Today’s important articles/news in various newspapers (4th May)

Dear aspirants, following are the links of various articles taken from various newspapers. Click the link to read further. To get notification, follow the blog. Thank you

1. The right approach for public-private partnership

To avoid privately financed infrastructure projects from becoming expensive and slower than anticipated, private financing should be brought in only after a project is completed

Why do we need the PPP to provide infrastructure(such as roads and power)?

  1. Public provision faces two challenges: an incentive problem and a budget problem
  2. The budget problem stems from the fact that there is only so much that a government can safely borrow, because it will have to raise future taxes to repay the debt
  3. As a consequence, many worthwhile projects must be postponed
    But the PPP can help
  4. Suppose the project is a highway structured as a toll road with a 20-year concession
  5. This seems to solve both the incentive and budget problem
  6. The contractor will be responsible for the increased maintenance cost, presumably making him more likely to do high-quality work
  7. He also would have an incentive to run an efficient operation, because he gets to keep the savings
  8. In addition, because the project is financed by tolls, it need not be limited by fiscal constraints

Uncertainties with the engineering, procurement and construction (EPC) phase

  1. The bidders(for road projects) need to plan for two phases: engineering, procurement and construction (EPC),
  2. and a longer phase of operation when toll revenue is collected to recover incurred costs and expected returns
  3. There are plenty of uncertainties in both phases, but especially during EPC, which may last three-seven years, depending on the project
  4. Given the risks in this phase, capital markets demand that it be financed with more equity than debt
  5. So, the project involves quite sophisticated financial engineering
  6. Almost always, such plans cannot be realized unless the government provides guarantees against geological or traffic risks
  7. Negotiating such agreements often adds years to the project

The main issues with the private projects

  1. The above uncertainties means that there are good reasons why privately financed projects become more expensive, given the higher cost of capital,
  2. and why completing them can be much, much slower

What can be done? : The possible solution

  1. An alternative is to concentrate the role of the private sector in the latter phases of the project
  2. The best option may be for the government to build the road and sell the concession for operation and maintenance
  3. This allows the government to cash out and reinvest the resources in pre-investment and EPC,
  4. thus recycling scarce public capital more quickly while cutting out the most expensive and slowest parts of private involvement

2. India gold demand seen rising

According to the WGC, the demand for gold in India is expected to improve following a normal monsoon and the government’s efforts to raise rural incomes

Lowest demand since 2008

  1. According to the latest WGC report, the first three months of 2018 saw the world gold demand pegged at 973 tonnes making it the lowest first quarter since 2008
  2. All major markets like India, China, Germany and the U.S. saw a dip in the demand for gold bars and coins in the first quarter
  3. The global demand at 973 tonnes was a decrease of 7% compared with 1,047 tonnes in the first quarter of 2017

The decline can also be seen in India

  1. In India, the overall demand in the first quarter at 115.6 tonnes was lower by 12% compared with the year-earlier period
  2. Jewellery demand dipped to the lowest in almost 10 years due to a rise in local gold prices
  3. According to the WGC, Government’s focus on unaccounted income continued to crimp this part of the market, with retail investors wary of heightened surveillance

World Gold Council

  1. The World Gold Council is the market development organisation for the gold industry. It works across all parts of the industry, from gold mining to investment, and their aim is to stimulate and sustain demand for gold
  2. They frequently publish research that demonstrates gold’s strength as a preserver of wealth – both for investors and countries
  3. They also provide analysis of the industry, offering insights into the drivers of gold demand. They have also launched various products such as SPDR GLD and gold accumulation plans in India and China
  4. The World Gold Council is an association whose members comprise the world’s leading gold mining companies
  5. It helps to support its members to mine in a responsible way and developed the Conflict Free Gold Standard
  6. Headquartered in London United Kingdom, they have offices in India, China, Singapore, Japan and the United States

3. Harming the nation

The deliberate refusal to implement the decisions of the collegium is hurting the judiciary.

  • The first blow to the independence of the judiciary came in 1973 with the supersession of the three senior-most judges of the Supreme Court because they had ruled against the government.
  • Two years later, the setting aside of Indira Gandhi’s election by the Allahabad High Court eventually led to the Emergency and a large number of political opponents being detained without any trial under the infamous Maintenance of Internal Security Act, 1975 (MISA).
  • Several high court judges struck down these orders. Sixteen of them were transferred without their consent.
  • The names of 40 more judges to be transferred were leaked, clearly indicating that any adverse ruling would not be tolerated.
  • On April 28, 1976, in the ADM Jabalpur case, the Supreme Court held that, during the Emergency, no detention could be challenged in any high court even if it was mala fide and illegal.
  • Justice H R Khanna dissented from this much criticised majority view and paid the heavy price of being denied the office of Chief Justice of India; he was superseded by Justice M H Beg.
  • For thousands of persons, who were detained, the door to judicial relief was closed. They remained in jail without a trial till the Emergency was lifted in 1977.
  • After the Emergency, Justice N L Untwalia recorded with “utmost responsibility” that these transfers “had shaken the very foundation and structure of an independent judiciary throughout the country”.
  • In addition to damaging the judiciary, the 42nd Amendment drastically cut down the powers of the high courts and the Supreme Court.
  • Jurist H M Seervai called this amendment “outrageous” but mercifully, Mrs Gandhi was voted out in 1977 and the new Janata government undid most of the constitutional damage.

From 1977 till 1980;

  • The Supreme Court partly reclaimed its prestige by a series of landmark decisions.
  • In 1980, Mrs Gandhi came back to power and the assault on the independence of the judiciary was renewed by a controversial letter written by the government itself requiring, as a condition of appointment, the consent of newly appointed judges to be transferred to the other high courts.

First Judges Case:

  • The transfer policy was unfortunately upheld in S P Gupta v. Union of India, popularly called the First Judges’ Case, which granted the executive the final say in judicial appointments.
  • Armed with this power, Mrs Gandhi effectively rejected the recommendation of the CJI no less than five times in 1983 alone.
  • After her untimely demise in 1984, only two recommendations were not accepted between 1985 and 1991.

1993 and NJAC

  • Alarmed at the executive interference, the Supreme Court devised the collegium system in 1993, giving itself the primacy and the final say in the appointment of the high court and Supreme Court judges.
  • The governments at the Centre and the states also had important consultative roles because, as the Supreme Court noted, it would often be aware of certain antecedents or information relating to the individual candidates, which may require particular recommendations to be reconsidered.
  • This process enabled the executive to raise their objections and require the collegium to reconsider the name of the particular candidate.
  • However, if the collegium reiterated its recommendation, the candidate has to be appointed without demur.
  • This method continued until the 99th Amendment to the Constitution, which proposed a National Judicial Appointments Commission (NJAC) to substitute the collegium. Unfortunately, the proposed amendment had several drafting flaws, which led to the NJAC being held unconstitutional and the restoration of the collegium system.

Past Responses

  • In the past, judgments, which invalidated any policy or reforms proposed by the government, were responded to by appropriate amendments. This method was rightly followed by Jawaharlal Nehru, amending the Constitution 17 times in 15 years (1950-1965), to overcome adverse judicial verdicts and implement legislation mainly relating to the zamindari abolition and agrarian reforms.
  • These amendments, to the credit of the Supreme Court, were mostly upheld. The unfortunate response of Mrs Gandhi was not merely to overrule the judgments but to attack independent judges as well.


  • In 2014, the clear majority of the BJP-led alliance provided a golden opportunity to repair the past damage as it was not hamstrung by the compulsions of coalition politics.
  • Respecting the judiciary would have enhanced the prestige of the government. Sadly, the new tactics are either deliberate inaction and, in some cases, outright violation of constitutional norms.
  • The last few years have seen a huge rise in the number of vacancies reaching a staggering 40 per cent level at the high courts.
  • The Supreme Court will soon witness a large number of vacancies as well. It has been reported that more than 140 candidates approved by the collegium are pending with the government.
  • Apart from inaction, what is more worrisome is a deliberate refusal to implement the decisions of the collegium.
  • An additional judge is recommended to be made permanent by the collegium but the shocking response is to make him an additional judge again even after reiteration.
  • When the name of one high court chief justice is recommended for elevation to the Supreme Court, untenable reasons are given for not appointing him particularly when six vacancies exist.
  • Strangely, the issue of regional representation and lack of SC/ST candidates was not seen as an objection to the clearance of the candidate from the Bar.
  • And the direct correspondence with the Karnataka chief justice to reinvestigate a complaint that had already been found to be untenable by the collegium was a serious transgression of constitutional propriety.
  • On May 2, the collegium has sadly deferred the decision of the appointment of Justice K M Joseph despite its earlier decision affirming his suitability.
  • The assault on the judiciary between 1973-1984 actually did more harm to the nation. In the end, we cannot today have an independent judiciary unless the collegium system is respected and the decisions of the collegium are implemented without delay.
  • If the ruling party finds the collegium system distasteful, the remedy is to pass another constitutional amendment and replace it with a Judicial Appointments Commission that will pass constitutional muster.

4. AIIB not a threat, can cooperate: ADB president

Open to collaborate on ‘belt and road’ initiative; trade spat yet to impact investment sentiment: Nakao

Related image

Difference between the China-led AIIB and the New Development Bank led by BRICS 


Both are inherently Developing/Emerging countries initiatives irritated at the existing International Governance institutions refusal to reform based on present realities.

instances where the old world powers have dominated the present institutions like IMF President is always a European, USA has a veto power at IMF; USA has sole discretion over top role at World Bank; ADB is headed by Japan since its founding in 1966.

BRICS countries share of Global Economic output is a quarter, while their voting share combined is mere 10.3% in IMF.

Also, Present institutions attempt to transplant the model of Democratic markets while failing to provide for specific developmental needs. e.g., World Bank’s insistence on Austerity measuresand forced financial liberalization in Thailand & Indonesia has led to disastrous outcomes following Asian Financial crisis of 1997.


ADB study —- $800 billion/year needed in Asia until 2020— yet World Bank and ADB combined Capital bases itself less than $400 billion.


regarding the new institutions progress towards implementing Good Governance. While China’s “no strings attached” approach to overseas investment in Asia and Africa has meant significant headway for vital infrastructure projects, it has also drawn valid criticism for failing to adhere to adequate environmental or labor standards.

Differences :

NDB – Principle of Equal shares of startup capital $100 billion – $20 billion contribution from each. 5-year presidentship is to be rotated among the members. Caters to infrastuctural needs of the members now and later beyond too.

AIIB – China has bulk of the capital share- nearly 50%, though it said it’ll reduce it to 26–30% in the future and that it’ll not use veto as exercised in the present Global institutions like IMF, World Bank. Primary focus — 75% for Asian needs; primarily Asia-Pacific focus.

AIIB has 16 of the 20 richest countries as shareholders => it is bound to get AAA status, which makes its offers attractive to anyone who are potential borrowers. while, present NDB may lose out on this.

NDB’s insistence on Equal share basis =>China even though it’ll be able to provide for higher capital, considering that it’s a much larger economy and other countries will not be able to match it on an equal basis has limitations on the total amount of initial capital that can be garnered, while there are no such limitations[on contributions front] in AIIB.

5. Iran to quit n-deal if U.S. walks away

Trump has almost decided to withdraw from the pact, say White House officials.

Related image

What was IRAN nuclear deal? 

Let’s see the 5 important pillars of nuclear deal or agreement:

  1. Iran should give up 97% of its enriched uranium i.e. from 10000 kg down to 300 kg.
  2. Iran can produce modest amount of uranium enriched to low levels at 3.67%.
  3. Iran has to give up 2/3rd of its centrifuges i.e. from 19000 down to 5000. (Centrifuges are machines used to enrich uranium).
  4. UN inspectors should have access to nuclear facilities anytime & anywhere. (But Iran can challenge rrequest for access).
  5. USA+UN+EU will remove many eeconomic, financial & energy sanctions.

In 2016, Iran started implementation on the nuclear deal after the clearance of IAEA.

In the UNGA 2017, Trump threatened to step-out of the of the Iran nuclear deal.

Trump believes that the deal is an “embarrassment” & the Iran (if it want) can have nuclear weapons in just 5 years. In other words, Iran is fooling the world.

Please note that the Iran nuclear deal was not between just USA & Iran, it is between UNSC, EUROPE & P5+1 NATIONS & Iran. USA stepping out of the deal doesn’t mean the deal is dead.

Effects on India ::

From India’s perspective, Iran is highest supplier of crude oil to India. Tehran has always offered New Delhi very favourable terms including non-dollar oil sale & other commercial attractions.

  • India has said that it will start operation of chahbahar port in 2018.
  • India to have the operating rights in Farzad B gas field.
  • Iran buys basmati rice, sugar, agrochemicals, medicines, & petroleum products (refined oil) from India.

If Iran gets into problems in future, It may affect Indian trade relations also.

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