Newspaper notes for UPSC 02-07-18

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Tax department launches ‘instant’ PAN card service

GS P3 : Economy 1/10

  • The Income Tax Department has launched an ‘instant’ Aadhaar-based PAN allotment service for individuals seeking the unique identity for the first time.
  • This facility is free of cost and instant allotment of e-PAN is available for a limited period on a first-come, first-served basis for valid Aadhaar holders.
  • The facility was introduced because of the increasing number of people applying for the PAN. A fresh PAN will be allotted on the basis of a one-time password sent on the mobile number linked to the Aadhaar number of a person. The new PAN will have the same name, date of birth, gender, mobile number and address as in the Aadhaar.

Agni-V to be part of nuclear arsenal soon

GS P3 Technology 7/10

  • India’s longest-range ballistic missile, Agni-V, will be inducted into the nuclear arsenal very soon.
  • The Intermediate Range Ballistic Missile (IRBM) with a range of over 5,000 km can reach most parts of China.
  • The official said the missile features the latest technologies for navigation and improved accuracy. Earlier variants of the Agni family of long-range missiles have already been deployed.
  • Last month, the canisterised variant of the missile was successfully test-fired by the user, the Strategic Forces Command (SFC).
  • The Agni series of missiles constitute the backbone of India’s nuclear weapons delivery, which also includes the Prithvi short-range ballistic missiles and fighter aircraft. The submarine-based nuclear arsenal, which assures second strike capability in the face of the proclaimed no-first-use policy, is taking shape.
  • Agni-5 can carry nuclear warheads weighing 1.5 tonnes to a distance of over 5,000 km and is the longest missile in India’s arsenal capable of reaching most parts of China. With a smaller payload the range can go up much higher.
  • The missile features many new indigenously developed technologies:
  •  The very high accuracy Ring Laser Gyro based Inertial Navigation System (RINS)
  • and the most modern and accurate Micro Navigation System (MINS) which improves the accuracy of the missile.

Agni Missiles

  • The missiles of Agni family are medium to long range.
  • These are developed by the Defence Research and Development Organisation of India under Integrated Guided Missile Development Program.
  • Together five Agni missile form the bulwark of India’s nuclear deterrence capability.

The five missiles are:

  1. Agni-I: 700 km
  2. Agni-II: 2,000 km
  3. Agni-III: 3,000 km
  4. Agni-IV: 4,000 km
  5. Agni-V: 5000 Km

No first Use policy:

  • One of the cornerstones of India ’ s official nuclear policy is No First Use (NFU) of nuclear weapons, which has a long history in Indian nuclear debates and discussions. The country ’ s stated doctrine from January 2003 includes a pledge not to use nuclear weapons first but with a significant caveat, that nuclear weapons could be used if Indian forces are attacked with biological or chemical weapons. The NFU policy has often been held up by Indian diplomats, government spokespeople, and various strategists as proof of India ’ s status as a responsible nuclear power.
  • At the same time, there is also a history of strategists, military leaders, and, more recently, government officials questioning, or calling for the abandonment of, the NFU commitment.
  • The NFU policy serves another purpose: it allows Indian politicians and diplomats to portray India as a responsible country, especially by contrasting India with Pakistan.
  • Withdrawing the NFU policy and making a declaration to that effect makes little strategic sense, since it will damage India’s status as a responsible nuclear power. Such a step will abrogate India’s commitment to the universal goal of nuclear disarmament and upset the regional balance in the sub-continent. The NFU policy is a sound pillar of India’s nuclear doctrine.

Row over U.K.-India meet postponement

GS P2 IR 2/10

  • India had proposed a three-day window for a brief bilateral in June during the U.K.-India week, sources in London and New Delhi confirmed. However, due to scheduling difficulties, Britain’s Ministry of Defence declined the meeting for proposed dates.
  • India had previously cancelled a confirmed trip by the Minister in February, after which a July date had initially been agreed upon. A meeting has now been scheduled for later in the summer.
  • Nevertheless, the decision to turn down a meeting with India — which London has pegged as one of its major defence partners in the wake of Brexit — raised concern in Britain, coming days after the controversy over the exclusion of Indian students from a relaxation of visa documentation.

FDI growth hits 5-year low

GS P3 Economy, FDI  3/10

  • Foreign direct investment (FDI) in India seems to be petering out with the growth rate of inflows recording a five-year low of 3% at $44.85 billion in 2017-18, according to the latest data of the Department of Industrial Policy and Promotion (DIPP).
  • According to experts, it is critical to revive domestic investments and further improve ease of doing business in the country to attract foreign investors.
  • While the government has taken substantial efforts in relaxing the regulations as well as removing ambiguities, global consumer and retail companies are still hesitant to take decisions to invest in India.
  • An UNCTAD report, too, had recently stated that FDI in India decreased to $40 billion in 2017 from $44 billion in 2016. However, outflows from India, the main source of the FDI in South Asia, more than doubled to $11 billion.

RERA vs IBC: two laws that now ring fence homebuyers

GS P3 Infrastructure. 5/10

  • The Real Estate (Regulation and Development) Act,2016 (RERA) and the Insolvency and Bankruptcy Code (IBC) offer protection to homebuyers from errant builders.
  • How does RERA protect homebuyers? RERA offers protection to homebuyers by imposing duties on promoters and consists of preventive and penal provisions. Every promoter shall register his project with RERA and 75% of the amount realised shall be deposited in a separate account; withdrawal from the account shall be in proportion to the degree of project completion, among others. Failure to comply entails penalty.
  • Protection that IBC offers: Post the recent ordinance promulgated in June 2018, homebuyers are included in the category of financial creditors under the IBC, thereby climbing up the ladder of precedence in recovery proceedings. Money given to real estatecompanies by homebuyers gets the commercial effect of a borrowing.
  • Which is the best forum to approach: RERA or IBC?
  • RERA, which caters to the real estate sector, contains stringent norms and penalties against errant builders. The IBC recognised homebuyers as financial creditors to protect their rights even when a creditor, other than a homebuyer, invokes insolvency proceedings against the builder. It may be in the interests of homebuyers to approach the National Company Law Tribunal only when the promoter fails to remedy default under RERA or where RERA is not active.

A transition to bioplastic: will it work?

GS P3 Environment 7/10

  • Under pressure from activists, the European Union, Britain, India and even fast food giants like McDonald’s have all made some headway towards bringing the use of plastic straws to an end.
  • According to peer-reviewed U.S. journal Science , eight million tonnes of plastic are dumped into the earth’s oceans and seas each year250 kg every second.
  • For years, the focus of environmentalists has been on plastic bags. But plastic straws have now come into the spotlight.
  • There are alternatives to plastic straws, but they are much pricier. Others are using raw pasta and bamboo sticks.
  • The U.S. is resisting change while Europe takes the lead with biodegradable plastics made either from fossil fuels or crops such as potatoes and corn.
  • Some 100,000 tonnes of bioplastics were produced in 2016 in the world, according to Germany’s specialist Nova-Institute. In 2017, biodegradable plastic production capacity rose to 8,00,000 tonnes globally.
  • Experts, meanwhile, warn that biodegradable plastics may not be a miracle solution anyway. A separate collection system for bioplastic waste would need to be set up in order for the shift to really work, and that would involve millions in investment from States.

Does tracking mobile location breach privacy?

GS P2 Privacy 5/10

  • A recent ruling by the US Supreme Court addressed a question that has so far been a grey area in the digital age:
  • can law enforcers tracking a suspect collect location data from cellphone companies? They generally need a warrant, the nine-judge Supreme Court ruled in a 5-4 majority decision that was a statement for a consumer’s privacy rights.
  • In India, central and state law enforcement agencies gain access to cellphone location data whenever service providers, once asked, provide them with call data records. Accessing such information is subject to certain permissions. Only an officer of SP rank — DCP rank in a commissionerate — can write to the nodal officer of a service provider seeking call data records.
  • The US court ruled that it did not matter that the location records were in the hands of a third party. This marks a break from earlier decisions that went by the “third-party doctrine” — a legal theory that holds that people who voluntarily give information to third parties (service providers in this case) have “no reasonable expectation of privacy”.
  • The new decision has implications for all kinds of personal information held by third parties, including email and text messages, Internet searches, and bank and credit card records.
  • with GPS information, the time-stamped data provides an intimate window into a person’s life, revealing not only his particular movements, but through them his familial, political, professional, religious and sexual associations.
  • In one dissent, Justice Anthony M Kennedy wrote: “Cell-site records are uniquely suited to help the government develop probable cause to apprehend some of the nation’s most dangerous criminals: serial killers, rapists, arsonists, robbers, and so forth.” The ruling made exceptions for emergencies like bomb threats and child abductions.

Editorial and Opinions

GST monthly revenue will exceed Rs. 1.1 lakh cr

GS P3: GST, Economy Imp of article: 6/10

  • Revenue from the Goods and Services Tax (GST) will exceed Rs. 1.1 lakh crore monthly, Finance Minister l said , adding that he expects about Rs. 13 lakh crore of revenue from the new tax regime over this financial year.

Live mint: Opinion

  • It has been a year since the landmark goods and services tax (GST), which converted India into a single market, was implemented. Although India opted for an extremely complex GST structure, its implementation was still a big breakthrough as problems can always be addressed with experience.

Some interesting facts in this year’s Economic Survey:

  • First, the Survey showed that India’s formal non-farm payroll is much higher than is commonly believed. The implementation of the GST, which is bringing more businesses into the tax net, will further push formalization of the economy.
  • Second, the GST is leading to better tax compliance. The number of unique registrations has now crossed the 10 million mark. The increasing number of taxpayers and better compliance should help raise higher revenue in the medium to long run.
  • Third, the GST system is creating a vast repository of data that could be useful in policymaking. For example, it is now possible to know the state-wise distribution of international exports.
  • Finally, the way the GST council has evolved is a notable achievement. All decisions so far have been taken by consensus. It shows the way complex issues can be addressed through cooperation between the Union and state governments.

Issues with GST :

  • However, despite visible benefits,  the GST structure is far from optimum. The latest “India Development Update” of the World Bank, for example, noted that the 28% rate, applicable on a set of goods, is the second highest among the 115 countries sampled: 49 countries have a single rate and 28 have two rates.
  • Only four countries other than India—Italy, Luxembourg, Pakistan and Ghana—have four rates.
  • It is important for India to simplify the tax structure. The first target should be to move to at least a three-rate structure—a lower rate for essential goods, a relatively high rate for luxury goods, and a standard rate for the majority of goods and services.
  • Apart from rates, some of the operational issues, such as those related to ease of filing and refund, need to be resolved. Delays in refund affect the working capital of firms and should be avoided, particularly in the case of exporters, in an environment of widening trade deficit. Further, the council will need to work on bringing items such as electricity, petroleum products and real estate into the GST net.

Bhima-Koregaon and the fault in our laws

GS P2 laws and acts 7/10 The article should be read in entirety, still tried to summarize it.

  • Many other members of the Constituent Assembly (CA), were objecting to the wide range of restrictions that had been imposed upon fundamental rights in the draft Constitution. Drawing attention to the multiple “Public Safety Acts” and “Defence of India Acts” that had been the favourite weapons of the colonial regime, speaker after speaker expressed the concern that, despite the best intentions of the Assembly, the Constitution could easily be interpreted to authorise the continuation of these hated laws.
  • The arrest of five individuals in early June, ostensibly for instigating the riots at Bhima-Koregaon at the beginning of the year, throws the fears expressed in the CA into sharp relief. The accused, who include activists and lawyers, have been booked under the Unlawful Activities (Prevention) Act (UAPA). An examination of the UAPA shows how, in one overarching “anti-terrorism law”, vast discretionary powers are conferred upon state agencies, judicial oversight is rendered toothless, and personal liberty is set at naught.
  • The UAPA authorises the government to ban “unlawful organisations” and “terrorist organisations” (subject to judicial review), and penalises membership of such organisations.
  • The problems begin with the definitional clause itself. The definition of “unlawful activities” includes “disclaiming” or “questioning” the territorial integrity of India, and causing “disaffection” against India. These words are staggeringly vague and broad, and come close to establishing a regime of thought-crimes.
  • “Membership” of unlawful and terrorist organisations is a criminal offence, and in the latter case, it can be punished with life imprisonment. But the Act fails entirely to define what “membership” entails. Are you a “member” if you possess literature or books about a banned organisation? If you express sympathy with its aims? If you’ve met other, “active” members? These are not theoretical considerations: charge sheets under the UAPA often cite the seizure of books or magazines, and presence at “meetings”, as clinching evidence of membership.
  • In 2011, the Supreme Court attempted to narrow the scope of these provisions, holding that “membership” was limited to cases where an individual engaged in active incitement to violence. Anything broader than that, it ruled, would violate the constitutional guarantees of freedom of speech and of association.
  • The second serious problem with the UAPA regime kicks in: Section 43D(5) of the Act prohibits courts from granting bail to a person if “on a perusal of the case diary or the [police] report … [the court] is of the opinion that there are reasonable grounds for believing that the accusation against such person is prima facietrue.”
  • The case diary and the charge sheet is the version of the state. Therefore, under the UAPA, as long as the state’s version appears to make out an offence, a court cannot, under law, grant bail. When we juxtapose this with the inordinately slow pace at which criminal trials progress, Section 43D(5) of the UAPA is effectively a warrant for perpetual imprisonment without trial.
  • However, as the CA debates reveal, the provision was meant to be used in rare and exceptional cases.
  • This is not to say that the state always, or even often, abuses its power. The purpose of a Constitution and a bill of rights, however, is to establish a “culture of justification” where the state cannot abuse its power. Civil and political rights are based upon the understanding that at no point should so much power, and so much discretion, be vested in the state that it utterly overwhelms the individual.
  • This is why the traditional argument in defence of laws such as the UAPA — that the state must be given a strong hand to control terrorist and other violent and disruptive activities — proves too much. It proves too much because it subordinates every other constitutional value — freedom of speech, personal liberty, the right to a fair trial — to the overarching concern of order. Such an attitude can be justified only in times of war or Emergency (and even then, subject to safeguards). But what the UAPA does is to normalise this “state of exception”, and make it a permanent feature of the legal landscape.
  • The Bhima-Koregaon arrests provide us with yet another opportunity to rethink a legal regime that has obliterated the distinction between the normal and the abnormal. The power to keep citizens incarcerated for long periods of time, on vague charges, and without affording them an opportunity to answer their accusers in a swift and fair trial, is an anathema to democracy and the rule of law.
  • The UAPA’s stringent provisions should go the way of its predecessors — the Terrorist and Disruptive Activities (Prevention) Act and the Prevention of Terrorism Act. They should be removed by Parliament, and, in the alternative, struck down as unconstitutional by the Supreme Court. And if that is not feasible, then there must at least be a change in the legal culture, with the courts following the example of the Bombay High Court in the first Kabir Kala Manch case, and granting bail unless the state can produce some cogent proof of criminality.

The dream of being an AI powerhouse

GS P3 and P2 Policy making, technology 7/10

  • In a recent discussion paper, NITI Aayog has chalked out an ambitious strategy for India to become an artificial intelligence (AI) AI is the use of computers to make decisions that are normally made by humans.
  • NITI Aayog envisions AI solutions for India on a scale not seen anywhere in the world today, especially in five key sectors — agriculture, healthcare, education, smart cities and infrastructure, and transport.
  • In agriculture, for example, machines will provide information to farmers on the quality of soil, when to sow, where to spray herbicide, and when to expect pest infestations. It’s an idea with great potential: India has 30 million farmers with smartphones, but poor extension services. If computers help agricultural universities advise farmers on best practices, India could see a farming revolution.

However, there are formidable obstacles.

  • The first problem is data. Machine learning, the set of technologies used to create AI, is a data-guzzling monster. It takes reams of historical data as input, identifies the relationships among data elements, and makes predictions.
  • More sophisticated forms of machine learning, like “deep learning”, attempt to mimic the human brain. And even though they promise greater accuracy, they also need more data than what is required by traditional machine learning.
  • Bengaluru-based Intello Labs,  is a start-up which helps buyers at agricultural mandis evaluate the quality of grains, fruits or vegetables.
  • To develop this product, the Intello Labs team had to photograph 2.5 million agricultural samples. Experts then identified the contents of these photos — a laborious process called annotation. Next, the team wrote a deep learning algorithm, which was trained using the photos. Today, the algorithm can predict the quality of 12 foods over 95% of the time in a few markets like Delhi and Rajasthan. But in order to expand their basket beyond 12 products and a few States, Intello Labs will need millions of more such images. This can be challenging for a private firm, unless such images are collected, digitised and annotated automatically by the government at agricultural mandis. Such data collection doesn’t happen today.The biggest agricultural data today resides with the government. It’s entirely up to them to annotate it and make it usable.
  • lack of data means that deep learning doesn’t work for all companies in India. One example is Climate-Connect, a Delhi-based firm, which uses AI to predict the amount of power a solar plant will generate every 15 minutes.But to generate such data, Climate-Connect needs historical inputs like the time of sunrise and sunset, and cloud cover where the plant is located. Unfortunately, since most Indian solar plants are recent, data are available only for a couple of years, whereas deep learning needs data over many years to predict generation.
  • Another problem for AI firms today is finding the right people. NITI Aayog’s report has bleak news: only about 50 Indian scientists carry out “serious research” and they are concentrated in elite institutions such as the Indian Institutes of Technology and the Indian Institutes of Science. Meanwhile, only about 4% of AI professionals have worked in emerging technologies like deep learning.
  • How does this skill gap impact companies? To some extent, open libraries of machine learning code, which can be customised to solve Indian problems, help. This means that companies need not write code from scratch, and even computer science graduates can carry out the customisation.
  • But open libraries can only go so far. For some technical problems, such libraries don’t exist. In Bengaluru, a start-up called Ati Motors is developing an autonomous cargo vehicle to ferry materials in ports and factories. One of the things the vehicle must do is to chart out its trajectory based on the obstacles along its path. There are no standard deep learning algorithms for this, and Ati Motors must write these on its own.
  • Can India then really become an “AI garage” for 40% of the world, as NITI Aayog envisions? The discussion paper mentions no timeline for this goal. But for any reasonable time frame for execution, much needs to change immediately.
  • First, if the government is serious about AI solutions powering agriculture or healthcare, it must collect and digitise data better under its existing programs.
  • Second, to close the skill gap, NITI Aayog suggests setting up a network of basic and applied AI research institutes. But if these institutes are to fulfil their mandate, they must collaborate closely with agricultural universities, medical colleges and infrastructure planners.
  • Third, NITI Aayog’s ambitious road map does not mention deadlines or funding. Without these, it lacks accountability. The government must make haste and specify its commitments on these fronts.

Gearing up for space wars

GS P3 Technology and P2 IR 4/10

  • The announcement by U.S. President Donald Trump in June about the creation of a “space force” or a sixth branch of the American armed forces has taken many by surprise within and outside the U.S.
  • Trump said at the time of the announcement, the intention is to see that the U.S. establishes and maintains dominance in space.
  • The U.S. Defence Secretary said that adding another military arm would only compound the organisational challenges facing the U.S. armed services. First, it could undercut ongoing missions. Second, it could very well increase budgetary allocations in the future. Third, his objections were clear in that a space corps could undermine American efforts in the domain of joint warfare.
  • the fundamental difficulty of a space corps is that the physical environment of space is not conducive to the conduct of military operations without incurring serious losses in the form of spacecraft and debris. And despite efforts to make spacecraft more fuel efficient, the energy requirements are enormous. Further, the technical demands of defending assets in space make the possibility of dominance and space as a domain for war-fighting a sort of chimera.
  • China and Russia’s responses: While China has reiterated its response to the Trump Administration’s announcement with its oft-repeated statement that it opposes the weaponisation of space, it knows that it is the prime target of this incipient force.
  • Beijing will be in no mood to allow U.S. space dominance. China’s space military programme has been dedicated to building “Assassin Mace” technologies (an array of kinetic and non-kinetic means of attack) — capabilities that are geared to help win wars rapidly.
  • Russia for its part has been shriller in its response, making it clear that it will vigorously take on the U.S.. However, given its lack of the resources for competition, it will in all probability, for tactical reasons, align itself with China.
  • Implications for India While India is officially committed to PAROS, or the prevention of an arms race in outer space, it is yet to formulate a credible official response to the Trump plan.
  • New Delhi would do well to come out with an official white paper on space weapons. The government needs to engage with multiple stakeholders directly about the role space weapons will play in India’s grand strategy. More than their war-fighting attributes, space weapons have one principal function — deterrence.

Still thriving

GS P2 IR 3/10

  • There is a growing feeling amongst the larger Asian countries that the West is passé.
  • The news coming out of west, especially since the 2008 financial crisis, is of declining populations, big layoffs and economic meltdowns,So much of bad news over an extended period gives the impression that the rise of the West has finally halted.
  • One tends to forget that the most populous of the Western countries, the U.S., has a growing population and remains the most productive and innovative in the world, as well as militarily the most powerful.
  • The West continues to have most of the finest educational and research facilities, and takes in the most brilliant and creative minds from the rest of the world.
  • West hangs together, with a combined GDP several times than that of the rest of the world.
  • The West has no problem it cannot overcome, simply because it also collectively commands formidable military might of a kind that has enabled it to intervene wherever and whenever it chooses.
  • The robust legal and administrative systems in the West, the kind of social security as well as democracy its people enjoy, the accountability insisted upon, along with quick retribution of wrongdoing makes life there so much more secure and predictable.
  • Though as the world looks on the West as a spent force, there is every reason to believe that it will dominate the 21st century, as it has the two before that. The rest of the world badly needs a revolution in governance and public accountability to overcome seemingly insurmountable environmental, social and economic challenges.

Seychelles template

GS P2 IR 7/10

  • New Delhi has clearly opted for a charm offensive in the Indian Ocean Region (IOR). The red carpet laid out for the visiting Seychelles President Danny Faure last week came against the backdrop of setbacks in the bilateral relationship owing to the Assumption Island agreement being put on hold. The pact, to build a naval base on the island, was seen as a major strategic enhancement of India’s IOR naval capacities and had been under discussion since 2003.
  • Background: It was finally signed during Prime Minister Narendra Modi’s visit to the Seychelles in 2015. The deal was to include 30-year access to the base as well as permission to station Indian military personnel on the ground, with facilities on the island funded by India, owned by Seychelles and jointly managed. After Opposition protests about loss of sovereignty, however, it had to be renegotiated and an amended version was signed in January 2018. Even that proved insufficient. Mr. Faure lacks the numbers in the legislature to ratify it, and with the Opposition sticking to its stand he announced in early June he would not be taking the agreement with India forward. Instead, Seychelles would build the naval facility “on its own”.
  • Both sides decided to walk around the minefields relating to Assumption Island, with Mr. Modi saying they would work on the project “keeping in mind each other’s interests”. India also announced a credit line of $100 million for Seychelles to purchase defence equipment from India to build its maritime capacity.
  • This is good strategy. It would have been pointless to push the Seychelles President for a more concrete assurance on the Assumption Island project, as he has little room for manoeuvre.
  • Until 2020-21, when Seychelles is due for presidential and parliamentary elections, it may not be possible to move the agreement further for ratification; rather than renegotiate or cancel it entirely, it is best to keep it in abeyance. This softer approach adopted by the government is in remarkable contrast to the strong-arm tactics it has used in the past with other countries in the IOR, such as the Maldives.

Risky recourse

GS P3 Economy , P2 regulators 8/10

  • The Insurance Regulatory and Development Authority of India has approved a proposal to allow the Life Insurance Corporation of India to increase its stake in the ailing state-owned IDBI Bank to 51%.
  • While there are no details on how exactly this capital infusion will take place — reports suggesting that the LIC may acquire the additional 40% stake it would need to reach 51% shareholding from the Government of India.
  • Reports suggesting that the LIC may acquire the additional 40% stake it would need to reach 51% shareholding from the Government of India — market speculation and media reports have estimated figures north of Rs. 10,000 crore.
  • Whether this will be adequate to even staunch the flow of red ink at the troubled bank, leave alone help it turn around, is another matter. The bank posted a net loss of Rs. 8,238 crore in the 12 months ended March 31, 2018, and is facing the prospect of more losses with gross non-performing assets rising to 28%.

The proposal raises several troubling questions.

  • The government clearly sees it as a relatively painless way to recapitalise the bleeding bank without adversely impacting its fiscal position.
  • The regulators: The IRDA, whose mission is to “protect the interest of and secure fair treatment to policyholders”, is reported to have exempted the LIC from the well-reasoned 15% cap on the extent of equity holding an insurer can have in a single company. This puts at risk the interests of the premium-paying customers of the LIC.
  • The Securities and Exchange Board of India has in the past waived the mandatory open offer requirement under its takeover regulations when it involved a state-run acquirer and another state enterprise as the target. As the capital markets watchdog, SEBI has an obligation in all such cases to weigh the interests of the small investor.
  • And the RBI, as the banking regulator, should not ignore the contagion risks that the level of “interconnectedness” the proposed transaction would expose the entire financial system to.

Over The Barrel: Networked and vulnerable

GS P2 IR 7/10 Facts useful for mains and essay.

  • The world has a population of 7.6 billion people. Of them, 1 billion have subscriptions to mobile phones, 4 billion have access to internet, and 3.1 billion are active users of the social media.
  • In just one internet minute, 4,50,000 tweets are sent, 9,00,000 people log onto Facebook, 1.8 million snaps are created, 3.5 million searches hit Google, 4.1 million YouTube videos are seen and over 156 million emails are sent. The point: The world must not ignore the consequences of being so tightly networked.
  • The historian Niall Ferguson has placed the consequences in historical context in his latest book, The Square And The Tower: Network, Hierarchies And The Struggle For Global Power . He avers that the 1,000-year old Roman Empire collapsed because of the viral spread of the “network borne threats” of religion (Christianity), disease (bubonic plague) and migration (the Germanic tribes). These threats spread because of physical and spiritual connectivity. They permeated every strata of the Empire’s governance and social hierarchy. The leadership did not anticipate or have the capability to contain the spread. The result was the erosion of the foundations of the Empire and its eventual demise.
  • The challenge of managing and mitigating “network borne” threats (cyber, pandemics, global warming) is on most government and corporate agendas. A tour d’horizon of the global landscape suggests, however, that instead of converging towards a common purpose for managing these threats, the world leaders are adopting divergent, populist and localised approaches.
  • The only two countries that stand out in this landscape as islands of relative stability and strong leadership are India and China. China has recognised that this fragmented world offers an opportunity. It has projected itself, ironically as the custodian of the multilateral rules based system and it is using its financial leverage to broaden strategic relations. Its One Belt One Road is a manifestation of this intent. India has an opportunity also to take on a global mantle. It should do so.
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