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Detailed News Articles: 15 June 2019

1.  India to impose retaliatory tariffs on 29 American goods

The Commerce Ministry has said that India has decided to impose retaliatory tariffs on 29 goods imported from the U.S. starting June 16. The decision comes a year after it was initially decided.

Background:

  • The US has withdrawn the Generalized System of Preferences (GSP) benefits to India, effective 5th June.
  • The commerce and industry minister said that India has accepted the decision of the US to withdraw GSP benefits gracefully, and would work towards making the exports competitive.
  • It was also clarified that the duty hikes were against the tariff hikes on steel and aluminium products by the U.S. and not because it withdrew duty-free benefits to Indian exporters.
  • America had in March last year imposed 25 per cent tariff on steel and a 10 per cent import duty on aluminium products. As India is one of the major exporters of these items to the US, the US decision has revenue implication of about $240 million on Indian steel and aluminium products.
  • The move to impose retaliatory tariffs comes ahead of the meeting between Modi and Trump on the sidelines of the G20 summit in Japan

Details:

  • India had repeatedly postponed the imposition of retaliatory tariffs since they were first announced in June 2018.
  • The tariff would now be imposed on 29 US products, including almond, walnut and pulses.
  • The other products on which duties will be hiked include certain kind of nuts, iron and steel products, apples, pears, flat rolled products of stainless steel, other alloy steel, tube and pipe fittings, and screws, bolts and rivets.
  • The move will hurt American exporters of these 29 items as they have to pay duties on these products. India would get about $217 million additional revenue from such imports.
  • The consensus view is that the impact is commensurate to the impact on India due to the U.S. tariffs on aluminium and steel imports.
  • India has also dragged the US to the World Trade Organisation’s (WTO) dispute settlement mechanism over the imposition of import duties on steel and aluminium.
  • India’s exports to the US in 2017-18 stood at $47.9 billion, while imports were at $26.7 billion. The trade balance is in favour of India.

2. Narendra Modi, Imran Khan exchange pleasantries during SCO Summit at Bishkek

Shanghai Cooperation Organisation Summit 2019 is being held in Bishkek, capital of Kyrgyzstan.

What is SCO?

Shanghai Cooperation Organisation is a Eurasian Economic, Political and Security organization. The Shanghai Cooperation Organization was formed with the primary objective of military cooperation between its member nations. It works towards intelligence sharing and counter terrorism operations in the Central Asian Region (CAR).

Fight against Terrorism:

  • Addressing the Shanghai Cooperation Organisation Summit, PM Modi highlighted the spirit and ideals of the SCO to strengthen cooperation in the fight against terrorism.
  • To combat the menace of terrorism, countries will have to come out of their narrow purview to unite against it, he said.
  • Prime Minister called on the SCO member states to cooperate under the SCO Regional Anti-Terrorist Structure (RATS) against terrorism.
  • The Bishkek Declaration urged the international community to encourage global cooperation to fight terrorism, without politicisation and double standards; with respect for the sovereignty and independence of all countries.
  • It sought the support of the member countries to work towards a consensus on adopting the Comprehensive Convention on International Terrorism.
  • The summit signed a document titled ‘Roadmap for Further Action of the SCO-Afghanistan Contact Group.
  • The other agreements on sports, mass media, coordination of humanitarian affairs, tourism, healthcare were signed.
  • A separate MoU was signed for establishment of Astana International Financial Centre.

Details:

  • Without naming Pakistan, Mr. Modi raised the issue of state-sponsored terrorism at Bishkek and said that countries sponsoring, aiding and funding terrorism must be held accountable as he called for a global conference to combat the menace.
  • However, Prime Minister exchanged usual pleasantries with the Prime Minister of Pakistan Imran Khan.
  • It is the first exchange since the Pulwama terror attack that had led to escalation of tensions between the India and Pakistan.

Regional Anti-Terrorist Structure (RATS):

The Regional Antiterrorism Structure (RATS) was established in the year 2004 at the Tashkent Summit. SCO-RATS is a permanent body established to bring about coordination and interaction between member states in ensuring security in the region. The Regional Antiterrorism Structure works on information sharing and joint counter terrorism measures between the member states. Post the Astana summit declaration of 2005, Shanghai Cooperation Organisation has emerged as a regional security organization.

3. Shaky building blocks

Analysis:

  • Some experts opine that many children in elementary classrooms across India cannot read and write proficiently, as demonstrated on an annual basis by the Annual Status of Education Reports (ASER). As a consequence, they assert, this affects other school-based learning, as well as functioning in societies and economies that prize literacy.

A Perspective on the capabilities of young children:

  • It was heartening, therefore, to see a chapter devoted to “Foundational Literacy and Numeracy” in the draft National Education Policy, 2019.
  • As a matter of fact, the focus it places on the early years is welcome, and the continuity it recommends between the pre-primary and primary years is necessary.
  • Likewise, its emphasis on mother tongue-based education and oral language development are critical.
  • However, experts point out that the analysis presented on why children fail to learn to read and write largely points to factors surrounding the teaching and learning process — the health and nutritional status of children, high student-teacher ratios, and so on.
  • It is important to note that while each of these factors is undoubtedly important, they do not address with sufficient clarity curricular, pedagogical and teacher education-related issues that plague the teaching and learning of early literacy in many Indian classrooms.

(a) What plagues the teaching and learning of early literacy in many Indian classrooms?

  • Most classrooms across India view the task of foundational literacy as teaching children to master the script, and being able to read simple words and passages with comprehension.
  • Higher order meaning making, critical thinking, reading and responding to literature, and writing are typically reserved for later years of schooling.
  • Critics opine that this draft reinforces such restrictive and outdated ideas about the goals of a foundational literacy programme.
  • It is important to note that research evidence from around the globe demonstrates unequivocally that even very young children are capable of using early forms of reading, writing and drawing to express themselves and to communicate; they are also capable of inferential meaning-making, critical thinking, and so on.
  • As a matter of fact, this entire body of scholarship, referred to as “emergent literacy”, has been ignored in the draft.
  • Experts opine that this has powerful consequences for the recommendations that follow, which propose largely oral activities for the pre-primary grades, reading hours for Grades 1-3, with an additional hour for writing starting only in Grades 4 and 5.
  • Further, it contradicts evidence suggesting that young children be taught listening, speaking, reading and writing simultaneously and not sequentially.

(b) A Look at the many pedagogical approaches:

  • Another concern is that the recommendations are based on generic theories of early childhood education, such as multiple age groups learning together in flexible, play- and activity-based ways.
  • Critics opine that they don’t draw upon ideas specific to the teaching and learning of early literacy.
  • Early literacy requires a “balance” between helping children to acquire the script, and engaging them with higher order meaning making.
  • It also requires knowledge of a variety of pedagogical approaches, such as reading aloud to children, guiding children in their efforts to read and write, encouraging independent exploration, helping them learn about different genres of texts, and so on.
  • Further, it needs a balance of materials — moving beyond textbooks and workbooks to high quality children’s literature, material created by the children themselves, and the like.

(c) The Onus on Teachers:

  • Teachers need to know how to differentiate instruction for learners at different levels and how to provide specific help to students who are struggling.
  • As a matter of fact, this also requires sufficient time — an average of two-three hours per day, as per the recommendations of the Ministry of Human Resource Development (MHRD).
  • Further, while it may be beyond the scope of a policy document to detail specific curricular and pedagogical approaches, it must provide sufficient direction for a national curriculum framework to pick up from — in this case, it should signal the need for a balanced and comprehensive approach to foundational literacy and knowledgeable teachers for its implementation.
  • Earlier documents addressing this issue (for example, MHRD’s Padhe Bharat, Badhe Bharat, 2014, and Ambedkar University’s position paper on Early Language and Literacy in India, 2016) have been far more specific in recommending a comprehensive approach with expanded time, and a balance of goals, methods and materials.

(d) Teaching literacy

  • Experts point out another important concern as well. This concern centres on the lack of discussion about what it takes to prepare teachers to successfully teach foundational literacy in a multilingual country.
  • Instead, the document recommends recruiting volunteers and community members to support the acquisition of early literacy (even remedial instruction!) in the primary grades, albeit under the guidance of teachers.
  • Critics point out that this lends credence to a dangerous and erroneous idea that any literate person can teach literacy, and undercuts sophisticated understandings related to children’s development and literacy learning that teachers ideally bring to their jobs.
  • Volunteers can be used, but cannot be a primary mechanism that a national policy relies upon to deliver foundational literacy to students.

Concluding Remarks:

  • In focusing on the limitations of the non-academic nature of anganwadi experiences on the one hand, and the inappropriate curricular and pedagogic practices followed by many private pre-schools on the other, critics opine that the authors of the draft appear to have not engaged with the advances made by scholars, practitioners and policy-makers in the field of early literacy.

4. Reversing the scale of priorities

Analysis:

  • Experts opine that in the weeks ahead, the honourable Supreme Court of India will hear arguments on an appeal filed against a judgment of the Madras High Court in P.V. Krishnamoorthy v. The Government of India.
  • As a matter of fact, there, a series of notifications acquiring land for a proposed eight-lane expressway connecting Chennai to Salem were quashed.
  • The Supreme Court has already denied, with good reason, the National Highway Authority of India’s urgent request for a stay of the judgment.
  • Experts opine that such an order would have rendered unavailing the High Court’s lucidly reasoned ruling. Indeed, the quality of the High Court’s verdict is such that, when the appeal made against it is heard, the Supreme Court could find that the judgment demands a wider, national embracing.

Question of procedure:

  • The eight-lane highway is part of the “Bharatmala Pariyojana”, which is a centrally sponsored highways programme, aimed chiefly as a corridor for more efficient freight movement.
  • The intended highway between Chennai and Salem will cover more than 250 km, and, once constructed, will cut its way through a slew of agricultural and reserve forest lands.
  • It is important to note that although the High Court framed a series of questions that required answering, the ultimate controversy in the case came down to this: was an environmental impact assessment (EIA) required before efforts were made to acquire land for the highway project? If not, at what stage of the project was such an assessment required?

What did the petitioners say?

  • According to the petitioners, many of them landowners, the state had failed to obtain an environmental clearance for the project before acquiring land and had thereby violated its responsibilities.
  • What is more, in any event, such permission, they argued, could hardly be obtained since it was clear that the project would have a deleterious impact on the forests, the surrounding water bodies and the wildlife of the region.

What did the government say?

  • The government denied this.
  • It argued that its power to acquire land under the National Highways Act, 1956, was unconditional.
  • There was, it said, no law mandating an EIA before efforts are made to acquire private land.
  • Critics opine that in its belief, a notification under the Environment (Protection) Rules, 1986, which required an EIA for the construction of a new highway, did not decree such an assessment for the purposes of securing the land.

Emergence and Relevance of Sustainable development:

  • It is important to note that for some time now, it’s been evident that the environment is in a state of utter ruin.
  • Recognising this, in 1987, a United Nations-backed committee led by the former Norwegian Prime Minister Gro Brundtland proposed a long-term strategy which called for sustainable development, among other things.
  • This programme, radical at the time, titled “Our Common Future”, defined the principle as an endeavour to ensure that any development “meets the needs of the present without compromising the ability of the future generations to meet their own needs.”
  • Since then, sustainable development has been viewed as something of a mantra in environmental jurisprudence.
  • So much so that in India, even before the principle crystallised into a binding international norm, the Supreme Court in Vellore Citizens’ Welfare Forum (1996) read the idea as intrinsic to India’s constitutional structure.
  • As a matter of fact, “The traditional concept that development and ecology are opposed to each other is no longer acceptable,” wrote Justice Kuldip Singh. “‘Sustainable Development’ is the answer.”
  • Having said that, and as grand as this statement sounds, in practice it’s proved scarcely useful.
  • For the courts have invariably seen sustainable development as demanding a balancing exercise, as requiring a calculation of trade-offs between the environment and the economy.
  • Experts opine that what this has meant is that the courts of neoliberal India wound up fashioning a sliding scale of priorities in which the environment, particularly the urban ecosystem, always trumped people, but where eventually development trumped it all.
  • This approach, experts show, was typified in the Supreme Court judgment in a case concerning industrialisation at the Kudremukh National Park (Godavarman, 2002).
  • Holding that any development would have an adverse effect on the ecology and the environment, a balance, wrote Justice Arijit Pasayat, had to be struck.
  • “Where the commercial venture or enterprise would bring in results which are far more useful for the people, difficulty of a small number of people has to be bypassed,” he wrote.
  • “The comparative hardships have to be balanced and the convenience and benefit to a larger section of the people has to get primacy over comparatively lesser hardship.”

What do such utilitarian reckonings hold in store?

  • Experts opine that utilitarian reckonings of this kind, perhaps, represent a problem inherent in seeing sustainable development as a virtuous model.
  • It could easily be argued that by its very design, the principle calls for a form of calculation that tends to see growth as outplaying all other concerns. As Amartya Sen wrote, while the prominence accorded to sustainable development may be laudable, we must equally ask whether “the conception of human beings implicit in it is sufficiently capacious”.
  • A project, for example, which might deny future generations the opportunity to breathe fresh air may well be defended on a simple application of the norm if those future generations are likely to be rich enough to enable them to live comfortably without breathing fresh air.
  • In this illustration, the principle overlooks, as Prof. Sen wrote, “the need for anti-emission policies that could help future generations to have the freedom to enjoy the fresh air that earlier generations enjoyed.”

Primacy to the environment:

  • Sustainable development can, therefore, work only if the environment is seen as valuable for its own sake.
  • The Madras High Court does this in its judgment in Krishnamoorthy.
  • To argue, as the government did, that an EIA wasn’t required before land was acquired for a highway, as the court recognised, was to effectively place the cart before the horse.
  • As the court pointed out, the highway in question here was a greenfield project that was intended as an altogether new road to be constructed on virgin land.
  • In such a case, to eschew an EIA before land was obtained would have created irreversible effects that would have had a bearing not only on the environment, but also on the social and economic life of the landowners.

A Few more notable perspectives:

  • “The land of an agriculturist,” wrote Justice T.S. Sivagnanam, for the court, “is vital to sustain his livelihood… The land provides dignity for the person.”
  • The judgment, therefore, not only holds the state accountable for the violation of basic notions of due process, in exercising the power of eminent domain, but also sees the possession of farmlands by farmers as an article of faith.
  • However, most importantly, the ruling deepens a commitment to the protection of forests and waterbodies. It places the environment in a position of primacy over unthinking measures of ostensible development.
  • There are important questions that emerge:
  • When a highway passes through a reserve forest would it not, the court asks, “pave way for establishments in the near vicinity”? Would it not “pave way for poaching of endangered species of birds and animals”? Would it not “pave way for illicit felling and transportation of valuable timber”?
  • The rigours of the country’s environmental laws, the judgment therefore holds, ought to outweigh those of procedural laws concerning acquisition of land, for “the protection of environment stands in a higher pedestal when placed on scale with that of the economic interest.”

Concluding Remarks:

  • By so holding, the Madras High Court has effectively reversed the prevailing scale of priorities.
  • This is especially remarkable since it comes at a time when the government is seeking to further weaken the existing norms for environmental clearance.
  • Lastly, the fact that such efforts at diluting environmental protections are underway when it has become increasingly apparent that climate change represents an existential threat ought to alarm us into action.
  • One way to act is to compel the state to look beyond exercises of balancing, as the High Court does, and to see nature as intrinsically valuable.

5. Full disclosure: On SEBI norm for financial disclosure

Editorial Analysis:

  • There have been a record 163 downgrades of debt instruments this year (2019), according to data released by Prime Database recently.
  • This is more than double the number of defaults over the whole of last year (2018).
  • Further, it is important to note that debt instruments issued by prominent companies including Yes Bank, Essel and Jet Airways have been downgraded this year (2019).
  • Experts opine that this spate of defaults, which may well be a sign of the turning of the credit cycle in the broader economy, may have forced SEBI to crack the whip on credit rating agencies.

Information Conveyed in a recently issued circular:

  • In a recently issued circular, SEBI laid down a new standard framework for financial disclosure by credit rating agencies that it believes will enhance the quality of information made available by these agencies to investors.
  • Notably, the agencies will have to publish information on how their performance in the rating of debt instruments compares with a benchmark created in consultation with SEBI.
  • As a matter of fact, the regulator believes this will help investors to better gauge the performance of credit rating agencies.

What does SEBI’s approach suggest?

  • Experts opine that SEBI’s aggressive regulatory approach seems to suggest a certain disappointment with credit rating agencies, which may not be unfounded.
  • They have been caught napping on several occasions, including during the recent default by Infrastructure Leasing & Financial Services on its debt commitments.
  • Importantly, they are also seen by many as being more loyal to companies whose instruments they rate rather than to investors who provide precious capital.
  • These concerns need to be addressed.

Concluding Remarks:

  • SEBI’s attempt seems to be to align ratings methodologies with global best practices.
  • The suggestion to revise the method of computing default rates and the precise definition of terms that raters should use in describing a client’s liquidity position — strong, adequate, stretched and poor — are aimed at sharpening disclosure and leaving little room for raters to be ambiguous.
  • Lastly, what is not clear, though, is how the new framework will effectively resolve the conflict of interest issue that plagues the rating industry.
  • The issuer-pays model where the ratings agency is paid by the issuer of the instrument that it rates is not a healthy one.
  • But the problem is that a viable alternative is yet to be proposed.
  • The bottomline is that the poor track record of credit rating agencies is known to most investors and is appropriately discounted by market participants.

Thank you!

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