The Hindu Editorial Analysis 1st july 2019

The Hindu Editorial Analysis 1st july 2019

OpEd 1st :- Thumbs Down to Unilateralism :-

Introduction :-

Economic relations between India and the United States have been bumpy
  • After the U.S. took a series of unilateral actions against India’s exports, that began in 2018, 
  • India’s recently announced retaliatory move of increasing tariffs on 28 products imported from its largest trade partner. 
As a result of these developments, India has become the Trump administration’s most significant target after China. But this is not the first time we are hearing this, what needs to be noted is that similar complaints have been made by successive U.S. administrations over the past few decades, the tone and tenor of the Trump administration has distinctly upped the ante.

Background :-
Let us recall some of the major instances where the U.S. has questioned India’s trade and other related economic policies.
  • In the past, U.S. agencies — in particular, the Office of the United States Trade Representative (USTR) and the United States International Trade Commission (USITC) — have “investigated” India’s trade policies, the conclusions of which have been used by the administration to demand changes in policies that would benefit American businesses. 
  • The latest demands stem from two extensive USITC investigations which were conducted between 2013 and 2015 on India’s trade, investment, and industrial policies.
The main message that was conveyed by these investigations was that American businesses strong disapproved several of India’s key policies on trade and investment and that these policies had to be amended.

But The investigations conducted by the U.S. agencies raises three issues which need to be understood well for this is the only way in which the Government of India can prepare appropriate responses to the persistent questioning by the U.S. administration of its trade and investment policies.

  • First Issue of propriety :-

    It is important to mention here that all of India’s trade-related policies (which include intellectual property rights that were investigated and questioned in the two USITC reports were done under the cover of the U.S.’s domestic laws which isequivalent to unilateralism. In this age of multilateralism, where differences on policy issues between sovereign countries must be resolved in the appropriate multilateral forums.

    The possibilities of a stronger power using unilateral means should be eliminated.

    The areas that were investigated by the USITC during the two investigations were also those that are covered by the WTO. Therefore, propriety and global trade rules demanded that the concerns of American businesses about India’s policies had to be addressed within the WTO through consultations among the members.

    The main purpose of the GATT/WTO is to provide a forum for the resolution of disputes by following multilaterally agreed rules. The global community agrees that this would be the best way of preventing countries from getting into trade wars, which had pushed the global economy into the depression of the 1930s. The only country disagreeing with this position is the U.S.; it seems intent on pushing its trade partners into trade wars.

  • Second issue of Procedure :-
    Now to the procedure of conducting the investigations. This was deeply flawed for it provided a platform for vested interests in the U.S. to make common cause against India’s policies. What is more, in these investigations, U.S. government agencies have been not only acting as the judge and the jury but also actively engaged in getting the findings of the investigations implemented.

  • Third issue of Substance :-
    The substance of the investigations touched trade-related issues that are covered by the WTO agreements. Since the establishment of the WTO, India’s policies have mostly been consistent with its commitments, where they have not been.

What is at the core ?

The India-U.S. discord over trade stems from a deep-seated desire of U.S. businesses to have a bigger footprint in the Indian economy, and to achieve this goal, the administration is stepping beyond legitimate means. The basis of the discord lies in the way the U.S. has been targeting India’s policies, disregarding the rule of law.

Early resolution of this discord seems difficult as the U.S. has decided to undermine the WTO’s dispute settlement mechanism and walk down the path of unilateralism instead.

Under these circumstances the Government of India would have focus on two fronts:
>To remain engaged with its largest trade partner
>to also engage actively with the global community to make the U.S. understand the imperatives of a rules-based trading system.

OpEd 2nd:- Its time to Act, not to do Research

Introduction :-

In its first 100 days, Prime Minister Narendra Modi’s second government has begun yet another rethink of higher education policies through the draft NEP (National Education Policy) and EQUIP (Education Quality Upgradation and Inclusion Programme). This is the latest, and seemingly among the most elaborate, in an endless series of official reports and programmes aimed at improving higher education in independent India.

A key goal of EQUIP and the NEP :-

India must expand the percentage of young people enrolled in post-secondary education significantly. The draft NEP aims at increasing the gross enrolment ratio to at least 50% by 2035 while EQUIP targets doubling the gross enrolment ratio to 52% by 2024.

Fact :- At present, India’s gross enrolment ratio is 25.8%, significantly behind China’s 51% or much of Europe and North America, where 80% or more young people enrol in higher education.

Challenges :-

  • Half of the population in India is under 25 years of age. Therefore, The challenge is not only to enrol students, but to ensure that they can graduate. Non-completion is a serious problem in the sector.
  • To improve graduation rates
  • To ensure that they are provided with a reasonable standard of quality. It is universally recognised that much of Indian higher education is of relatively poor quality. Employers often complain that they cannot hire graduates without additional training. The fact that many engineering colleges even today have to offer “finishing programmes” to their graduates underlines the pathetic state of quality imparted by these institutions.
  • India has the largest number of students in private higher education in the world. But much of private higher education is of poor quality and commercially oriented. 
  • There is too much bureaucracy at all levels, and in some places, political and other pressures are immense. Professors have little authority and the hand of government and managements is too heavy. At the same time, accountability for performance is generally lacking.

  • Inadequate allocation of funds :-

    Higher education in India has been chronically underfunded — it spends less than most other BRICS countries on higher education.

    The last Budget allocated only ₹37,461 crore for the higher education sector. Other related ministries and departments such as Space, Scientific and Industrial Research, Skill Development and Entrepreneurship, Science and Technology, Health Research and Agricultural Research have been allocated only modest support.

    All State governments, which provide the bulk of higher education money, also fail to adequately support students and institutions.
  • Even the Institutions of Eminence scheme falls short of requirements and is dramatically behind similar programmes in China and several European countries. Funding for basic research, which is largely a Central government responsibility, lags behind peer countries. Apart from Tata Trusts, Infosys Foundation, and Pratiksha Trust, industry provides little support.

What India needs ?

  • India requires substantial additional resources for higher education to improve quality and build a small but important “world class” sector. Massive effort is needed at both State and Central levels — and the private sector must contribute as well.
  • India needs a differentiated academic system — institutions with different missions to serve a range of individual and societal needs. Some “world class” research-intensive universities are needed. 
  • Colleges and universities that focus on quality teaching and serve large numbers of students are crucial. 
  • Robust quality assurance is needed for all of post-secondary education, but especially for private institutions.
  • The structure and governance of the higher education system needs major reform. 

Recommendations :- :-

(a) dramatically increased funding from diverse sources, and the NEP’s recommendation for a new National Research Foundation is a welcome step in this direction

(b) significantly increased access to post-secondary education, but with careful attention to both quality and affordability, and with better rates of degree completion

(c) longitudinal studies on student outcomes

(d) to develop “world class” research-intensive universities, so that it can compete for the best brains, produce top research, and be fully engaged in the global knowledge economy

(e) to ensure that the private higher education sector works for the public good

(f) to develop a differentiated and integrated higher education system, with institutions serving manifold societal and academic needs

(g) reforms in the governance of college and universities to permit autonomy and innovation at the institutional level

(h) better coordination between the University Grants Commission and ministries and departments involved in higher education, skill development, and research.

Way Forward :- The latest draft NEP and EQUIP have reiterated the importance of some of these points. What is needed is not more research, but rather long-neglected action.

OpEd 3rd:- SEBI's norms for Mutual Funds Investments :-

After introducing a new standard framework for credit rating agencies last month, the Securities and Exchange Board of India (SEBI) came up with more stringent regulations to govern the management of mutual funds.

Background :-
The mutual fund industry came under its scrutiny after some mutual funds in the last few months had to postpone redemption of their fixed maturity plans (FMPs). HDFC Mutual Fund and Kotak Mutual Fund came to grief and had to roll over or proportionately reduce redemption of their FMPs in April after some Essel group companies failed to redeem their non-convertible debentures where the funds had invested.

New Regulations :- According to the new SEBI regulations
  • Liquid mutual fund schemes will have to invest at least 20% of their funds in liquid assets like government securities. They will be barred from investing more than 20% of their total assets in any one sector; the current cap is 25%. 
  • When it comes to sectors like housing finance, the limit is down to 10%. 
  • Some mutual funds entered into standstill agreements with companies in whose debt instruments the funds had invested. This is not a welcome practice and goes against the interests of investors in the mutual fund. SEBI has done the right thing by banning funds from entering into such standstill agreements.

These Regulations will help in :-
  • The mandated investment in government securities will ensure a modicum of liquidity
  • The reduction in sectoral concentration will discipline funds and force them to diversify their risks.   
  • Further, SEBI has required that assets of mutual funds be valued on a mark-to-market basis in order to better reflect the value of their investments.

Consequences of Some of New Regulations  :-
  • One of the new regulations introduced by SEBI is to increase the exit load on short-term investments in liquid mutual funds to discourage sudden demands for redemption. This could possibly hinder fund flow into the bond market, which in India is already quite undeveloped when compared to the rest of the world. 

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