27 September, 2020
- Self Assessment Speed Test
- Farm Bills: who gains and who loses - (Polity & Governance)
- Address aspirations of Tamil people, Modi urges Rajapaksa + A party for the Rajapaksas - (International relation)
- CAG moots probe over cess accounting dodge - (Polity & Governance)
- PSU to PSU stake sale just moves funds to govt., says CAG - (Polity & Governance)
- Question of the day (International Relation)
- UPSC Current Affairs:Farm Bills: who gains and who loses – Pg 12
UPSC Syllabus: Prelims: Economy |Mains: GS Paper III – Economy
Sub Theme: Problems in Farm Bills | UPSC
- Farmers have taken to the streets, protesting against three Bills on agriculture market reforms that were passed by Parliament last week and will become laws once they are signed by the President. In Punjab and Haryana, bandhs were observed, with blocked roads and mass rallies.
- Opposition parties and farmers groups across the political spectrum have expressed concern that the laws could corporatize agriculture, threaten the current mandi network and State revenues and dilute the system of government procurement at guaranteed prices.
- Since the basic provisions of the bills have already been discussed in our earlier DNS, we will keep our discussion limited to the issues with the bills.
Let us quickly go over the bills
- The Bills which aim to change the way agricultural produce is marketed, sold and stored across the country were initially issued in the form of ordinances in June.
- They were then passed by voice-vote in both the Lok Sabha and the Rajya Sabha during the delayed monsoon session this month, despite vociferous Opposition protest.
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, allows farmers to sell their harvest outside the notified Agricultural Produce Market Committee (APMC) mandis without paying any State taxes or fees.
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, facilitates contract farming and direct marketing.
- The Essential Commodities (Amendment) Bill, 2020, deregulates the production, storage, movement and sale of several major foodstuffs, including cereals, pulses, edible oils and onion, except in the case of extraordinary circumstances.
- The government hopes the new laws will provide farmers with more choice, with competition leading to better prices, as well as ushering in a surge of private investment in agricultural marketing, processing and infrastructure.
Issues with the bills
- Constitutional issue:
Agriculture falls in the State list, and hence many argue that the Centre should not be making legislation on this subject at all, as that will compromise on the states ability to Tax and Regulate agriculture sector.
- Mandis act as a source of revenue for states: (Punjab and Haryana)
- Some states are concerned about the loss of revenue from mandi taxes and fees, which currently range from 8.5% in Punjab to less than 1% in some States.
- Punjab and Rajasthan are considering legal measures to expand the bounds of their APMC mandi yards to ensure that they can continue collecting taxes on all agricultural trade within their State’s borders.
- Dispute resolution will happen under contract farming will not be done by state government.
- Fear of lowering of procurement price
Only 6% of farmers actually sell their crops at MSP rates. However,
- More than half of all government procurement of wheat and paddy in the last five years has taken place in Punjab and Haryana, according to Agriculture Ministry data.
- More than 85% of wheat and paddy grown in Punjab, and 75% in Haryana, is bought by the government at MSP rates. Farmers in these States fear that without MSPs, market prices will fall.
- States such as Chhattisgarh and Odisha have seen procurement increase over the last five years, after the implementation of decentralised procurement. Paddy farming has received a major boost with procurement at MSPs and farmers fear their newly assured incomes are at stake.
- Destruction of APMC and Commission agents Network
- A system of arthiyas or commission agents facilitates procurement, and link roads connecting most villages to the notified markets and allowing farmers to easily bring their produce for procurement.
- Farmers fear that encouraging tax-free private trade outside the APMC mandis will make these notified markets unviable, which could lead to a reduction in government procurement itself.
- Most of the slogans at the farmers’ protests revolve around the need to protect MSPs, or minimum support prices, which they feel are threatened by the new laws.
- Farmers are also demanding that MSPs be made universal, within mandis and outside, so that all buyers — government or private — will have to use these rates as a floor price below which sales cannot be made.
- Introduction of large corporates
- The majority of agricultural marketing already happens outside the mandi network. Bihar, Kerala and Manipur do not follow the APMC system at all.
- However, most private buyers are currently small traders at local mandis. The removal of stock limits and facilitation of bulk purchase and storage through the amendment to the Essential Commodities Act could corporatize agriculture space.
- Although they will bring much-needed investment, they could also skew the playing field, with small farmers unlikely to match them in bargaining power.
- UPSC Current Affairs: Address aspirations of Tamil people, Modi urges Rajapaksa + A party for the Rajapaksas – Pg 1 + 14
UPSC Syllabus: Prelims: International Relations | Mains: GS Paper-II - International Relations
Sub Theme: Amendment in Sri Lanka’s Constitution | UPSC
Context - Calling on the newly elected Sri Lankan government to fully implement the 13th constitutional amendment, which envisages a measure of power devolution to provinces, Prime Minister Narendra Modi “highlighted” India’s concerns about the rights of the Tamil minorities, during talks with his Sri Lankan counterpart Mahinda Rajapaksa via video conference on Saturday.
In the DNS dated 06-09-20 we discussed the following
- History of Tamil-Sinhalese conflict
- Demand of separate Tamil State in Sri Lanka
- Indian intervention on peace process in Sri Lanka and 13th
- Form of government in Sri Lanka
- India-Sri Lanka present relation.
Form of government in Sri Lanka
Sri Lanka has Semi-presidential System
- In semi-presidential systems, there is always both a president and a prime minister.
- In such systems, the president has genuine executive authority, unlike in a parliamentary republic, but the role of a head of government may be exercised by the prime minister.
Both a president and a prime minister
Both a president and a prime minister
Head of the state of Popularly elected
Head of the state of Popularly elected
Head of the state is not Popularly elected
No legislative responsibility
Government does not depend on a legislative majority
Government does depend on a legislative majority
Government does depend on a legislative majority
- Sri Lanka elects on national level a head of state - the president - and a legislature.
- The President, directly elected, is head of state, head of government, and commander in chief of the armed forces.
- President is responsible to parliament for the exercise of duties under the constitution and laws.
- The president may be removed from office by a two-thirds vote of Parliament with the concurrence of the Supreme Court.
- The prime minister would serve as the deputy to the president if both are from the same political party. In certain occasions, when the president is not from the majority party in parliament or a national government is formed, the prime minister would be appointed from a party different from the president's. In such a situation, the prime minister would serve as the de facto head of government.
- The President's deputy is the prime minister, who leads the ruling party in Parliament. A parliamentary no-confidence vote requires dissolution of the cabinet and the appointment of a new one by the President.
- Parliament reserves the power to make all laws.
After the 1978 constitutional amendment president has vast power
- The President may summon, suspend, or end a legislative session and dissolve Parliament any time after it has served for one year.
- President chose the Prime Minister from the party having majority in the parliament.
- President has the power to remove the PM or ministers.
- Very difficult to remove the president.
The timeline of fall of Mahinda Rajapaksa – 19th Amendment – Rise of Mahinda Rajapaksa – 20th Amendment
- Mahinda Rajapaksa wasthe Leader of the Oppositionof Sri Lanka from 2002 to 2004, Prime Minister from 2004 to 2005,and the President from 2005 to 2015. He was defeated in his bid for a third term in the 2015 presidential election by Maithripala Sirisena.
- In 2015, Maithripala Sirisena joined hands with Ranil Wickremesinghe in an unexpected alliance.
- With constitutional reforms as the top priority in their manifesto, the electoral triumph was perceived to have provided a mandate to the government to tackle issues of politicisation of institutions, nepotism, corruption and the centralisation of power that occurred during the 15 years of Mahinda Rajapaksa’s rule.
- In 2016 19th Constitutional Amendment was made.
- Rajapaksa unsuccessfully sought to become Prime Minister in the 2015 parliamentary election.
- Once on bail, Basil Rajapaksa, the former Minister and younger brother of Mahinda Rajapaksa, wasted no time in building a new party.
- Their third brother Gotabaya Rajapaksa, who was Defence Secretary in Mahinda Rajapaksa’s government, began attracting professionals and intellectuals, with a stated mission of influencing “the moral and material development of Sri Lanka”.
- The Sri Lanka Podujana Peramuna (SLPP or People’s Front), in less than four years after it was founded, firmly established itself as the party of the people, mainly the majority Sinhala-Buddhist community, and its icons — the Rajapaksa brothers — as the country’s leaders.
- There was strain in working of president and Prime Minister. In 2018 Mr. Sirisena shocked the country with his dramatic move — sacking PM Wickremesinghe, appointing Mahinda Rajapaksa in his place, and prematurely dissolving Parliament. For 52 days, Mr. Rajapaksa was the purported Prime Minister.
- Some of his own supporters were displeased with their leader choosing expedience over the law. The Supreme Court deemed Mr. Sirisena’s move illegal, and Mr. Rajapaksa resigned. Though he and the party had lost some sheen since February 2018, he gained more.
- The following months saw a complete breakdown in governance — culminating in the security lapse ahead of the Easter terror attacks — and laid the red carpet for the SLPP.
- However, the 19th Amendment — a 2015 legislation — prevented Mahinda Rajapaksa from contesting the presidential polls for the third time.
- The brothers put their might behind Gotabaya Rajapaksa, a former Lieutenant Colonel, pledging national security to a country terrified after a terrorist attack, along with development and prosperity. The promise of a strong leader, coupled with a provocative, nationalist rhetoric, did the trick.
- In November 2019, opposition candidate Mr. Gotabaya Rajapaksa secured 52.25 % of the mandate and was elected President.
- Following the landslide win in the August parliamentary polls, one of the first things President Rajapaksa ordered was the tabling of the 20th Amendment Bill in Parliament, which not only envisions an even stronger executive presidency, but reduces the Prime Minister to a ceremonial position.
President Rajapaksa is of the opinion that the 19th amendment was framed as the major impediment in governing the country. This narrative got some resonance due to the openly dysfunctional relationship between the previous president Maithripala Sirisena and prime minister Ranil Wickremesinghe which paralysed major governance programmes and caused political instability.
Provisions such as a five-year term for the president and a two-term limit have remained. So has the right of access to information.
Draft 20th Amendment
Citizens have the right to file Fundamental Rights applications against the President.
The President will be immune from all legal proceedings during the period of his/ her presidency
Constitutional Council established with seven members of parliament and three eminent members of public.
The Parliamentary Council will be comprised of only Members of Parliament Besides the ruling and principal opposition party, there is no representation of other political parties represented in Parliament.
Constitutional Council to approve the nominees of the President for - The Chief Justice and the other Judges of the Supreme Court ; The President and the Judges of the Court of Appeal; The Members of the Judicial Service Commission; The Attorney-General; The Auditor-General; The Inspector-General of Police; The Ombudsman; The Secretary-General of Parliament
As above, the President will only seek "observations" from the Parliamentary Council for appointments to these posts.
President can appoint members to the following commissions only on recommendation of the Constitutional Council. The Commissions are: Election Commission; Public Service Commission; National Police Commission; Human Rights Commission of Sri Lanka; Commission to Investigate Allegations of Bribery or Corruption; Finance Commission; Delimitation Commission; National Procurement Commission; Audit Service Commission
The President will only seek "observations" from the Parliamentary Council. Unlike the existing constitution where the constitutional council's decision is binding, President has no obligation to consider the observations.
On "advice" of the Prime Minister, President can appoint Ministers to portofolios "so determined".
President can decide the appoint of ministers and their portfolio in consultation with PM, but only if it is deemed "to be necessary".
No provision for the President to assign a certain ministry to himself.
Limitation on number of ministers removed.
PM cannot be removed by the President and shall continue to hold office throughout the period in which the Cabinet functions unless he resigns or ceases to be a MP.
President can unilaterally remove any Minister, including the Prime Minister.
The President can dissolve Parliament only after four and half years after first meeting.
President can dissolve Parliament at any time after one year from the date of General Election, except in certain limited situations.
Experts’ committee to draft an entirely new constitution
- Indian observers are scrutinising the reason behind the government quickly setting up an experts’ committee to draft an entirely new constitution.
- The urgency shown to overhaul the constitution, when the key constraints on presidential executive power would be removed by the 20th amendment, is raising eyebrows. With this 20thAmendment serving the purpose of the new regime, there’s hardly a need now for a new Constitution, other than to look into 13thAmendment (Provincial Councils) and electoral reforms.
- It may have larger implications to the 1987 bilateral accord between the two nations.
- It was an outcome of the Indo-Lanka Accord of July 1987.
- It mandated a measure of power devolution to the provincial councils established to govern the island’s nine provinces.
- It led to the creation of Provincial Councils, assured a power sharing arrangement to enable all nine provinces in the country, including Sinhala majority areas, to self-govern. Subjects such as education, health, agriculture, housing, land and police are devolved to the provincial administrations.
- But because of restrictions on financial powers and overriding powers given to the President, the provincial administrations have not made much headway. In particular, the provisions relating to police and land have never been implemented.
- It recognised Tamil as second official language of Sri Lanka.
- It was opposed vociferously by both Sinhala nationalist parties and the LTTE. The former thought it was too much power to share, while the Tigers deemed it too little.
- It was widely perceived as an imposition by a neighbour wielding hegemonic influence.
- Till date, the 13th Amendment represents the only constitutional provision on the settlement of the long-pending Tamil question. In addition to assuring a measure of devolution, it is considered part of the few significant gains since the 1980s, in the face of growing Sinhala-Buddhist majoritarianism from the time Sri Lanka became independent in 1948.
When Prime Minister Mahinda Rajapaksa visited India in February, Prime Minister Narendra Modi reiterated that Sri Lanka needs to complete the implementation of the 13th amendment. During that visit, Mahinda Rajapaksa did not categorically commit to it. In an interview with The Hindu, he stated that the demands of the Tamil National Alliance (TNA) for full implementation will not be accepted by the majority Sinhala community. During recent bilateral talk with Indian PM via video conference, Prime Minister Mahinda Rajapaksa expressed the confidence that Sri Lanka will work towards realising the expectations of all ethnic groups, including Tamils, by achieving reconciliation nurtured as per the mandate of the people of Sri Lanka and implementation of the Constitutional provision.
Arguments against Provincial Councils
- Provincial councils have not been of much help. For a small nation central government can can effectively manage provinces.
- Local bodies should be empowered.
- Until clauses detrimental to the sovereignty and territorial Integrity of SriLanka, are reviewed and revised, No Police or Land Powers will be delegated to the PCs
- Provincial councilswas “forced down upon us by the Indians, at virtual gunpoint”.
- Provincial councils are a threat to the unity of the country.
Even if the Sri Lankan government only moves forward with diluting the powers of the provincial councils, rather than complete abolition, India will have to carefully weigh its response. Unlike the 20th amendment, New Delhi may not be able to remain silent.
- UPSC Current Affairs: CAG moots probe over cess accounting dodge - Page 11
UPSC Syllabus: Prelims: Polity & Governance | Mains: GS II – Polity & Governance
Sub theme: Central Road and Infrastructure Fund (CRIF)| UPSC
Context: This article highlights that the office of CAG has recently highlighted some serious accounting lapses in the Central Road and Infrastructure Fund (CRIF) and has accordingly called for investigation against the accounting authorities.
Details about the Central Road and Infrastructure Fund (CRIF)
- Presently, the Centre is imposing Road and Infrastructure Cess at the rate of Rs 10 per litre on the imported and domestic sale of petrol and high-speed diesel. The proceeds of this Cess is routed to the non-lapsable dedicated fund known as Central Road and Infrastructure Fund (CRIF). Prior to the year 2018-19, it was routed to Central Road Fund.
- In Budget 2018-19,Government had amended the Central Road Fund Act, 2000 and had renamed the Central Road Fund as Central Road and Infrastructure Fund (CRIF).The main purpose of the amendment was to use the proceeds of the cess under CRIF to finance other infrastructure projects including waterways, railway infrastructure, social infrastructure among others. The amendment prescribes that cess should be first credited to the Consolidated Fund of India and later, with parliament's approval, should go to the CRIF.
- The administrative control of Central Road and Infrastructure Fund (CRIF) is under the Department of Economic Affairs (DEA), finance Ministry. Earlier, it was under the domain of Ministry of Road Transport and Highways.
Note: Details related to Cess has been covered in DNS dated 24th Sep 2020
- When the CRF was replaced with the CRIF, ideally, the money lying in the CRF should have also got transferred to CRIF as well. However, the Government transferred almost around Rs 10,250 crores from CRF to consolidated fund of India rather than transferring it to CRIF.
- This transfer to the Consolidated Fund of India was accounted as "Non-Tax receipts" of the Government. The CAG has pointed out that it was primarily done by the Government to inflate the revenue receipts of the Government.
- In response, the Finance Ministry has argued that the idle balance in the CRF was transferred to the Consolidated Fund of India (CFI) with the approval of the Finance Minister. Morever, such write-backs had been done in the past also.
- UPSC Current Affairs: PSU to PSU stake sale just moves funds to govt., says CAG - Pg 11
UPSC Syllabus: Prelims: Economy |Mains: GS III – Economy
Sub theme: Strategic Disinvestment | UPSC
In the year 2018-19, the Government had raised around Rs 72,000 crores through the Strategic Sale of the 4 PSUs to other PSUs. For example, Rural Electrification Corporation (REC) was taken over by Power Finance Corporation, which is also a PSU under the Government of India. The Strategic sale of one PSU to another PSU has been criticized by the CAG in his audit report. The CAG has highlighted that such disinvestments merely resulted in transfer of resources from one PSU to another and did not lead to any change in the stake of the public sector / government in the disinvested PSU. In this regard, let us understand the concept of Strategic Disinvestment.
What is Disinvestment?
Disinvestment refers to the mechanism in which the Government loses a part of its ownership of the PSUs through the sale of shares. The Disinvestment as a policy was adopted by the Government post 1991 LPG Reforms. The Department of Investment and Public Asset Management under the Ministry of Finance acts as the nodal agency for the Disinvestment in India.
What is Strategic Disinvestment?
According to the Department of Disinvestment, in the strategic sale of a company, the transaction has two elements:
- Transfer of a block of shares to a Strategic Partner and
- Transfer of management control to the Strategic Partner
The Strategic Disinvestment takes place when the Government ownership in the PSUs get reduced to below 51%. Further, this is accompanied by transfer of management control to Strategic Partner (which could either be Public or Private Sector).
According to the strategic sale guidelines issued by DIPAM, after the transaction, the Strategic Partner may hold less percentage of shares than the Government, but the control of management would be with partner. For instance, if in a PSU the shareholding of Government is 51% and the balance is dispersed in public holdings, then Government may go in for a 25% strategic sale and pass on management control, though the Government would post-transfer have a larger share holding (26%) than the Strategic Partner (25%). But the necessary condition is that the control of the firms should be with the strategic partner.