<\/span><\/h2>\nJudiciary versus Economy <\/b><\/h3>\n
Introduction:<\/b><\/p>\n\n- With an expanding economy, the number of legal disputes <\/b>involving property, contract, labour, tax and corporate laws is bound to increase<\/b>.<\/li>\n
- How these disputes are adjudicated by the courts will have direct consequences for the disputants and also shapes the behaviour of individuals and entities involved in production, commerce and banking.<\/li>\n
- Judicial findings also influence decision-making of government agencies<\/b>, which are major actors in a developing economy. Yet, the Indian judiciary doesn\u2019t seem to fully appreciate the economic consequences of its judgments<\/b>.<\/li>\n<\/ul>\n
Important cases:<\/b><\/p>\n
Case 1: Power Producers Association of India v. Union of India and Ors.<\/b><\/p>\n\n- May 31, 2018 order of the Allahabad High Court ruled that bankruptcy proceedings cannot be started against a power company unless the company is a wilful loan defaulter.<\/li>\n
- It did not factor in the issue of viability of the project. As such, the \u2018wilfulness\u2019 condition is hard to prove. Nonetheless, the ruling is one of the less problematic ones.<\/li>\n<\/ul>\n
Case 2: Rameshwar and Ors v. State of Haryana and Ors (2018)<\/b><\/p>\n\n- In this case, the dispute involved 688 acres of land for which the then Haryana government had issued an acquisition notification in 2007. As soon as the notification was issued, builders and developers started approaching owners to buy their land.<\/li>\n
- Since the official compensation was going to be meagre, many owners sold their land at throwaway prices. Later, the government decided to drop the acquisition plan.<\/li>\n<\/ul>\n
Supreme Court held the State\u2019s decision a fraud, acted out through an unholy nexus between the officials and the builders.<\/p>\n
As the owners sold their land under duress and on unconscionable terms, the land should have been restored to them by declaring the deals infructuous. However, the SC handed over the land to the State government.<\/p>\n
Case 3: Uddar Gagan Properties Ltd v. Sant Singh & Ors (2016)<\/b><\/p>\n\n- In this case, at dispute were 280 acres of land under acquisition in 2005. The land was illegally transferred to developers through dubious deals approved by the then Haryana government.<\/li>\n
- Here too, the SC handed over the land to the official agency that was an active partner in the fraud. Farmers were forced to accept paltry compensations.<\/li>\n<\/ul>\n
Crux:<\/b><\/p>\n\n- Through such judgments, the judiciary has failed not only to protect the legitimate rights of owners, but also to provide economic justice<\/b> enshrined in Article 38 of the Constitution.<\/li>\n
- Moreover, the court has transferred land, a precious economic resource, from those who own, need and use it to governments who do not need it by their own accord.<\/li>\n<\/ul>\n
It is due to the perverse incentives created by such judgments that government agencies abuse laws and are sitting on a massive stock of unused land<\/b>, which would have been put to more productive use by its owners.<\/p>\n
Judicial intervention in infrastructure projects<\/b><\/p>\n\n- Similarly, several infrastructure projects are being held up due to judicial interventions in the bidding process.<\/li>\n
- Courts have failed to realise that the quality of infrastructure assets and the technical capability of contractors to deliver them are serious issues. The mere difference in prices demanded by the bidder may or may not be a decisive factor.<\/li>\n
- Court\u2019s intervention has led to delay in project, escalating its cost far more than any possible gains from ruling in favour of the lowest price bidder.<\/li>\n
- There are instances where Judiciary didn\u2019t opt for help of experts to assess the construction and maintenance cost rather it went on to interpret a contract and cut into its terms if found not right or reasonable.<\/li>\n<\/ul>\n
Such judicial interventions can undermine the sense of security that comes from signing competitive bidding contracts, thereby discouraging investment.<\/p>\n
A public good<\/b><\/p>\n
The adjudication process can serve as a public good. However, casual and unpredictable adjudication has the opposite effect.<\/p>\n
Shivashakti Sugars Limited v. Shree Renuka Sugar Limited and Ors (2017) <\/b><\/p>\n\n- In this landmark judgment, Judiciary admitted the role of economic reasoning in adjudication. It also pushed for the inter-discipline between law and economics to serve the developmental needs of the country.<\/li>\n
- In situations where alternative views are possible or wherever discretion is available, the associated judges have argued for the view which subserves the country\u2019s economic interest.<\/li>\n
- They have exhorted the courts to avoid outcomes which can have adverse effects on employment, growth of infrastructure, the economy or the revenue of the State.<\/li>\n<\/ul>\n
The way ahead:<\/b><\/p>\n
Economic analysis of the law and disputes <\/b>is a welcome move; however courts should not go overboard.<\/p>\n\n- Treating economic growth and the revenue of the state as public purposes is walking on a slippery slope.<\/li>\n
- While adjudicating such cases, judiciary should consider a cost-benefit analysis of a different kind.<\/li>\n<\/ul>\n
Infringement of individual rights should be considered only if it is absolutely necessary.<\/p>\n
The situation should be such that public purpose cannot be achieved without putting limitations on individual rights. Moreover, the degree of infringement should be minimum to realise the purpose. It should not cut too deep.<\/p>\n
Finally, infringement should follow the proportionality principle \u2014 the social benefit must be commensurate with the seriousness of the infringement.<\/p>\n
Connecting the dots:<\/b><\/p>\n\n- Judicial intervention in infrastructure projects and bidding process has led to delays and sense of insecurity, discouraging investment. Do you agree? Elucidate.<\/li>\n
- Indian judiciary doesn\u2019t seem to fully appreciate the economic consequences of its judgments. Do you agree? Give your opinion illustrating through examples.<\/li>\n<\/ul>\n
\nPaper 2:\u00a0 Bilateral, regional & global groupings & agreements involving India &\/or affecting India\u2019s interests<\/h3>\nUNHRC Report on Kashmir<\/h3>\nIndia is upset over the UN body\u2019s report<\/h3>\n\n
What prompted this human rights report?<\/span><\/strong><\/p>\n<\/div>\n\n- The first ever report by the Office of the UN High Commissioner for Human Rights (OHCHR) on Jammu and Kashmir<\/strong>, including Pakistan-occupied Kashmir, published last week, has been in production since 2016. A new wave of violence had then hit the Kashmir Valley, when protests sparked by the killing of Hizbul Mujahideen militant Burhan Wani were met with force by security personnel; about 51 protesters and civilians were killed in the months that followed, while more than 9,000 were injured by pellets and bullets. Consequently, the OHCRC asked India and Pakistan to allow its teams access to the State, a request that was refused<\/li>\n<\/ul>\n
Why is this report controversial to India?<\/h3>\n\n- Apart from being irked by the report\u2019s criticism of India\u2019s handling of the protests, alleged extra-judicial killings and hard tactics, the Ministry of External Affairs is also upset by the terms used to describe militants. For example, Hizbul Mujahideen, which is regarded as a terrorist organisation by India, was described in the report as an \u201carmed group\u201d. Wani, regarded as a terrorist by Indian security forces, was described as the \u201cleader\u201d of the organisation. <\/span><\/li>\n
- India in its official statement said the report \u201cundermines the UN-led consensus on zero tolerance to terrorism\u201d. Finally, it makes specific recommendations aimed at India, including removing the Armed Forces (Special Powers) Act from areas and instituting inquiries into alleged human rights <\/strong>violations.<\/span><\/li>\n<\/ul>\n
\n<\/span>Significance of SCO for India<\/b><\/span><\/h2>\n\n- Shanghai Cooperation Organisation (SCO) summit in Qingdao, China was the first SCO summit attended by India as a full-fledged member.<\/li>\n<\/ul>\n
SCO-Shanghai Cooperation Organization
\n<\/b><\/p>\n\n- SCO grew out of the Shanghai Five grouping \u2014 of Russia, China, Kazakhstan, Tajikistan and Kyrgyzstan \u2014 which was set up in 1996 to resolve boundary disputes between China and each of the four other members.<\/li>\n
- It admitted Uzbekistan in 2001, re-christened itself the Shanghai Cooperation Organisation and broadened its agenda to include political, economic and security cooperation.<\/li>\n
- It admitted India and Pakistan as full members in 2017.<\/li>\n<\/ul>\n
Significance for India<\/b><\/p>\n\n- SCO now has about half the world\u2019s population and a quarter of its GDP. Its boundary extends southwards to the Indian Ocean.<\/li>\n
- The SCO\u2019s relevance for India lies in geography, economics and geopolitics. India has important economic and security interests<\/b> in these countries.<\/li>\n
- With India having complicated ties with neighbours, it makes sense to strengthen ties with its neighbours\u2019 neighbours<\/b>.<\/li>\n
- With Pakistan joining the Organisation and Afghanistan and Iran knocking on the doors for membership, the logic of India\u2019s membership becomes stronger.<\/li>\n
- Expanding opportunities for India in Central Asia<\/b>: India\u2019s relations with Central Asian countries have been constrained by lack of overland access through Pakistan and Afghanistan\/Iran, because of political and\/or security reasons. SCO should help in this regard.<\/li>\n
- Russian and Chinese officials suggested that harmonious cooperation in the SCO may pave the way for an India-Pakistan rapprochement<\/b>, recalling that SCO membership had facilitated resolution of China\u2019s boundary disputes with Russia and Central Asian countries.<\/li>\n<\/ul>\n
Challenging areas:<\/b><\/p>\n\n- The SCO is expected to nudge both countries to cooperate in sensitive areas. One example is the Regional Anti-Terrorist Structure (RATS) <\/b>of the SCO, which coordinates cooperation for security and stability, through intelligence-sharing on criminal and terrorist activities. India and Pakistan have to find ways of cooperating in the RATS.<\/li>\n
- Defence cooperation<\/b> is another tricky area: enhanced linkages between armed forces is an SCO objective. India has agreed to participate in the SCO\u2019s counter-terrorism military exercises in Russia later this year, when Indian and Pakistani troops will operate together.<\/li>\n
- Reconciling Indian and Pakistani perspectives in the SCO\u2019s initiatives on Afghanistan<\/b> would be yet another challenge.<\/li>\n
- The challenge for India \u2014 besides that of security and defence cooperation with Pakistan \u2014 may come from increasing Chinese dominance of the SCO.<\/li>\n<\/ul>\n
\nPaper-3: Indian economy and issues relating to planning,mobilization of resources ,growth,development and employment<\/h3>\nGST-A Game Changer<\/h3>\n
Performance of GST<\/strong><\/p>\n\n- One fiscal year into the implementation of the GST, it is worth asking how it has performed in terms of revenue generation both for the country and for individual states<\/li>\n<\/ul>\n
Three important findings:<\/strong><\/p>\nAggregate revenues are highly buoyant<\/strong><\/p>\n\n- This year\u2019s Economic Survey<\/strong> had argued that confusion reigns in understanding GST performance because of focusing on one or more of the bewildering sub-categories of the GST (CGST, SGST, IGST, cess etc)<\/li>\n
- A revenue growth of 11.9 percent has been observed, compared with the relevant pre-GST numbers<\/li>\n
- The implied tax buoyancy<\/strong> (responsiveness of tax growth to nominal GDP growth) is 1.2, which is high by the historical standards for indirect taxes<\/li>\n<\/ul>\n
\u201cTrue\u201d compensation requirements are minimal<\/strong><\/p>\n\n- The government produces estimates which show that compensation, although financeable from within the GST, has been substantial<\/li>\n
- Nearly all the states have seen their revenues grow by at least 14 percent<\/li>\n
- There will be\u00a0likely improvements in compliance with the introduction of e-way bills and invoice matching<\/li>\n
- There are very few states where there is a significant decline in the post-GST share compared to the pre-GST share<\/li>\n<\/ul>\n
GST is boosting revenues of consuming states<\/strong><\/p>\n\n- Evidence from the first nine months suggests this<\/li>\n
- Many of the net consuming states, such as nearly all the North-eastern states as well as UP, Rajasthan, MP, Delhi, Kerala, and West Bengal, have indeed increased their post-GST shares<\/li>\n
- States that have seen a small decline in their shares are states that had special tax regimes in terms of incentives or in agriculture<\/li>\n<\/ul>\n
Further reforms\u00a0<\/strong><\/p>\n\n- Simplifying the rate structure<\/li>\n
- Widening the base to include currently exempted sectors<\/li>\n
- Streamlining procedures for filing and refunds<\/li>\n<\/ul>\n
Way Forward<\/strong><\/p>\n\n- From a revenue perspective, and especially considering the headwinds, the GST has been a positive development<\/li>\n
- The GST appears to be a force for fiscal convergence<\/li>\n<\/ul>\n
\nReforms for Un-organized sector<\/h3>\n
Portable smart ID for workers<\/strong><\/p>\n\n- The Centre has started work to create a national database and Aadhaar-seeded identification number system to facilitate welfare delivery to 40 crore workers in the unorganized sector<\/li>\n
- This comes ten years after passing a law that envisaged a portable smart ID card for unorganized sector workers<\/li>\n<\/ul>\n
Unorganised Workers Identification Number<\/strong><\/p>\n\n- The Union Ministry of Labour has called for tenders to design, develop and run the new UWIN \u2014 Unorganised Workers Identification Number<\/strong> \u2014 Platform<\/li>\n
- The \u201csingle unified sanitized database\u201d will assign a ten-digit UWIN to every worker and include details of both nuclear and extended families of unorganized workers<\/li>\n
- The Centre will create and maintain the platform and it is up to the states to identify and register unorganized workers<\/li>\n
- The Socio-Economic and Caste Census 2011<\/strong> will be used as the base for the platform, and other worker databases \u2014 from the states as well as other Central ministries such as Textiles and Health \u2014 will also be incorporated into UWIN<\/li>\n
- The Unorganised Workers Social Security Act, 2008<\/strong> had first mandated that every worker be registered and issued a smart ID card<\/li>\n<\/ul>\n
Aadhar Mandatory<\/strong><\/p>\n\n- Those who have enrolled for Aadhaar but have not yet received it can provisionally enroll themselves into the UWIN system with their Aadhaar Enrollment ID<\/li>\n
- They will be assigned a UWIN number\u00a0only when they are able to link Aadhaar with their dataset at a later stage<\/li>\n<\/ul>\n
\nUnemployment in India to rise<\/strong><\/p>\n\n- Coupled with a continual increase in voluntary unemployment, the International Labour Organisation<\/strong> expects unemployment in India to be higher in 2018<\/li>\n
- In India,\u00a065% of the population is below 35 years and unemployment, especially among youth, can limit the nation\u2019s ability to reap the much-hyped demographic dividend<\/strong><\/li>\n<\/ul>\n
Enhancing youth employability<\/strong><\/p>\n\n- A wide range of stakeholders, including the government, companies, civil society organizations, and for-profit enterprises are working either independently or in cohesion to enhance youth employability<\/li>\n
- The government has also undertaken a structured approach via the establishment of the ministry of skill development and employment and the Pradhan Mantri Kaushal Vikas Yojana<\/strong><\/li>\n
- Currently, four models are used for supporting youth employability in the country<\/li>\n
- The first model, or the self-employment model, work on the rationale that if youth are trained in a particular skill, they will have the capacity to become micro-entrepreneurs.The second model, or the employer-led model, trains youth in specific skills relevant to an enterprise and then absorbs the youth into their own value chain.The third, the placement-led model, provides training to youth and also established linkages with potential employers<\/li>\n
- Fourth, the market linkage model provides end-to-end support to self-employed youth, assisting them in earning better incomes<\/li>\n<\/ul>\n
Causes of increasing\u00a0unemployment<\/strong><\/p>\n