- Resilient supply chains as a pandemic lesson
- The broken bonds of democracy
- The tragedy of conservation
Editorial: Resilient supply chains as a pandemic lesson
- A key lesson learnt by the world during the COVID-19 pandemic has been the importance of creating resilient supply chains that can withstand disruptions and ensure reliability for the global economy.
- GS Paper 2: Bilateral, Regional and Global Groupings and Agreements involving India
- India has the capacity and the potential to become one of the world’s largest destinations for investments, and one of the world’s largest manufacturing hubs, in the aftermath of the pandemic. Discuss. 15 Marks
- An economy such as India can ill-afford the shocks of disruption or be held hostage by an over-reliance on imports. Discuss. 15 Marks
- A key lesson learnt by the world during the COVID-19 pandemic has been the importance of creating resilient supply chains that can withstand disruptions and ensure reliability for the global economy. Discuss. 15 marks
Dimensions of the Article:
- What is supply chain resilience ?
- Why is supply chain resilience needed?
- A New Initiative: Supply Chain Resilience Initiative (SCRI)
- Importance of SCRI for India:
- Way forward:
What is supply chain resilience ?
In the context of international trade, supply chain resilience is an approach that helps a country to ensure that it has diversified its supply risk across a clutch of supplying nations instead of being dependent on just one or a few. Unanticipated events — whether natural, such as volcanic eruptions, tsunamis, earthquakes or even a pandemic; or manmade, such as an armed conflict in a region — that disrupt supplies from a particular country or even intentional halts to trade, could adversely impact economic activity in the destination country.
Why is supply chain resilience needed?
Both Natural and Man-made interruptions in supply chains are disruptive:
- Terror Attacks: Terrorist drone attacks on Aramco’s oil refineries at Abqaiq and Khurais in Saudi Arabia in September 2019 resulted in a drop of 5.7 million barrels of oil per day, triggering a steep plunge in Saudi Arabia’s stock market and a sharp spike in global oil prices.
- Bilateral disputes: China has long practised “supply chain politics”. Japanese entrepreneurs learnt a hard lesson when the detention of a Chinese fishing trawler captain in 2010 near the disputed Senkaku Islands resulted in the Chinese government cutting off exports of rare earths to Japan.
- Natural Calamities: In Japan’s case, the Great Tōhoku Earthquake of 2011, followed by the Tsunami, led to a nuclear disaster (Fukushima Daiichi), causing a sharp drop in Japanese automobile exports to the United States.
- During Pandemic: When the novel coronavirus pandemic broke out, it had an immediate and telling effect on supply chains emanating from China. In India, several companies felt the disruption in the automotive, electronics and white goods sectors. India excels in the pharmaceuticals sector but the over-reliance on Active Pharmaceutical Ingredients (APIs) from China still creates vulnerabilities in the value chain.
- Trade War: Tensions with China led the United States government to impose restrictions on export of microchips to China’s biggest semiconductor manufacturer, Semiconductor Manufacturing International Corporation (SMIC), following assessment that there was an “unacceptable risk” that equipment supplied to it could be used for military purposes.
A New Initiative: Supply Chain Resilience Initiative (SCRI)
Japan has mooted the Supply Chain Resilience Initiative (SCRI) as a trilateral approach to trade, with India and Australia as the other two partners. The initiative is at the strategy stage and has some way to go before participants can realise trade benefits.
- Petroleum, automobiles, textiles and steel are some of the key sectors that could be the focus areas under the Supply Chain Resilience Initiative (SCRI).
- The SCRI seeks to enhance the resilience of supply chains in the Indo-Pacific region and develop dependable sources of supply and attract investment.
- Some of the possible sectors that could be looked at from the perspective of the volume of trade in all categories of goods (raw materials, intermediates, capital goods and consumer goods) and services of the 3 countries are petroleum and petrochemicals, auto and auto components, and steel and its products,”.
- The other sectors include pharmaceuticals, medical devices, marine products, tourism and travel services, financial services, information technology and skill development.
- SCRI is also planning to finalise “Track 1.5” participants to involve industry, academia and government, besides exploring inclusion of like-minded countries to build secure supply chains in the region.
Importance of SCRI for India:
- Unaffordable supply shocks: A large emerging economy such as India can ill-afford the shocks of disruption in supply chains. Nor can it allow itself to be held hostage due to an over-reliance on imports. For instance, the pandemic caused a breakdown in global supply chains in the automotive sector since most global manufacturers in China abruptly went offline.
- Over Dependence upon China: For India, which imports 27% of its requirement of automotive parts from China, this quandary was a wake-up call, given the sudden shortage of braking components, electrical components, interiors and lighting fixtures.
- Boosting Investment: India’s electronics industry was worth $120 billion in 2018-2019 and is forecast to grow to $400 billion by 2025. Today, India is seeking to enhance its presence substantially in the global supply chains by attracting investments in the semiconductor components and packaging industry.
- Boosting trade with Japan: India’s electronics industry was worth $120 billion in 2018-2019 and is forecast to grow to $400 billion by 2025. Today, India is seeking to enhance its presence substantially in the global supply chains by attracting investments in the semiconductor components and packaging industry.
India needs to enhance self-reliance against China, so that it could build resilience into the economy’s supply networks. Economic measures are of real value in this regard.
- Ease of Doing Business: While India appears an attractive option for potential investors both as a market and as a manufacturing base, it needs to accelerate progress in ease of doing business and in skill building.
- Tax incentives: These will help in attracting investments from China and other attractive locations like Vietnam and the Philippines.
- Boost Domestic Manufacturing: India’s strategy should be to boost manufacturing competitiveness and increase its share in world trade.
India has the capacity and the potential to become one of the world’s largest destinations for investments, and one of the world’s largest manufacturing hubs, in the aftermath of the pandemic.
Editorial: The broken bonds of democracy
- A recent order by the Central Information Commission (CIC) has again revealed the inherent problems surrounding the Electoral Bond Scheme (scheme) of 2018.
- This order passed in an appeal against the State Bank of India (SBI) has effectively shut the door to seek any details about donors and donees relating to electoral bonds under the Right to Information (RTI) Act.
- GS paper 2: Salient features of the Representation of People’s Act.
- The public scrutiny of parties and political candidates is an essential and inalienable part of a free and fair democratic process. Discuss. 15 Marks
- By suppressing knowledge of political financing, we are breaking the basic bonds of democracy holding the country together. In this context, discuss the electoral bond and its consequences upon democratic process in India. 15 Marks
Dimensions of the Article:
- What is electoral bond?
- Why has the electoral bond introduced?
- Issues with electoral bond:
- Way forward:
What is electoral bond?
An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
- The citizen or corporate can then donate the same to any eligible political party of his/her choice.
- The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest.
- An individual or party will be allowed to purchase these bonds digitally or through cheque.
Why has the electoral bond introduced?
- To limit the use of cash in political funding: To reduce using illicit means of funding and the ‘system’ was wholly opaque and ensured complete anonymity.
- To curb black money– due to the following features included in the electoral bond so Payments made for the issuance of the electoral bonds are accepted only by means of a demand draft, cheque or through the Electronic Clearing System or direct debit to the buyers’ account”.
- Limiting the time for which the bond is valid ensures that the bonds do not become a parallel currency.
- Eliminate fraudulent political parties– that were formed on pretext of tax evasion, as there is a stringent clause of eligibility for the political parties in the scheme.
- Protects donor from political victimization- as non-disclosure of the identity of the donor is the core objective of the scheme.
Issues with electoral bond:
- Still maintains opacity in political funding- due to the following reason so Prior to electoral bonds, political parties had to maintain records of donations above Rs 20,000. However, the electoral bonds were kept out of the purview of this requirement.
- Further, political parties are legally bound to submit their income tax returns annually under Section 13A of the Income Tax Act, 1961. However, the electoral bonds have also been exempted from IT Act.
- The electoral bonds were also opened for foreign funding, which has been highlighted in the recent dissent note of the RBI.
- Allowed possibility of corporate misuse- as revealed from the nature of transactions discussed above. o Earlier, no company could donate more than 7.5% of its profits to a political party. But this limit was completely removed under this scheme.
- Lack of level playing field in terms of political funding– as
- Government amended Section 29B of the Representation of the People Act, restricting the benefits of electoral bonds only to a few political parties.
- Data revealed through the audit report of ruling party also showed that the ruling party has received 94.6% of all the electoral bonds sold in 2017-18.
- Merely an urban phenomenon- the data also highlights the fact, that electoral bonds have been used by the rich players in cities, rather it being percolating to the majority population, especially in rural areas.
The early trends on electoral bonds attest to what political analysts have been fearing that the new channel would greatly undermine India’s electoral democracy by inviting unbridled corporate influence. There is a need to carry out a thorough check on the way the scheme is being implemented otherwise it can undo the significant gains achieved in political finance reforms and transparency norms.
Editorial: The tragedy of conservation
- Since the time the Ministry of Environment and Forests began identifying the potential heritage sites, there has been unrest among the indigenous people.
- The restrictions on movement following the declaration of these territories as ecologically sensitive areas aggrieved them further.
- GS Paper 3: Environmental conservation; Environmental pollution and degradation; Environmental Impact Assessment.
- Isolating the indigenous people from their natural habitats in the Western Ghats to protect biodiversity is unproductive. In this context, assess the role of Right to Forest Act 2006 to protect the rights of indigenous people. 15 Marks
- Declaration of the Western Ghats as a World Heritage Site is as important in preserving the rich biodiversity of the region as the recognition of the rights of the people who depend on the forests. Discuss. 15 Marks
Dimensions of the Article:
- What is Forest Right Act?
- Issues related to Forest Right Act.
- Way Forward
What is Forest Right Act?
It provides for a rights-based, democratic and decentralized governance of forests. Rights recognized under FRA.
- Individual forest rights (IFR) to legally hold forestlands that the forest dwelling communities have been residing on and cultivating prior to 13 December 2005.
- Community rights (CRs) of ownership, use and disposal of ‘minor forest produce’, also known as non-timber forest produce (NTFP).
- CRs include rights of grazing, collection of firewood, fish and other such products from water bodies, as well as rights to biodiversity and intellectual property, including those related to traditional knowledge.
- Community forest resource (CFR) rights under Section 3(1)(i) to protect, regenerate, conserve or manage forest resources for sustainable use, providing for community governance of forests. About CFR
- CFR rights is the most empowering provision of the Act because it restores gram Sabha’s [village council] control over governance of forests from the forest department, thereby democratising the country’s colonial forest governance as a whole.
- CFR management committees (CFRMCs) are created by Gram Sabha, which are expected to prepare a conservation and management plan for community forest resources in order to sustainably and equitably manage CFR areas.
Issues with Forest Right Act 2006:
- Large number of cases in Left-Wing Extremism affected areas where tribal population is high. The forest land claims of these tribes and forest-dwellers are mostly rejected by the States owing to the security concerns.
- Lack of awareness of forest dwellers– Being poor and illiterate, living in remote areas, they do not know the appropriate procedure for filing claims.
- Inadequacy of Gram Sabha– The gram Sabhas, which initiate the verification of their claims, are low on awareness of how to deal with them. More than half the rejections in Chhattisgarh were found to be at the gram Sabha level.
- Administrative Callousness In several states there have been reports on administrations going particularly slow on even accepting community-level claims. o The district administration is expected to assist the gram Sabhas by providing forest and revenue maps. But this hasn’t taken place as expected.
- In some cases, one-line orders are being passed without following the procedure.
- Hasty Rejections- A large number of cases are rejected due to lack of evidence or incomplete evidence. Officials demand Tribals to furnish satellite imagery and non-existent 75-year-old records.
- Other Illegalities done by authorities, which are alleged/ claimed by petitioners- such as –
- Raising of frivolous objections. E.g. the summons and notices issued to 60 Bhil Tribals for encroaching on forest land in 2002 were used as evidence for evicting them under the Forest Rights Act, 2005.
- Range officers are not authorised to reject FRA claims; they can only provide recommendations to claims committees. However, many cases are decided by forest guards or patwaris.
- There is need to collate proper data which accurately indicates the status of a claim.
- Any rejection order should be passed after observance of due process of law; compliance with principles of natural justice and whether appeal mechanisms have been properly exhausted.
- The administrative machinery should focus on increasing the awareness of tribals and aiding these groups in finding evidences, rather than ignoring them.
- The Ministry of Tribal Affairs should coordinate this drive and take help of other non-state actors such as the Campaign for Survival and Dignity (CSD), a national organisation of several Adivasi and forest dwellers’ movement.