it had dispatched aircraft and ships and deployed land based missile systems in response to the situation.
• Japan’s Prime Minister condemned China’s largest live-fire exercise in the region, calling it a “serious problem that impacts our national security and the safety of our citizens,” after 5 ballistic missiles launched by the People’s Liberation Army (PLA) landed in Japan’s exclusive economic zone
What are live-fire exercises?
• They are exercises primarily used by military personnel, in which live ammunition is used to create training conditions that are as close to real combat scenarios as possible. Live-fire exercises are also used by law enforcement and firefighters as a form of field training, to train them to act calmly in real-life emergency situations in the future.
• During live-fire training, soldiers are placed in simulated combat situations and are given the opportunity to use their weapons and equipment (like ships, aircraft, tanks and drones). Such exercises are invaluable in maintaining combat readiness of troops, the cohesiveness of units, and instilling confidence in their ability to use their weapons and equipment correctly.
• It also involves testing the effectiveness of vehicles, weapon platforms and weapons systems (such as intercontinental ballistic missiles, cruise missiles, anti-aircraft weapons), so that any design flaws can be resolved before the weapons are fully operational.
Have they been done in the region before?
• China had previously undertaken a similar show of force during the Third Taiwan Strait Crisis in 1995-1996, when it fired missiles into the waters near Taiwan, after former President Lee Teng-hui visited the US, despite China’s strong objections.
• Between July 25-29, the US army resumed its live-fire drills in South Korea after a hiatus of three years, in response to the series of weapons tests undertaken by North Korea this year. The deadly Apache helicopters stationed in South Korea were allowed to fire rockets and guns at the Rodriguez Live Fire Complex, south of the Demilitarised Zone (DMZ) that divides North and South Korea. The live-fire exercises had been previously cancelled in 2019 after residents living in the vicinity of the area had complained about noise and raised concerns about safety, according to sources.

3. WHAT IS TAIWAN’S ‘PORCUPINE STRATEGY’ TO PROTECT ITSELF IF CHINA ATTACKS?

THE CONTEXT: China launched aggressive and unprecedented military exercises near Taiwan in response to US House Speaker Nancy Pelosi’s visit to the island that Beijing claims as part of its territory.
THE EXPLANATION:
• As the long-range, live-fire drills began with China’s Eastern Theatre Command firing several ballistic missiles, Taiwan said that it was “preparing for war without seeking war”.
The “porcupine doctrine”
• The “porcupine doctrine”, which was proposed in 2008 by US Naval War College research professor William S Murray, is a strategy of asymmetric warfare focused on fortifying a weak state’s defences to exploit the enemy’s weaknesses rather than taking on its strengths.
• It is about building defences that would ensure that Taiwan “could be attacked and damaged but not defeated, at least without unacceptably high costs and risks”,
Asymmetric systems of defence
• In its 2021 Quadrennial Defence Review, Taiwan’s Ministry of National Defence defined asymmetric systems as ones that are “small, numerous, smart, stealthy, mobile and hard to be detected and countered”, and “associated with innovative tactics and employments”. According to Taiwan’s former Chief of the General Staff Admiral these systems are “a large number of small things”.
• The Texas National Security Review, a policy journal backed by the University of Texas, notes that among Taiwan’s current and yet-to-be-delivered military systems, “the minelayer ship, the Harpoon coastal defence cruise missile, the Stinger man-portable air defence missile, and possibly the missile corvettes can be considered ‘small things’ that can be fielded in large numbers”.
• Taiwan’s 2021 Defence Review also spoke of efforts to build a multi-layered maritime strike power using “coastal mobile anti-ship missiles, light and rapid maritime force, and advanced naval mines”, apart from using “new offensive and defensive technologies of EW (electronic warfare) and cyber warfare, as well as multi-functional unmanned systems for surveillance and strike”.

The need for such a strategy
• China enjoys overwhelming military superiority over Taiwan. Over the past decade, Beijing has developed far more accurate and precise weapon systems to target Taiwan and has been vocal about its intention to “reunite” the island with the mainland, by force or coercion if needed.
• In its 2021 report to Congress, the US-China Economic and Security Review Commission noted that the scale of China’s nuclear buildup points to support for a “new strategy of limited nuclear first use”. Such a strategy, it said, would enable Chinese leaders to deter US intervention in a war over Taiwan.

4. THE ONGOING VIOLENCE IN GAZA BETWEEN ISRAEL AND PALESTINE

THE CONTEXT: Recently, Israel and Palestinian militants in the Gaza Strip were exchanging fire in the worst bout of cross-border violence since an 11-day war between Israel and Hamas in 2021.
THE EXPLANATION:
• Israeli airstrikes have killed 11 people, including a senior commander from the Palestinian Islamic Jihad, an Iran-backed militant group, who was slain in a targeted attack.
• Israel has carried out several deadly airstrikes, among them the targeted killing of a senior commander from the Palestinian Islamic Jihad, an Iran-backed militant group. Militants have fired dozens of rockets at Israeli cities and towns, disrupting life for tens of thousands of people.
In Hamas’s Shadow
• Islamic Jihad is the smaller of the two main Palestinian militant groups in the Gaza Strip and is vastly outnumbered by the ruling Hamas group. But it enjoys direct financial and military backing from Iran and has become the driving force in engaging in rocket attacks and other confrontations with Israel.
• Hamas, which seized control of Gaza in 2007 from the internationally recognised Palestinian Authority, is often limited in its ability to act because it bears responsibility for running the day-to-day affairs of the impoverished territory. Islamic Jihad has no such duties and has emerged as the more militant faction, occasionally even undermining Hamas’ authority.
• The group was founded in 1981 with the aim of establishing an Islamic Palestinian state in the West Bank, Gaza and all of what is now Israel. It is designated a terrorist organisation by the US State Department, European Union and other governments. Like Hamas, Islamic Jihad is sworn to Israel’s destruction.
The Iranian Connection
• Israel’s archenemy Iran supplies Islamic Jihad with training, expertise and money, but most of the group’s weapons are locally produced. In recent years, it has developed an arsenal equal to that of Hamas, with longer-range rockets capable of striking central Israel’s Tel Aviv metropolitan area.
VALUE ADDITION:
Israel- Palestine conflict– Historical Background:
• The conflict has been ongoing for more than 100 years between Jews and Arabs over a piece of land between Jordan River and the Mediterranean Sea.
• It was between 1882 to 1948, when the Jews from around the world gathered in Palestine. This movement came to be known as Aliyahs.
• Then in 1917, Ottoman Empire fell after World War 1 and the UK got control over Palestine.
• The land was inhabited by a Jewish minority and Arab majority.
• The Balfour Declaration was issued after Britain gained control with the aim of establishing a home for the Jews in Palestine. However during that period the Arabs were in majority in Palestine.
• Jews favored the idea while the Palestinians rejected it. Almost 6 million Jews lost their lives in the Holocaust which also ignited further demand of a separate Jewish state.
• Jews claimed Palestine to be their natural home while the Arabs too did not leave the land and claimed it.
• The international community supported the Jews.
• In 1947, the UN voted for Palestine to be split into separate Jewish and Arab states, with Jerusalem becoming an international city.
• That plan was accepted by Jewish leaders but rejected by the Arab side and never implemented.

THE ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

5. EXPLAINED: WHAT IS A CARBON MARKET, AND WHY DOES INDIA WANT TO CREATE ONE?

THE CONTEXT: A Bill to amend a 20-year law, the Energy Conservation Act, was introduced in Parliament. One of the most significant provisions of the Bill is to create a domestic carbon market.
THE EXPLANATION:
• In order to facilitate the achievement of more ambitious climate change targets and ensure a faster transition to a low-carbon economy, the government is seeking to strengthen a 20-year law, called the Energy Conservation Act of 2001, which has powered the first phase of India’s shift to a more energy-efficient future.
• The Bill to amend the Energy Conservation Act, 2001, which was introduced in Parliament which has two main objectives. First, it seeks to make it compulsory for a select group of industrial, commercial and even residential consumers to use green energy. A prescribed minimum proportion of the energy they use must come from renewable or non-fossil fuel sources. And second, it seeks to establish a domestic carbon market and facilitate trade in carbon credits.
• Importantly, the amendment Bill seeks to widen the scope of energy conservation to include large residential buildings as well. Till now, the energy conservation rules applied mainly on industrial and commercial complexes.
Energy Conservation
• The 2001 law defined standards for energy conservation and efficiency to be followed by a select group of industries and commercial complexes. Efficiency standards were also prescribed for equipment and appliances like air conditioners or refrigerators. This law set up the Bureau of Energy Efficiency (BEE) to promote the use of more efficient processes and equipment in order to save energy. The star ratings on various household appliances and the largescale shift to LED bulbs were some of the successful initiatives of BEE that have resulted in massive energy savings over a period of time.
• The overall objective has been to improve energy efficiency across sectors, so that much more productivity can be obtained from the same amount of energy. Over the years, India’s energy intensity, or the amount of energy consumption per unit of GDP, has declined significantly.
New provisions
• The amendment Bill seeks to build upon the progress made so far. For example, just like the standards for appliances and equipment, energy consumption standards would be specified for motor vehicles, ships and other water vessels, industrial units, and buildings. In the case of vehicles and water vessels, fuel consumption norms would be defined. And just like it is for appliances and equipment, the new provisions would empower the government to prohibit the manufacture or import of any vehicles or water vessels if it does not conform to the prescribed energy standards.
• New sustainable building codes are to be defined which every building with a certain threshold of energy consumption, whether industrial, commercial or residential, would have to adhere to. Every such building would have to ensure that at least a part of its total energy consumption comes from renewable or non-fossil fuel sources. This would help in reducing the proportion of fossil-fuel based energy being used in the economy and push the demand for renewable or other non-fossil fuels.
What are carbon markets?
• The creation of a domestic carbon market is one of the most significant provisions of the proposed amendment Bill. Carbon markets allow the trade of carbon credits with the overall objective of bringing down emissions. These markets create incentives to reduce emissions or improve energy efficiency.
• For example, an industrial unit which outperforms the emission standards stands to gain credits. Another unit which is struggling to attain the prescribed standards can buy these credits and show compliance to these standards. The unit that did better on the standards earns money by selling credits, while the buying unit is able to fulfill its operating obligations.

VALUE ADDITION:
• Under the Kyoto Protocol, the predecessor to the Paris Agreement, carbon markets have worked at the international level as well. The Kyoto Protocol had prescribed emission reduction targets for a group of developed countries. Other countries did not have such targets, but if they did reduce their emissions, they could earn carbon credits. These carbon credits could then be sold off to those developed countries which had an obligation to reduce emissions but were unable to.
• This system functioned well for a few years. But the market collapsed because of the lack of demand for carbon credits. As the world negotiated a new climate treaty in place of the Kyoto Protocol, the developed countries no longer felt the need to adhere to their targets under the Kyoto Protocol. A similar carbon market is envisaged to work under the successor Paris Agreement, but its details are still being worked out.

6. THE GREAT BARRIER REEF’S RECOVERY AND VULNERABILITY TO CLIMATE THREATS

THE CONTEXT: The highest levels of coral cover, within the past 36 years, has been recorded in the northern and central parts of Australia’s Great Barrier Reef (GBR), according to the annual long-term monitoring report by the Australian Institute of Marine Science (AIMS).
THE EXPLANATION:
The researchers behind the report have warned, however, that this could be quickly reversed owing to rising global temperatures. This came after the reef experienced a mass coral bleaching event in March 2022.

What are coral reefs?
• Corals are marine invertebrates or animals which do not possess a spine. They are the largest living structures on the planet. Each coral is called a polyp and thousands of such polyps live together to form a colony, which grow when polyps multiply to make copies of themselves.
• Corals are of two types — hard corals and soft corals. Hard corals extract calcium carbonate from seawater to build hard, white coral exoskeletons. Hard corals are in a way the engineers of reef ecosystems and measuring the extent of hard coral is a widely-accepted metric for measuring the condition of coral reefs. Soft corals attach themselves to such skeletons and older skeletons built by their ancestors. Soft corals also add their own skeletons to the hard structure over the years. These growing multiplying structures gradually form coral reefs.
Australia’s Great Barrier Reef is the world’s largest reef system stretching across 2,300 km and having nearly 3,000 individual reefs. It hosts 400 different types of coral, gives shelter to 1,500 species of fish and 4,000 types of mollusc. Coral reefs support over 25% of marine biodiversity even as they take up only 1% of the seafloor. The marine life supported by reefs further fuels global fishing industries. Besides, coral reef systems generate $2.7 trillion in annual economic value through goods and service trade and tourism. In Australia, the Barrier Reef, in pre-COVID times, generated $4.6 billion annually through tourism and employed over 60,000 people including divers and guides.

What does the new report say?
• The annual long-term monitoring by AIMS began 36 years ago, and reefs are surveyed through in-water and aerial techniques. The current report surveyed 87 reefs in the GBR between August 2021 and May 2022. The report states that reef systems are resilient and capable of recovering after disturbances such as accumulated heat stress, cyclones, predatory attacks and so on, provided the frequency of such disturbances is low.
• The new survey shows record levels of region-wide coral cover in the northern and central GBR since the first ever AIMS survey was done. Coral cover is measured by determining the increase in the cover of hard corals. The hard coral cover in northern GBR had reached 36% while that in the central region had reached 33%. Meanwhile, coral cover levels declined in the southern region from 38% in 2021 to 34% in 2022.

• The record levels of recovery, the report showed, were fuelled largely by increases in the fast-growing Acropora corals, which are a dominant type in the GBR. Incidentally, these fast growing corals are also the most susceptible to environmental pressures such as rising temperatures, cyclones, pollution, crown-of-thorn starfish (COTs) attacks which prey on hard corals and so on. Also, behind the recent recovery in parts of the reef, are the low levels of acute stressors in the past 12 months — no tropical cyclones, lesser heat stress in 2020 and 2022 as opposed to 2016 and 2017, and a decrease in COTs outbreaks.

Does this mean the reef is out of the woods?
• Besides predatory attacks and tropical cyclones, scientists say that the biggest threat to the health of the reef is climate change-induced heat stress, resulting in coral bleaching.
• Corals share a symbiotic relationship with single-celled algae called zooxanthellae. The algae prepares food for corals through photosynthesis and also gives them their vibrant colouration. When exposed to conditions like heat stress, pollution, or high levels of ocean acidity, the zooxanthellae start producing reactive oxygen species not beneficial to the corals. So, the corals kick out the colour-giving algae from their polyps, exposing their pale white exoskeleton and leading to coral starvation as corals cannot produce their own food. Bleached corals can survive depending on the levels of bleaching and the recovery of sea temperatures to normal levels. Severe bleaching and prolonged stress in the external environment can lead to coral death.

Over the last couple of decades, climate change-induced rise in temperature has made seas warmer than usual. Under all positive outlooks and projections in terms of cutting greenhouse gases, sea temperatures are predicted to increase by 1.5°C to 2°C by the time the century nears its end. According to the UN assessment in 2021, the world is going to experience heating at 1.5°C in the next decade, the temperature at which bleaching becomes more frequent and recovery less impactful.

• The concern is that in the past decade, mass bleaching events have become more closely spaced in time. The first mass bleaching event occurred in 1998 when the El Niño weather pattern caused sea surfaces to heat, causing 8% of the world’s coral to die. The second event took place in 2002. But the longest and most damaging bleaching event took place from 2014 to 2017. Mass bleaching then occurred again in 2020, followed by earlier this year. According to the Australian government’s scientists, 91% of the reefs it had surveyed in March were affected by bleaching.
• Notably, half of the total reefs were surveyed before the peak of this year’s mass coral bleaching event in the GBR. Since surveys to determine the effects of bleaching need to occur during or after the summer heatwave, the authors of the report say that the full impact of this year’s mass bleaching would only be known in next year’s report. The aerial surveys by AIMS included 47 reefs and coral bleaching was recorded on 45 of these reefs. While the levels were not high enough to cause coral death it did leave sub-lethal effects such as reduced growth and reproduction.
• The AIMS report says that the prognosis for the future disturbance suggests an increase in marine heatwaves that will last longer and the ongoing risk of COTs outbreaks and cyclones. “Therefore, while the observed recovery offers good news for the overall state of the GBR, there is an increasing concern for its ability to maintain this state,” the report says.




Ethics Through Current Development (08-08-2022)

  1. Accepting humbly with an open heart READ MORE
  2. Best defence is good offence READ MORE
  3. SPIRITUAL PROGRESS IS MEASURE OF SUCCESS READ MORE



Today’s Important Articles for Sociology (08-08-2022)

  1. Building a civil and just society READ MORE
  2. India today~I READ MORE



Today’s Important Articles for Geography (08-08-2022)

  1. Tackling marine plastic pollution READ MORE
  2. The Pesky Problem of Offshoring Pollution READ MORE



Today’s Important Articles for Pub Ad (08-08-2022)

  1. India, democracy and the promised republic: At 75, the country must be judged by the extent to which it has advanced human development READ MORE
  2. Judging the fudging of data READ MORE
  3. How India can get its data protection law right READ MORE
  4. Building a civil and just society READ MORE
  5. Making it meaningful: Boycott by any Chief Minister of Niti Aayog Governing Council meeting is not good for nation building READ MORE
  6. Address pendency issue: The courts have four crores pending cases; inordinate delays leave lakhs languishing in jails READ MORE



WSDP Bulletin (08-08-2022)

(Newspapers, PIB and other important sources)

Prelim and Main

  1. States holding up results of Economic Census: Centre READ MORE
  2. Centre mum on availability, requirement of key leprosy drug READ MORE
  3. Satellites launched by SSLV in ‘wrong orbit, not usable’ READ MORE
  4. Lumpy Skin Disease outbreak in Ambala village, 100 cattle sick READ MORE
  5. FPIs buy shares worth Rs 14,000 cr in a week amid softening dollar index READ MORE
  6. Rajasthan’s nadis, an insurance against a dry summer READ MORE
  7. Data on plant ‘sweat’ might help predict wildfire severity READ MORE
  8. This common weed can offer drought-resistant crops READ MORE

Main Exam

GS Paper- 1

  1. A volcano is erupting again in Iceland. Is climate change causing more eruptions? READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

  1. India, democracy and the promised republic: At 75, the country must be judged by the extent to which it has advanced human development READ MORE
  2. Judging the fudging of data READ MORE
  3. How India can get its data protection law right READ MORE
  4. Building a civil and just society READ MORE
  5. Making it meaningful: Boycott by any Chief Minister of Niti Aayog Governing Council meeting is not good for nation building READ MORE
  6. Address pendency issue: The courts have four crores pending cases; inordinate delays leave lakhs languishing in jails READ MORE

INTERNATIONAL ISSUES

  1. India, Bangladesh, Pakistan: What east can teach west READ MORE
  2. An epochal transition: India should not lose strategic focus as it finds its feet in the global order READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

  1. Why strengthening genomic surveillance is an imperative READ MORE
  2. Focused on inflation: A rate increase was needed to prevent inflation expectations from stymieing growth READ MORE
  3. RBI, government must act in coordination during an economically challenging period READ MORE
  4. India’s tax-GDP ratio may be too high READ MORE
  5. India Today~II READ MORE

ENVIRONMENT AND ECOLOGY

  1. Tackling marine plastic pollution READ MORE
  2. The Pesky Problem of Offshoring Pollution READ MORE

SECURITY

  1. Defence Atmanirbharta is a real game changer READ MORE
  2. Countering radicalisation in Assam with long-term vision READ MORE

DISASTER MANAGEMENT

  1. Flood-fighting inept: Regular losses expose poor state of preparedness READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

  1. Accepting humbly with an open heart READ MORE
  2. Best defence is good offence READ MORE
  3. SPIRITUAL PROGRESS IS MEASURE OF SUCCESS READ MORE

IMPORTANT ARTICLES FOR ESSAY

  1. India today~I READ MORE
  2. India Today~II READ MORE

Questions for the MAIN exam

  1. ‘Justice is the law’s ultimate purpose, but it is sometimes an insufficient instrument for pursuing justice’. In the light of the statement, discuss the need for a reformed bail law for India.
  2. ‘India should not lose strategic focus as it finds its feet in the global order’. In the light of the statement, examine why India pursue its neighbourhood policy in the first place in its strategic relations.

QUOTATIONS AND CAPTIONS

  • Stand a little taller, rise a little higher, be a little better.
  • At 75, the country must be judged by the extent to which it has advanced human development.
  • India has grossly underestimated the issue of illegal mining, which damages the environment and causes revenue loss.
  • The available technologies for identifying data fudging are still inadequate to address all possible situations.
  • A rate increase was needed to prevent inflation expectations from stymieing growth.
  • Centre has weaponised money laundering law to target political opponents. SC has been blind to this threat to democracy.
  • Rather than regret the unfortunate dynamic on the western frontier and bemoan Pakistan’s reluctance to let the SAARC become a vehicle for regional cooperation, Delhi should focus on consolidating the “golden moment” in the east.
  • The 75th anniversary of independence offers Delhi and Dhaka a special opportunity to elevate the ambition for their bilateral partnership.
  • Once we have a statute on privacy, it would become easier to fashion a law on data protection that protects privacy.
  • The common understanding of the law is that it is a formalised set of rules, regulations, and statutes often enforced through societal institutions.
  • India should not lose strategic focus as it finds its feet in the global order.

50 WORD TALK

  • For the State, the law is the decree it can use to maintain order and police societal progression. Justice, on the other hand, is much more than an esoteric political construct couched in jargon and conventions. Justice is the law’s ultimate purpose, but it is sometimes an insufficient instrument for pursuing justice.

Things to Remember:

  • For prelims-related news, try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
  • Whenever any international place will be in the news, you should do map work (marking those areas on maps and exploring other geographical locations nearby, including mountains, rivers, etc. same applies to the national places.)
  • For economy-related news (banking, agriculture, etc.), you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
  • For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the main point of view will be covered in ED.
  • Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.



Day-261 | Daily MCQs | UPSC Prelims | ECONOMY

[WpProQuiz 305]




TOPIC : SHOULD INDIAN REGULATORY AGENCIES BE GIVEN CONSTITUTIONAL STATUS TO SAVE THEIR INDEPENDENCE?

THE CONTEXT: The financial sector in India has been hit by many scams like the recent NSE scam, PNB scam etc. Despite the presence of Independent Regulatory Bodies (IRBs)like RBI, SEBI etc., the occurrence of such scams has raised questions about the functioning and performance of these bodies. The working of other such IRBs more or less reflects these concerns. One view is that giving Constitutional status to these bodies will address the issues while others disagree. This article examines this debate in detail.

WHAT ARE INDEPENDENT REGULATORY BODIES?

DEFINITION

  • Independent Regularity Bodies (IRBs) are agencies of modern democratic governments, parts of the executive wing with a certain degree of statutory or constitutional autonomy, reporting directly to the legislature.
  • Like the general executive, they are accountable to the legislature and subject to judicial review.
  • With the increasing expansion of the scope and activities of governmental operations, IRBs came to be accepted as a needed instrument.

SEPARATE FROM THE EXECUTIVE

  • Government regulation has always existed through its own departments directly under its control.
  • Over the last century, a new type of regulatory system known as Independent Statutory Regulating Agencies has emerged.
  • These agencies differ from the traditional regulatory system in that they are separate from the executive branch of government and have some autonomy.

TYPOLOGY OF IRBs

  • Regulation in India can be mapped under three broad categories: economic regulation, regulation in the public interest and environmental regulation.
  • Hence, the IRBs in India majorly work under these broad areas.

NEED FOR IRBs

  • Need to prevent market failure,
  • Need to check anti-competitive practices,
  • Need to promote the public interest. (Read Ahead)

           EVOLUTION OF IRBs: AN OVERVIEW

LAISSEZ FAIRE ERA

  • The system of independent regulation started in 1887 in the USA where the independent regulatory commission was first established as a regulator.
  • It was aimed to keep government interference at arm’s length so that economy can work efficiently without the interference of government.

WELFARE ERA (PRE LPG)

  • Regulators were created to ensure that government should have proper control on the economy.
  • It was to ensure the economy work for public welfare.
  • The aim was to ensure control not facilitate.
  • In the pre-globalization era, the regulation was bureaucratic and more focused on control.
  • The regulation was premised on license permits and quotas, which suppress the innovation and expansion of business and other sectors.

LPG ERA

  • In the globalization/LPG era, there is revolutionary change and the focus of the regulatory environment was shifted from strict regulation to deregulation.
  • Its aim was to facilitate and create a business-friendly environment.
  • There was the emergence of sectoral regulation as the economy becomes more diversified and specialized.
  • The regulator was given more power with the concept of managerialism, arm’s length organization, and hands-off management.
  • The IRBs were empowered to take decisions, make rules and implement them.

SOME IMPORTANT IRBs WORKING IN ECONOMIC REGULATION 

RBI

  • The RBI Act of 1934 established it. It serves as a banker to the government, a lender of last resort, and performs various supervisory functions related to licensing and establishments, branch expansion, management, and liquidation.

SEBI

  • It performs protective (protecting investors’ interests, providing investment security, checking price rigging, and prohibiting insider trading), developmental (increasing business on the stock exchange), and regulatory functions (establishing rules, regulations, and a code of conduct for intermediaries such as merchant bankers etc.

IRDA

  • IRDA’s mission is to protect the interests of insurance policyholders and ensure fair treatment. It issues a registration certificate, renews, modifies, withdraws, suspends, or cancels such registration. It establishes a code of ethics for surveyors and loss assessors.

TRAI

  • It ensures technical compatibility and efficient interconnection of various service providers.
  • It establishes quality service standards in order to protect the interests of consumers.
  • It ensures effective fulfilment of the universal service obligation.

CCI

  • It ensures healthy and fair competition in the market economy and protects the interests of consumers:
  • It aims to prohibit anti-competitive business practices, and abuse of dominance by an enterprise as well as regulate various business combinations such as mergers and acquisitions.

 THE MAIN FUNCTIONS OF THE IRBs

The actual functions of individual regulatory authorities in a country would depend on the overall structure of the regulatory regime, empowerment of authorities as provided in the relevant legal instruments and rules, administrative arrangements and autonomy, and technical capacity. However, some of the essential functions of regulators include:

  • Protection of public interest.
  • Imposing penalties for non-compliance.
  • Administering tariff adjustments and periodic reviews.
  • Facilitating dispute resolution between parties.
  • Monitoring compliance with contractual obligations to the government and users, and other legal and regulatory requirements.
  • Establishing technical, safety and quality standards and monitoring their compliance.
  • Providing advice and counsel to government on policy matters and other related matters to private sector involvement in the sector.

THE RATIONALE BEHIND THE SETTING UP OF IRBs

LEVEL PLAYING FIELD

  • To provide a level playing field for all while also protecting the larger public and national interest.

COMPLEXITIES OF GOVERNANCE

  • Increasing complexities and technological advancement necessitated the use of experts to handle issues.

EFFECTIVE DECISION MAKING

  • Protecting decision-making from political interference serves the public interest best.

LPG-POST 1991

  • Following the 1991 reforms, the entry of the corporate sector necessitated certain measures to boost investor confidence and protect the public interest.

FUNCTIONAL SPECIALISATION

  • The traditional departmental structure of government was not well suited to the dual role of policymaking and regulation of the sector in question.

 INDEPENDENCE OF THE IRBs

According to the World Bank handbook, an IRB model of regulation requires setting up an independent regulator which has organizational, financial and management independence from ministries. This is necessary in order to depoliticize the decision-making and ensure sectoral regulation occurs on techno-commercial principles. In this regard, the IRBs have been established under various statutes which delineate the various aspects of personal management, functional domains, accountability areas etc. As the IRBs are set up by the legislatures, it is believed that government will have less ability to control their working which will enable them to work with efficiency, objectivity and fairness. In other words, independence is given to IRBs for performance excellence.

POOR PERFORMANCE OF THE IRBs: SOME ILLUSTRATIONS

RBI

  • The recurrence of scams in the banking sector (public, private, cooperatives), the problem of NPAs, persistent inflation etc. have raised questions on whether RBI is responsible for its mandate.

SEBI

  • The NSE co-location scam and the very unprofessional manner in which SEBI has handled the issue invited criticisms from various quarters.
  • The delay in concluding investigations, reactive rather than proactive actions and delay in addressing grievances of retail investors etc., are other instances.

TRAI

  • TRAI has been criticised for its favourable stance towards Reliance Jio in the context of predatory pricing.
  • The AGR dues didn’t pile up overnight but stem from a 15-year-old dispute over sharing of revenues between telcos and the government.
  • A well-regulated industry would not be subject to such a large fiscal shock.

 THREE MAJOR CHALLENGES IN THE WORKING OF IRBs

INDEPENDENCE

  • Financial independence is one aspect of independence.
  • Financial independence is frequently restricted by regulators’ reliance on concerned line ministries for budgetary allocations, approval of staff hires, and the requirement that the former report to the latter.
  • Independence also refers to a fixed term of employment and protection from dismissal, barring cases of incompetence and moral turpitude.
  • However, the government interferes repeatedly with the tenure of employees in regulatory agencies.
  • Functional independence is a requirement for regulatory effectiveness, which necessitates that the regulator maintains an impartial relationship with interest groups (Problem of Regulatory Capture)

ACCOUNTABILITY

  • During various Parliamentary debates, regulators do not respond to questions about them. The minister of the associated ministry is held accountable.
  • Regulators are frequently overlooked from scrutiny. Only two questions were posed to regulators in the 16th Lok Sabha. Only when there is an impending crisis or a serious debate in the country are the actions of the regulator called into question.
  • Annual reports from regulators are not submitted to parliamentary standing committees.

TRANSPARENCY

  • A transparent regulatory process is essential. Stakeholders, for example, must be made aware of the regulatory process and given opportunities to freely express their opinions.
  • Liberal use of interim orders, without hearing the affected party, is criticised.
  • It turns out that in many such cases, the regulator takes its time to issue the final order. Also, the rules are often harsh and are made without meaningful consultation and many a time the rules are changed as fast as they are made.

 WHETHER THE IRBs ARE TRULY INDEPENDENT?

In actual practice, the government can influence the personal management practices of the regulatory bodies. The significant role of government in appointment, promotion and removal, an extension of tenure etc. undermines the independence of regulated bodies. For instance, an Ordinance was brought to change the TRAI Act in order to change the eligibility criteria for the appointment of Chairman of TRAI, and the controversy between the RBI and Central Government and the resignation of the RBI Governor and Deputy Governor.  Similarly, the financial dependency of the regulatory body on the administrative ministry is also a cause of concern. Thus, it is argued that IRBs should be given constitutional status like the ECI, CAG, etc. The idea is that Constitutional status will eliminate political pressure and government influence from the functioning of regulatory bodies which will enhance their efficiency.

WHETHER CONSTITUTIONALIZING OF IRBs IS THE BEST WAY TO ENSURE INDEPENDENCE AND THUS PERFORMANCE?

ARGUMENTS IN FAVOUR

  • It will substantially reduce executive control over the IRBs thereby securing meaningful independence.
  • Constitutionalisation will completely remove the dependency of the IRBs on the ministries for funds and functionaries.
  • It will enhance the stature, prestige and authority of the IRBs which will help it to resist political pressure.
  • Regulation has become the fourth branch of the state and hence is a quite significant function of the state. So Constitutionalisation can enable them to carry out their function efficiently.
  • There are many countries that provide Constitutional status to IRBs. For instance, in a 2009 report, the Bank for International Settlements (BIS) found that the Constitutions of eight countries specifically provided for the independence of their central banks Switzerland, Chile, Mexico, Russia, South Africa etc.

ARGUMENTS AGAINST

  • The purpose of regulation is not to check the government and hence they can’t be equated with bodies like ECI, Supreme Court, CAG etc.
  • Constitutionalisation will lead to a further lack of accountability of the IRBs which is detrimental.
  • There is no guarantee that Constitutionalisation will automatically ensure independence and performance.
  • As IRBs are the creations of the legislature, which represents the sovereign authority of the people, it should have the freedom to decide the various aspects of the IRBs.
  • Neither the Damodaran Committee, the FSLRC, the Second ARC etc. have recommended Constitutionalisation.
  • Central banks perceived to have the “gold standard” of independence, such as the Reserve Bank of New Zealand, Federal Reserve, and Bank of Canada do not have Constitutional status. In fact, some of the best-governed banks, such as the Bank of Japan and the Federal Reserve have private shareholders, such as banks and financial institutions.

THE WAY FORWARD: 

ADHERE TO SECOND ARC RECOMMENDATIONS

  • Before establishing a regulator, its need should be carefully examined. Only where necessary should there be regulation, according to the rules.
  • A Management Statement outlining the goals and responsibilities of each regulator should be developed by each Ministry in addition to the statutory framework.
  • The appointment, tenure, and removal of different regulatory authorities must be done in a transparent and equitable manner.
  • There must be enough protection against arbitrary removal.
  • The relevant Departmentally Related Standing Parliamentary committees should be used to ensure parliamentary oversight of regulators (DRSC).
  • The independent regulators ought to undergo regular evaluation.
  • A report on the performance of the regulators in light of these principles ought to be included in their annual reports.

FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION RECOMMENDATIONS

  • The FSLRC advises achieving financial independence by independently obtaining funds from sources like fees.
  • FSLRC suggests specific regulatory goals, informing Parliament regarding their success in enforcing their regulatory targets, etc.
  • It also urges the consolidation of regulators, such as The PFRDA and IRDA.
  • It also suggests creating an extensive and enforceable code of conduct.

OECD: BEST PRACTICE PRINCIPLES FOR THE GOVERNANCE OF REGULATORS

Following the OECD best practices can improve the IRB’s functioning. These principles are:

  • Role clarity
  • Preventing undue influence and maintaining trust
  • Decision-making and governing body structure for independent regulators
  • Accountability and transparency
  • Engagement
  • Funding
  • Performance evaluation

ENSURE TRANSPARENCY

  • It may appear that an agency’s independence is being compromised when it is forced to defend its decisions in front of members of the public or other representatives.
  • Contrarily, one of the best ways to encourage the agency to act in the public interest is through transparency.
  • The provisions included in the Reserve Bank of India Act in 2015, which mandate the regular publication of the minutes of its meetings, the individual votes of each member, and the obligation to inform the government of any failures in upholding the inflation target, serve as a classic illustration.
  • As it would be difficult to justify decisions and votes that do not align with the public interest, this is a potent provision that simultaneously secures independence and accountability.

CONTINUOUS PARLIAMENTARY OVERSIGHT

  • Parliamentary oversight appears to be the best form of political accountability because accountability to the line ministry is frequently associated with pressure being applied to the regulator to favour utilities operated by the ministry.
  • Legislators need to devise such mechanisms to bring regulatory oversight but must be careful not to interfere in their functioning.

THE CONCLUSION: Regulation is an important activity and hence the IRBs need to have real independence. Constitutional status is not the right approach but there are many other ways by which this can be ensured. A via media need to be found that will balance the need for independence and democratic control.

QUESTIONS TO PONDER

  1. What do you understand by Independent Regulatory Bodies? Explain the reasons behind their establishment.
  2. “Independence of the IRBs require their Constitutionalisation”. Examine.