ATMANIRBHAR IAS

Date: 05&06-10-2020

➢ NEWSPAPER
EDITORIAL
NOTES
➢ RSTV- To be
resumed soon

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 TABLE OF CONTENTS
SR. TOPIC GS PAPER SOURCE
NO.
1. Stepping out of the frame GS 2- Indian Express
Infrastructure:
Energy, Ports, Roads,
Airports, Railways etc
2. Redo seventh schedule to GS 2- Separation of Livemint
clarify Centre-state powers between
various organs dispute
domains redressal mechanisms
and institutions.
3. Transforming Business & GS 3- Indian The Hindu
Insolvency System Economy and issues
relating to planning,
mobilization, of
resources, growth,
development and
employment.
4. India needs a Rainbow GS 3- Indian The Hindu
Recovery Plan Economy and issues
relating to planning,
mobilization, of
resources, growth,
development and
employment.

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Stepping out of the frame

Context: While policy makers are busy in tackling Covid-19 pandemic, there are various structural issues
in the economy which will be a drag on the growth. One of those structure issues is the financial plight of
the state electricity distribution companies.

Land
Acquisiton

Labour
Subsidies
Markets

Structural
impediments
to faster
growth
Farmers
Urban
remunerati
Congestion
on

Air
Pollution

Steps by government for revitalising discoms:

➢ UDAY scheme to pare down discom’s debt which did not prove much effective.
➢ Allocation of Rs 90000 crore in stimulus package which later on increased to 1.25 lakh crores.
This amount was approximatly tantamount to dues discoms owed to power generators.

Dues in numbers

➢ 2.27 lakh crores for march 2019 according to power finance corporation.
➢ Discoms are owed approximately Rs. 1.8 lakh crore by consumers alone.

Reasons for such bad shape of discoms

➢ Losses on account of aggregate technical and commercial (ATC) leaks due to inefficiency.
➢ Huge amount owed to them by state governments.

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 ➢ Opportunity losses incurred because of the failure of the regulators to fix cost related tariffs.
➢ More political and regulatory issues instead of operational dysfunctionalities.

Under such circumstances these steps would be ineffective-

➢ Infusion of liquidity
➢ Single pronged solution like privatisation.

Worsened condition dud to covid-19

➢ Sharp decline in the demand of electricity by industrial and commercial entities

➢ These entities may turn to renewables after demand pick up again.

What should be done?

➢ There is a simple suggestion that if all the stakeholders of the supply chain (i.e. Generators,
transmission companies, discoms, consumers, regulators and state governments ) clear their dues
to each other, discoms would look much stronger.
➢ Multipronged and networked overhaul of the discom sector esp. the regulatory structure and
deliverables.
➢ All stakeholders will have to take a haircut.

Redo seventh schedule to clarify Centre-state domains

About 7th schedule

➢ The Seventh Schedule to the Constitution of India defines and specifies allocation of powers and
functions between Union & States.
➢ It contains three lists; i.e. 1) Union List, 2) State List and 3) Concurrent List.
o Union List presently contains 100 items (originally 97) including Defence , war and
Peace, Citizenship, Currency, Coinage etc.
o State List at present contains 61 (originally 66) items including Local govt., Police,
Agriculture, Public Order(except any naval, military or air force or any other force of the
union) .
o Concurrent list contains 52 items (originally 47) including criminal procedure,
bankruptcy and insolvency, prevention of cruelty to animals, marriage & divorce etc.

Issues

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 ➢ Dilutions over the years have led the Centre to encroach on state subjects too often. The
numbers of items in state list have reduced over these years where as in concurrent and union list
have increased.
➢ Centrally-sponsored schemes", the Centre exercised de facto influence on many areas of
development, ranging from water, education and forestry to employment and health, which were
all in the policy domain of states.
➢ One size fits all approach to states in Central schemes reduces effectiveness for states to
address local issues→ reduced effectiveness e.g in MGNREGS, the central scheme prescribes
even the minutest details of how projects are to be implemented, leaving very little discretion to
local authorities. Also it would ignore local realities and all scope for local innovation.
➢ This overly centralized approach also reeks of a lack of trust. In 2013, the then chief minister
of Gujarat once complained against this “Big Brother" attitude of the Centre and its disregard for
the federal structure. When money was needed for irrigation, the Planning Commission would
give it for social schemes. This would rob states of their autonomy.
➢ Centrally-launched schemes like universal health insurance have further increased the financial
burden of states.
➢ And by signing up for the goods and services tax (GST) in 2017, states have fewer independent
options to raise local revenues. Currently, they are battling the Centre to get their promised
compensation for GST shortfalls.

Committee recommendations

➢ The Administrative Reforms Commission (1969) recommended :

o Powers should be delegated to the maximum extent to the states and
o Financial resources of the states should be augmented through fiscal transfers from the
centre
➢ Sarkaria Commission recommendation:
o Ordinarily, the Union should occupy only that much field of a concurrent subject on
which uniformity of Policy and Action is required in the larger interest of the Nation,
leaving the rest of the details for State action, within the broad frame-work of the Policy
laid down in the Union Law.
o Whenever, the Union proposes to undertake Legislation on a subject belonging to the
Concurrent List, the States’ views must be ascertained through inter-Governmental
Councils.

Transforming Business & Insolvency System

Context

a) The Prime Minister mentioned the Insolvency and Bankruptcy Code (IBC 2016) as one of the key
legislative reforms that would help in India’s path to self-reliance on a high growth trajectory.

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 b) The IBC along with GST reform is a key driver of the improving ‘Ease of Doing Business’
Ranking of India
c) The PM also credited these reforms as being responsible for increase in FDI in India in 2019-20
by nearly 20% as compared to last year

IBC – a key reform

a) Replacing an inefficient bankruptcy law regime, the IBC has focused on time-bound resolution,
rather than liquidation.
b) Creation of Information Utilities (IUs) which will act as a central repository of creditors
information.
c) It has successfully instilled confidence in the corporate resolution Methodology.
d) Under IBC debtor and creditor both can start 'recovery' proceedings.
e) According to the Resolving Insolvency Index India’s ranking improved to 52 in 2019 from
108 in 2018, a leap of 56 places. Further, the recovery rate improved nearly threefold from
26.5% in 2018 to 71.6% in 2019. And, the overall time taken in recovery also improved nearly
three times, coming down from 4.3 years in 2018 to 1.6 years in 2019

Issues

a) India suffers from a serious backlog in court cases, to the tune of nearly four crore matters
pending final judgment.
b) The enforceability of contracts has been a challenge. On an average, it takes as many as 1,445
days for a contract to be enforced.

Way Ahead

a) Decriminalising of minor offences. Criminal penalties including imprisonment for minor offences
act as major deterrents for investors.
b) Other legislative measures that will further improve the investment climate, include the rolling
out of the commercial courts.
c) Removing of over 1,500 obsolete and archaic laws.
d) Introduction of a regulatory framework for pre-pack insolvency.

A pre-pack is a pre arranged insolvency resolution process where there is an agreement between secured
creditors and investors instead of going in for any public bidding process.

a) Special insolvency proceedings for MSMEs.

Conclusion

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The Ministry of Corporate Affairs (MCA), in its year end summary press release, provided the context
of India’ s rapid rise in the Ease of Doing Business rankings, and the important role that IBC played in
it.

India needs a Rainbow Recovery Plan

A post Covid world recovery cannot be through ‘Business As Usual’ approach, it is an opportunity to
bring sustainaibility to centre stage. In Europe and the U.S. a ‘green new deal’ proposed would put the
climate and employment crises at the centre of economic recovery.

In India, we have a chance to build on our heritage to forge a multihued approach — a rainbow new deal
(RND)

Key Components of RND

a) Generate dignified, sustainable livelihoods for the vast majority of the population. And this has
to be built on regenerating and safeguarding the country’s soil, natural ecosystems, water,
biological diversity, and air.
b) Nearly 200 million small farmers, pastoralists, and fishers can be enabled to sustain or switch to
organic, ecologically sustainable production, with their own food security as the highest
priority.
c) Third, it would entail reviving and sustaining India’s incredible diversity of crafts, and
decentralized production of most goods and services, across all villages and towns.
d) Further the RND would entail substantial investments in public health, education, housing,
transportation and other basic needs.
e) Concept of a ‘network economy’, in which clusters of villages can be self-reliant for most basic
needs, and exchange with neighbouring clusters what they cannot produce or grow.
f) Ela Bhatt, founder of SEWA, has proposed the ‘100 mile radius’ as a region within which the
objective of self-reliance can be met.
g) This also means a serious attempt at land reforms, including recognising collective rights over
the commons: forests, grasslands, coastal and marine areas, biodiversity, wetlands, water, and
knowledge. Legislation similar to the Forest Rights Act, and community mobilisation to
implement it, is needed for all other ecosystems.

Conclusion

A Rainbow New Deal could lead the path for India in the post covid world.

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ATMANIRBHAR IAS

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