Context

The Indian National Centre for Ocean Information Services (INCOIS) has issued a warning to the coastal states about the “complete suspension of operational and recreational activities.

Swell Surge Warning

• Potential for Swell Surges: This is due to the potential for swell surges and rough sea conditions caused by the influence of high-period swell waves approaching from the distant southern Indian Ocean. 
• Safety Advisory for Fishermen and Coastal Residents: They have been advised to exercise caution regarding potential wave surges, such as intermittent inundation of seawater in the nearshore and beach areas, especially in low-lying areas.
•  Origin and Movement of High-Period Swells: The high period swells had started at approximately 10,000 km away from the Indian coast in the southern Atlantic Ocean and slowly moved towards the southern Indian Ocean.
  • This had caused the high energy swell propagation towards the Indian coastal regions which is expected to hit the southern tip of India in the early hours of May 4. 
  • These long-period swells combined with high tide conditions can cause coastal flooding in the low-lying areas on May 4 & 5.

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Swell Waves

These waves are formed by an ocean swell, hence the name swell waves/swell surge. A swell wave is the formation of long wavelength waves on the surface of the seas. They propagate along the interface between water and air.  Thus, they are often referred to as surface gravity waves. 

• Origin: Ocean swells do not occur due to the local winds, but rather due to distant storms like hurricanes, or even long periods of strong winds. 
  • Usually, states like Kerala witness swell waves as a result of strong winds in the southern part of the Indian Ocean, where an ocean swell is generated, and the waves then travel north to reach the coast in two or three days.
• Influencing Factors: The speed of the wind, the amount of ocean surface area affected by wind blowing in the same direction (also known as fetch), and the amount of time those winds blow over the same part of the ocean.

Features of Swell Waves:

• Narrow range of Frequencies: Swells have a narrower range of frequencies and directions than locally generated wind waves.
  • Swells take on a more defined shape and direction and are less random than locally generated wind waves.
  • In terms of directionality, they are characterised by the direction from where it emanates instead of where it is headed. 
• Wavelength: Swell waves often have a long wavelength but this varies with the size of the water body. Their wavelengths may rarely exceed more than 150 m. 
  • Swell wavelength, also, varies from event to event. Occasionally, swells which are longer than 700 m occur as a result of the most severe storms.

Earlier Instances of Swell Waves in India: The swell waves in March were generated after a low atmospheric pressure system moved over the region from the South Atlantic Ocean.

• The arrival of the pressure system resulted in strong winds, which led to the formation of swell waves of up to 11 metres in height. These waves hit the Kerala coast and Lakshadweep.

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Difference between Swell waves and Tsunamis

Unlike swell waves, a tsunami is a series of enormous waves created by an underwater disturbance usually associated with earthquakes occurring below or near the ocean.

• Tsunamis are around 10 times faster than swell waves. Although both swell waves and tsunamis slow down near the coast, the swell waves hit land at 30–50 km/h.

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Context

The Reserve Bank of India (RBI) revised the guidelines for custodian banks to issue Irrevocable Payment Commitments (IPCs) in light of the T+1 settlement regime for stocks. 

RBI Revises banks’ Capital Market Exposure Norms for T+1 settlement

• Capital Market Exposure (CME) Limit: The maximum intraday risk to the custodian banks issuing IPCs would be considered as CME at 30 percent of the settlement amount.
• Basis for the 30% Risk Limit: It is based on the assumption of a 20 per cent downward price movement of the equities on T+1, with an additional margin of 10 per cent for further downward movement of price. 

• • Earlier, the risk mitigation measures were prescribed based on T+2 rolling settlement for equities (T being the trade day).
• Eligibility Criteria for Custodian Banks Issuing IPCs: Only custodian banks, who have an agreement with clients giving them an inalienable right over the securities for receiving a payout in the settlement, are permitted to issue IPCs. 
  • This clause will not be insisted upon if the transactions are pre-funded.
• Capital Maintenance in T+1 Settlement Cycle: Under the T+1 settlement cycle, the exposure shall normally be intraday. 
  • However, if exposure remains outstanding at the end of T+1 Indian Standard Time, the bank will have to maintain capital based on the outstanding capital market exposure.
• Regulation of Bank Counterparty Exposures: The underlying exposures of banks to their counterparties, emanating from the intraday capital market exposure (CME), will be subject to limits prescribed under the Large Exposure Framework.

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Trade Settlement

It refers to the transfer of securities and funds between buyers and sellers after a trade is executed. A trade settlement is said to be complete once purchased securities of a listed company are delivered to the buyer, and the seller gets the money.

• Trade Settlement Period: It refers to the interval of time between the trade date on which an order is executed in the market and the settlement date on which a trade is deemed final.
• T+1 Trade Settlement:  It means trade-related settlements happen within a day, or within 24 hours of the actual transaction. 
  • Under the T+1 settlement cycle, if an investor sells securities, the money gets credited into her account the following day.
  • Status of India: India became the second country to start the T+1 settlement cycle in top listed securities after China, bringing operational efficiency, faster fund remittances, share delivery, and ease for stock market participants.
• T+2 Trade Settlement: In this, Indian stock exchanges are settled in two working days after the transaction is done (T+2).
• T+0 Trade Settlement:  This would mean settlements on the same day ( within an hour)  and instant settlement would ensure trades are settled immediately.

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Context

Foreign portfolio investors (FPIs) domiciled at the GIFT International Financial Services Centre (IFSC) and registered with the Securities and Exchange Board of India (SEBI) have been allowed to issue participatory notes (P notes).

IFSCA Permits Non-Bank FPIs at GIFT City to Issue Participatory Notes and ODIs

• Investment Landscape at GIFT City: At present, the International Financial Services Centre Authority (IFSCA), the unified regulator for GIFT City, allows banking units to issue P-notes.
  • Besides offshore bank units investing in securities in Indian stock exchanges, other entities primarily investing in listed markets are the funds in IFSC registered as FPIs.
• Regulatory Changes as per IFSCA Circular: Initially, only banking units registered with SEBI as FPIs were permitted to issue derivative instruments with Indian securities. 
  • Now, non-bank entities registered with IFSCA and SEBI as FPIs are also allowed to issue derivative instruments with Indian securities as underlying, within GIFT-IFSC.
• Need for Tax Relaxations: Although the IFSCA has permitted all IFSC entities to issue Offshore Derivative Instruments (ODIs) to non-resident investors, adjustments in tax regulations would be necessary to extend the exemption to investors from Indian taxation. 
  • There is a need for an exemption of capital gains on transfer of ODIs by the non-resident investors as well as for any distribution by ODI issuers.

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Significance

• Boost to Offshore Derivative Instruments (ODIs) Issuance: Allowing P-Note issuance from GIFT City could potentially enhance their attractiveness, provided that the rules around taxation are eased.
  • Currently, about 46 FPIs are domiciled at the GIFT IFSC. 
• Advantages of ODIs for Non-Banking FPIs at GIFT City: This presents an opportunity for non-banking FPIs located at the IFSC with substantial assets under custody (AUC) to offer ODIs to international investors. 
  • ODIs provide a major benefit of confidentiality to investors, which is highly appealing to many. 
  • When combined with the leverage permitted at the GIFT City, ODIs create a compelling argument for an increase in trading volume among GIFT City FPIs.
•  Expanding Investment Opportunities at GIFT City: AIFs with FPI registration can also issue ODIs. This issuance allows FPIs to hedge their risks and provides ODI holders with exposure to Indian equities and instruments.
  • Recent regulatory changes could give a fillip to FPI activity from the GIFT City.

Foreign investment in India

This can broadly be classified into two categories: Foreign direct investment (FDI) and investment made by foreign institutional investors (FIIs).

• There are strict guidelines laid down by market regulator SEBI for seeking approvals and documentation for FDI. There are several restrictions laid down on the exit of this money.
• On the other hand, FII is mainly characterized as portfolio investment i.e. quick money entering the Indian capital market for short-term.  Due to its short-term nature, there are fewer guidelines on FII than on FDI. 

Foreign Portfolio Investment (FPI)

FPI involves an investor buying foreign financial assets. It involves financial assets like fixed deposits, stocks, and mutual funds.  All the investments are passively held by the investors. 

• Investors who invest in foreign portfolios are known as Foreign Portfolio Investors.

Categories of FPI:

• Category I: This includes investors from the Government sector. Such as central banks, Governmental agencies, and international or multilateral organizations or agencies.
• Category II:This includes regulated broad-based funds such as mutual funds, investment trusts, insurance/reinsurance companies.
• It also includes regulated banks, asset management companies, portfolio managers, investment advisors, and managers.
• Category III: It includes those who are not eligible in the first two categories. It includes endowments, charitable societies, charitable trusts, foundations, corporate bodies, trusts, individuals

Participatory notes/P-notes: Offshore Derivative Instruments

Participatory notes/p-notes are used for making investments in the stock markets. However, they are not used within the country. They are used outside India for making investments in shares listed in the Indian stock market. Thus, they are called offshore derivative instruments.

• Issuance: They are issued by brokers and FIIs registered with SEBI. The investment is made on behalf of these foreign investors by the already registered brokers in India. 
  • For example, Indian-based brokerages buy India-based securities and then issue participatory notes to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors.
• Need for Participatory Notes: Overseas investors who are not registered with SEBI have to go through a lot of scrutiny, such as know-your-customer norms, before investing in Indian shares. To avoid these hurdles, foreign investors take this route.
  • Since the end beneficiary of these notes is not disclosed, many investors who want to remain anonymous use it. 
• Significance: These notes allow foreign high net worth individuals, hedge funds, and other investors to put money in Indian markets without being registered with SEBI, thus making their participation easy and smooth. 
  • P-Notes also aid in saving time and costs associated with direct registrations. 
• Current Market Trend: They were of immense popularity prior to 2007 when nearly half of the foreign flows came through this route.
  • However, they lost their appeal following tightening of norms around identification of their end beneficiaries and easing of FPI registration norms. 
  • Currently, P-notes account for around 2 per cent of the total AUC of FPIs.

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Advantages of Participatory Notes

• Anonymity: Any entity investing in participatory notes is not required to register with SEBI, whereas all FIIs have to compulsorily get registered. 
  • It enables large hedge funds to carry out their operations without disclosing their identity.
• Ease of trading: Trading through P-notes is easy because they are like contract notes transferable by endorsement and delivery.
• Tax saving: Some of the entities route their investment through participatory notes to take advantage of the tax laws of certain preferred countries.

Disadvantages of Participatory Notes

• Regulatory Oversight: SEBI has no jurisdiction over P-note trading and thus, no way to know who owns the underlying securities. 
  • It is alleged that a lot of unaccounted money made its way to India through the P-note route.

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Context

On the occasion of the artist’s 176th birth anniversary, the first authentic copy of Raja Ravi Varma’s painting “Indulekha” will be revealed at Kilimanoor Palace in Kerala.

Dedication Event Features Paintings of Kilimanoor Palace Members

• Besides this painting, other artworks will be dedicated during the event. These include a portrait of Pooyam Thirunal C.R. Kerala Varma, a late member of the Kilimanoor palace, painted by K. Ravi Varma, another member of the palace.
  • Additionally, paintings of C. Rajaraja Varma and Mangala Bayi, siblings of Raja Ravi Varma, will be dedicated. 
  • These artworks were created by artist Suresh.

About Raja Ravi Varma

Raja Ravi Varma was an Indian painter.

• Other names: Koil Thampuran of Kilimanoor, Ravi Varma Koil Thampuran
• Known as: The father of modern Indian art
• Place of Birth: He was Born in Kilimanoor Palace. It is now part of Thiruvananthapuram, Kerala.
• Artistic Style: He was Known for blending Hindu mythology(  Puranas, Mahabharata and Ramayana ) with European painting styles.
• Artistic Achievements:
  • First Indian to use oil paints
  • Mastered lithographic reproduction of his work
• Some of Ravi Varma’s most renowned paintings are:
  • “Damayanti Talking to a Swan”
  • “Shakuntala Looking for Dushyanta”
  • “Nair Lady Adorning Her Hair”
  • “Shantanu and Matsyagandha”
• Recognition:
  • He built his reputation with the support of royals. 
    • Commissions: He got major commissions from Maharana Fateh Singh and Sayajirao Gaekwad III.
  • He won the Governor’s Gold Medal in 1873 for an exhibition of his paintings in Vienna.
  • Ravi Varma’s paintings were showcased at the World’s Columbian Exposition held in Chicago in 1893.
    • He received two gold medals for his contributions.
  • Kaisar-i-Hind Gold Medal:
    • In 1904, Viceroy Lord Curzon, representing the King Emperor, awarded Raja Ravi Varma the prestigious Kaisar-i-Hind Gold Medal.
      • This marked the first time he was referred to as 
  • Crater on the planet Mercury: In 2013, in his honour, this crater was named 
• Contribution to Indian Art:
  • Pioneered a new movement by blending Western realism with Indian themes
  • Established a lithographic press in 1894 to mass-produce copies of his paintings

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Background of the Reclining Lady Painting

It is a 19th-century painting. The famous painting ‘Reclining Lady’ was made by Ravi Varma.

• This painting  is thought to have been based on Indulekha.
  • “Indulekha” is based on the character from the first modern Malayalam novel by O. Chandu Menon.
    • It was  published in 1889.
• The unveiling of the painting has generated excitement within the art community since its emergence into the public domain in 2022.

Details of the Reclining Lady Painting:

• The oil painting depicts Indulekha holding a letter addressed to her lover, Madhavan.
  • Madhavan was the hero of the novel, dated 1892. 
• Unique Feature: The painting is characterized by a meticulous attention to detail and an exaggerated sense of symmetry.
• Recently, it was restored by Madhan S. from the Heritage Conservation and Research Academy.

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Context

The Eta Aquariid meteor shower which has been active since April 15 is about to reach its peak on May 5 and 6.

About Eta Aquariid Meteor Shower

The Eta Aquarid meteor shower is one of two annual showers. It is formed when Earth passes through the orbital path of Halley’s Comet.

• Completion of one orbit of Halley’s orbit: Halley’s Comet orbits the Sun approximately every 76 years, and its debris creates the Eta Aquarids when Earth intersects its orbit.
• Discovery of Halley’s Comet: The periodic nature of the appearances of Halley’s Comet was discovered by astronomer Edmond Halley in 1705.
  • Last appearance of Halley’s Comet: Halley’s Comet last appeared in 1986 and is expected to return to the inner solar system in 2061.
  • The Orionids meteor shower: This shower occurs in October and  is also caused by debris from Halley’s Comet.

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• Characteristics:

  • Glowing trails: The Eta Aquariid meteor shower has fast meteors that leave long glowing trails.
    • Speed of movement: It  moves at speeds of around 66 km per second (2.37 lakh kmph) into Earth’s atmosphere.

• Duration and Peak Period:

  • Time duration in a year: The Eta Aquariid Meteor Shower typically runs from around April 21 to May 12 each year.
    • The number of visible meteors remains low until the peak around May 5 or 6.
  • Best Visibility location: These showers are best visible to countries such as Indonesia and Australia in the Southern Hemisphere.
    • shower’s radiant location: Southern Hemisphere observers have a clearer view of the meteors higher in the sky due to the shower’s radiant location.
      • The radiant point of the Eta Aquarid meteors is located within the constellation Aquarius.
        • Observers may find it challenging to view due to its proximity to morning twilight.
      • In the Northern Hemisphere, Eta Aquarid meteors often appear as “Earthgrazers,” long meteors that seem to skim the Earth’s surface.

What Are Comets?

Comets are icy leftovers from when our solar system formed about 4.6 billion years ago.

• Mixture: They consist of a mixture of dust, rocks, and ice.
• Orbital Characteristics of Comets
  • Elliptical orbit: Comets travel around the Sun in highly elliptical orbits.
  • Completion of one orbit: Some comets can take hundreds of thousands of years to complete one orbit of the sun.   
  • Comet Sizes
    • Most comets are about 10 kilometers wide.
    • As comets get closer to the Sun, they heat up and shoot out gases and dust. 
      • This can make their heads bigger than planets.
  • Formation of Tails
    • The released material from comets forms tails that can stretch millions of miles away from the comet.
      • These tails are a characteristic feature of comets when they are closer to the Sun.
• Number of Known Comets
  • Current comets: NASA has identified 3,910 comets to date.
  • However, scientists believe there are billions more comets orbiting beyond Neptune, in regions like the Kuiper Belt and the more distant Oort cloud.

Relationship Between Meteor Showers and Comets

• Meteor showers happen when Earth goes through the dusty trail left by comets in space.
• Visible Streaks: Debris from the comet burns up in Earth’s atmosphere, creating visible streaks. 
  • These visible streaks are known as meteors or shooting stars.
    • This burning also makes a short tail behind the shooting star.

Characteristics of Meteors:

• Meteors: These are tiny bits of dust or rock that burn up when they hit Earth’s atmosphere. Most meteors are really small, like grains of sand, and disappear in the sky.
• Meteorites: Sometimes bigger meteors survive and hit the ground, and then they’re called meteorites.

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Formation of Meteor Showers:

• Meteor showers occur when Earth passes through the orbital plane of a comet, encountering the debris left behind by the comet.
• As Earth moves through this debris field, the sky lights up with small and large meteor tails.

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Context

Recently, The University Grants Commission (UGC) released new guidelines for PhD admissions following expert committee recommendations. 

About New PhD Guidelines

These new PhD guidelines, applicable from the academic session 2024–25, 

• Transition to Common Entrance Test: 
  • The UGC’s move aligns with the National Education Policy 2020, aiming for single common entrance tests at all levels of higher education.
•  PhD admissions will now rely on the National Eligibility Test (NET).
  • Categorization of NET Candidates:  These guidelines will classify NET candidates into three categories from June 2024 onwards.
    • First would be those who are eligible for 
      • Admission to a PhD programme with JRF and 
      • Appointment as an assistant professor. 
    • Second would be those candidates who are eligible for 
      • Admission to a PhD programme without JRF and 
      • Appointment as an assistant professor. 
    • Third would be those candidates who are eligible for admission to a PhD programme only without getting selected for the JRF or being eligible for appointment as an assistant professor.
  • Potential Motive Behind News PhD Guidelines : 
    • To pursue the PhD in any subject irrespective of the subjects of their undergraduate degree. 
    • The provision has been introduced to strengthen the research ecosystem by increasing the pool of PhD candidates. 
    • Moreover, the UGC aims to shatter the perception that a PhD is an ‘elite qualification’.

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UGC’s Vision behind New PhD Guidelines

Unleashing the Full Potential of Graduates into the Mainstream

• Expansion of Eligibility Criteria: 
  • UGC’s decision allows graduates with four-year undergraduate degrees to appear for the National Eligibility Test (NET), thereby broadening the pool of prospective PhD candidates. 
    • Previously, eligibility for both lectureship and PhD programs required a Master’s degree, leading to a more restricted candidate base. 
  • Aim to Dismantle Perceptions of Elitism: 
    • UGC aims to dismantle the perception of PhD as an “elite qualification” by expanding eligibility criteria. 
    • Emphasis shifts towards making higher education more accessible and inclusive..
• Financial Considerations: 
• • The UGC aims to reduce financial burdens on students by replacing multiple entrance tests with a single common test. 
    • This shift seeks to alleviate expenses related to application fees, travel, and boarding, especially for students from rural or semi-urban areas. 

Concerns Raised with New PhD Guidelines 

• Standardization vs. Autonomy : 
  • Debate centers on balancing standardization and university autonomy in academia. 
  • The move towards a single common entrance test aims to streamline admissions but raises concerns about eroding institutional autonomy. 
• Importance of Rigorous Preparation: 
  • Concerns arise regarding the dilution of standards, particularly in conceptual and methodological preparedness. 
  • Elimination of MPhil programs and the reduced emphasis on postgraduate degrees raise questions about maintaining rigor in research.
  • Lack of long-form writing assessments in the NET exam raises doubts about its effectiveness. 
• Financial Implications and Equity Concerns : 
  • While the UGC aims to reduce financial burdens on students, concerns arise about exacerbating socio-economic disparities. 
  • The rise of the coaching industry around NET preparation raises questions about equitable access to higher education. 
• Global Best Practices vs. Local Realities : 
  • Critics highlight a gap between the UGC’s approach and global standards in PhD admissions. 
  • International practices emphasize holistic assessments, including research proposals, CVs, and statements of purpose, which are absent in the UGC’s guidelines. 
• Potential for Further “Elitisation” of Higher Education: 
• • If undergraduate degrees suffice for PhD research, it could lead to further “elitisation” of higher education. 
    • Only students with existing linguistic and academic capital may pursue research, exacerbating existing inequalities. 

Way Forward 

• Call for Publicly-Funded Research Institutes: 
  • The need for more publicly-funded research institutes with better infrastructure and increased fellowships is emphasized. 
  • Such initiatives could enhance opportunities for students while maintaining standards of rigor and mentorship. 
• Focus on the Role of Mentorship and Preparation: 
  • Adequate mentoring and preparation are crucial for students transitioning from undergraduate to PhD levels. 
  • Therefore, The importance of sustained mentoring and preparation periods should be taken into account for ensuring the quality of research. 

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Conclusion

While UGC’s new PhD guidelines aim to democratize access to higher education, concerns persist regarding the potential impact on the elite status of universities and the maintenance of research standards. Therefore, Balancing inclusivity with rigor and ensuring adequate mentorship is crucial for fostering a vibrant and equitable research ecosystem.

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Context

The Madras High Court criticized the students securing admission to postgraduate medical courses in government colleges by signing bonds to serve in public hospitals for two years after their studies.

• However, they later attempt to evade this responsibility.

Madras HC Upholds Doctors Bond Agreement

• Dismissal of Writ Petitions Against Bond Period: It dismissed the writ petitions filed by two doctors challenging their bond period, stating that such an attitude goes against public interest and is deemed unacceptable.

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Ruling by the Madras HC:

• Obligation to Serve Underprivileged: The Court asserted that individuals who received their education at the expense of the underprivileged are not entitled to seek exemption from serving them in government hospitals. 
• Against Medical Ethics: The prime object of the medical profession is to render service to humanity. 
  • Denial of treatment to poor patients in government hospitals despite agreeing to the same, under the bond, goes against the ethos of medical ethics.

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Context

According to Reporters Without Borders (RSF for Reporters sans Frontières), India’s position in the World Press Freedom Index declined from 36.62 to 31.28.

World Press Freedom Index

The World Press Freedom Index is compiled by RSF annually assessing the ability of journalists to work and report freely and independently.

• India’s Ranking in World Press Freedom Index 2024: India’s rank improved from 161 in 2023 to 159 in 2024. However, this rise was primarily due to other countries slipping in their rankings.
  • Scores for India decreased in all categories except for the security indicator in the press freedom questionnaire, which encompasses political context, legal framework, economic context, sociocultural context, and security.
• Ranking of Indian Neighbors: Pakistan ranked 152, Sri Lanka at 15, Nepal at 74 and Maldives at 106. 
  • Afghanistan is at 178, Bangladesh at 165, and Myanmar at 171.
• Asia-Pacific Region: It is the world’s second most difficult region for practicing journalism.
  • Five countries are among the world’s ten most dangerous countries for journalism. Myanmar (171st), China (172nd), North Korea (177th), Vietnam (174th) and Afghanistan (178th). 
• Middle East and North Africa: The situation is “very serious” in nearly half of the countries. 
  • The United Arab Emirates joins the eight other countries in the red zone on the map: Yemen, Saudi Arabia, Iran, Palestine, Iraq, Bahrain, Syria and Egypt. 
  • Palestine, occupied and under bombardment by the Israeli army, and the deadliest country for journalists, is at the bottom of the Index. 
• Countries with Good Press Freedom: The countries where press freedom is “good” are all in Europe, and more specifically within the European Union, which has adopted its first media freedom law (EMFA). 
  • Norway(1st) is followed by Denmark (2nd) and Sweden (3rd).

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Concern Raised by the World Press Freedom Index 2024

• Global Press Freedoms Under Threat: Political authorities, who are supposed to safeguard press freedom, are increasingly becoming threats to it. 
  • Press freedoms have experienced a decline, with an average decrease of 7.6 points globally.
• Use of AI for Election Manipulation: Increasing use of artificial intelligence(AI) is raising concerns, particularly its application in propagating disinformation for political motives. 
  • Deep Fakes are now being used to influence the course of elections.

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Context

2024 is an election year across the world and newly elected governments need to focus on the all-important sustainability issue.

• The United Nations summit on Sustainable Development Goals (SDG) was held in New York (September 18-19) and assessed progress towards achieving the SDGs. 

Sustainable Development Goals: The Agenda-2030

• Adoption: Sustainable Development Goals (SDGs) were adopted by the UN General Assembly in 2015.
• Focus: It identified 17 Sustainable Development Goals with 169 specific targets to be achieved by 2030. 
• Mandate: The programme is internationally non-binding, but all countries have committed to work towards these goals as transiting to sustainable development is a common global endeavor.

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Arising Concerns

• Slow Progress: According to available reports, progress is off track. 
  • From 2015 to 2019, there were some improvements, although insufficient to achieve the goals. 
  • The outbreak of the COVID-19 pandemic and other global crises have virtually slowed down the progress. 
  • World leaders agreed to step-up efforts to deliver SDGs by 2030. But how far these global pronouncements are operative at the ground level remains a big question.
• Less Attention: Little or no attention towards the goals related to the environment and biodiversity (including responsible consumption and production, climate action, life below water, and life on land) is a matter of great concern. 
  • The present trend, if it continues, will lead to accelerated environmental degradation and the purpose of transiting towards sustainability defeated.

Actions Required

• The UN Sustainable Development Goals Report, 2023 identified five key areas for urgent action: 
  • Commitment of governments to seven years of accelerated, sustained and transformative actions to deliver on the promises of SDGs.
  • Concrete, integrated and targeted government policies and actions to eradicate poverty, reduce inequality and to end the war on nature with a focus on advancing the rights of women and girls and empowering the most vulnerable.
  • Strengthening of national and subnational capacity, accountability, and public institutions to deliver accelerated progress.
  • Recommitment of the international community to deliver and mobilise resources to assist developing nations.
  • Continued strengthening of the UN development system.
• Deliberation: A team of 64 scholars analysed 3,000 studies, within national and global governance to address pressing challenges of poverty eradication, social justice and environmental protection. 
  • The results were published in the journal, Nature Sustainability, September 2022 issue, calling for wide deliberations, especially in the context of Agenda 2030 implementation.
  • Need to focus on five dimensions: Global governance, domestic political systems, the integration and coherence of institutions and policies, the inclusiveness of governance from local to global level, and the protection of ecological integrity. 
  • They concluded that ‘the SDGs thus far have had mainly discursive effects but also have led to some isolated normative and institutional reforms.
  • Overall assessment indicates that although there are some limited effects of the SDGs, they are not a transformative force in and of themselves.
• The UN report, ‘Future is Now’ (2019), provides some guidelines for action:
  • Systemic Approach: It emphasised that ‘The true transformative potential of the 2030 Agenda can be realised through a systemic approach that helps identify, manage trade-offs while maximising co-benefits. 
    • By co-benefit the stress is on the activities that, while addressing one SDG, will help address others at the same time. 
  • Local Solutions: The report suggests adopting locally best suited entry points following regional and national priorities and applying four levers — governance, economy and finance, individual and collective action, and science and technology to propel actions.
  • Actors from these levers must develop partnership and establish novel collaboration to design and rapidly implement integrated pathways to sustainable development corresponding to the specific needs and priorities of the country. 
  • Brundtland Report: The famous Brundtland report, “Our Common Future”, expressed the hope that politicians and policymakers will take note of the suggestions advanced in this report and steer the world towards sustainable development.

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Context

Recently, the Supreme Court has constituted a nine-judge Bench to interpret the Directive Principles of State Policy (DPSP) with respect to ownership and control of material resources.

Redistribution of Wealth and Mumbai ‘Cessed’ Properties Case

The debate surrounding the redistribution of wealth has gained prominence during the ongoing election campaign. 

• Cessed Properties Dispute: The case currently before the SC arose out of a challenge to the 1986 amendment to the Maharashtra Housing and Area Development Act, 1976 (MHADA) by owners of ‘cessed’ properties in Mumbai.

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Redistribution of Wealth

Redistribution of Wealth is the transfer of wealth from one individual to another through a social mechanism such as taxation, charity, or public services. 

• It means those earning more pay higher tax. 
• Any assistance the Indian government provides to poor people is a form of redistribution. 
• • The tax revenue is used to fund welfare measures, subsidies and direct cash transfers to the needy. State governments levy property tax. 

• • • In the past, India had estate duty (a form of inheritance tax), wealth tax and gift tax. They were abolished as the cost of administering them was more than revenue generated.
• Aim: To bridge the inequality gap between members of a society.

Constitutional Provisions for Wealth Redistribution in India

• The Preamble to the Constitution: It aims to secure all citizens’ social and economic justice, liberty and equality. 
• Fundamental Rights: Part III of the Indian Constitution lists down the fundamental rights that guarantee liberty and equality.
• Directive Principles of State Policy (DPSP): Part IV of the Indian Constitution contains the DPSP. Article 39(b) and (c) in Part IV contain principles that are aimed at securing economic justice. 
  • They provide that ownership and control of material resources of the society should be distributed to serve the common good and that the operation of the economic system does not result in concentration of wealth to the common detriment.

Right to Property in India

• Before Independence: The Constitution originally guaranteed the right to property as a fundamental right under Article 19(1)(f). 
  • It is provided under Article 31 that the state shall pay compensation in case of acquisition of private property. 
• After Independence: The government had to acquire the rights in such estates for carrying out land reforms and construction of public assets.
  • Considering the inadequate resources with the government and in order to provide greater flexibility in acquiring land for public welfare, various amendments were carried out curtailing the right to property. 
• Exceptions under Articles 31A, 31B and 31C of the Indian Constitution:
  • Article 31 A: It was inserted in the Indian Constitution by 1st Amendment Act, 1951. It provided that laws made for acquisition of states etc. shall not be void on the ground that it violated fundamental rights, including right to property.
  • Article 31 B: It was inserted in the Indian Constitution by 1st Amendment Act, 1951. It made laws placed under the ninth schedule to be immune from judicial review on the grounds of violation of fundamental rights. 
    • However, in the IR Coelho case (2007), the Supreme Court stated that protection of Schedule IX will not be available to those laws which violate elements of the basic structure doctrine from April 24, 1973 (date of the judgment of Kesavananda Bharati case).
  • Article 31 C: It was inserted in the Indian Constitution by 25th Amendment Act, 1971. It provided primacy to the DPSP under Articles 39 (b) and (c). Laws made to fulfill these principles shall not be void on the ground that it violated fundamental rights, including the right to property.
• A Constitutional & Legal Right: By the 44th Amendment Act, 1978 the right to property as a fundamental right was omitted and made it a constitutional right under Article 300A. 
  • Any law to acquire private property by the state should be only for a public purpose and provide for adequate compensation.

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• Rulings by the Supreme Court on Right to Property:
  • Golak Nath Case (1967): The Supreme Court held that fundamental rights cannot be abridged or diluted to implement DPSP. 
  • Kesavananda Bharati case (1973): A 13-judge Bench of the Supreme Court upheld the validity of Article 31C but made it subject to judicial review. 
  • State of Karnataka vs Shri Ranganatha Reddy (1977): This case saw a seven-judge Bench, by a 4:3 majority, holding that privately owned resources did not fall within the ambit of “material resources of the community”.
    • However, it was Justice Krishna Iyer’s minority opinion which would become influential in years to come.
    • Justice Iyer’s Opinion: Justice Iyer had held that privately owned resources must also be considered material resources of the community. 
    • To exclude ownership of private resources from the coils of Article 39(b) is to cipherise (make hidden) its very purpose of redistribution the socialist way.
  • Sanjeev Coke Manufacturing Company vs Bharat Coking Coal (1983): In this case, the interpretation of Article 39(b) offered by Justice Iyer was affirmed by a 5-judge Bench. 
    • The court upheld central legislation that nationalised coal mines and their respective coke oven plants relying on what Justice Iyer had ruled. 
  • Mafatlal Industries Ltd vs Union of India (1996): This case also relied on the interpretation of Article 39(b) offered by Justice Iyer and the Bench in Sanjeev Coke Manufacturing was affirmed by a 9-judge Bench.
    • This case held that “the words ‘material resources’ occuring in Article 39 (b) will take in natural or physical resources and also movable or immovable property and it would include all private and public sources of meeting material needs, and not merely confined to public possessions.
  • Minerva Mills Case (1980): The Supreme Court ruled that the Constitution exists on a harmonious balance between fundamental rights and DPSP.

Economic Policy of the Indian Government on Wealth Redistribution

• Socialist Model: 
  • Phase: Indian governments in the first four decades after independence followed a “socialist model” of economy. 
  • Objective: To reduce inequality and redistribute wealth among the poorer sections who constituted the majority of the population. 
    • There were many laws made by the Centre and States to acquire land from zamindars and big landlords for public purposes. 
  • Changes Brought: The economic policies resulted in the nationalization of banking and insurance, extremely high rates of direct taxes (even up to 97%), estate duty on inheritance, tax on wealth etc. 
  • There were also regulations that placed restrictions on growth of private enterprise like The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act). 
  • Concern: Such measures stifled growth and also resulted in the concealment of income/wealth. 
    • Taxes like estate duty and wealth tax generated revenue that was much less than the cost incurred in administering them.
• Market-driven Economy: 
  • Beginning: The nineties saw the country move from a closed economy towards liberalisation, globalisation and privatisation. 
  • Objective: A new industrial policy was unveiled in July 1991 with the objective of empowering market forces, improving efficiency and rectifying deficiencies in the country’s industrial structure. 
  • Changes Brought: The MRTP Act was repealed and replaced with the Competition Act, 2002 and income tax rates were reduced considerably. 
    • Estate duty was abolished in 1985 and wealth tax in 2016.
  • Significance: The market driven economy has resulted in additional resources for the government that has helped in bringing people out of abject poverty. 
  • Concern: This economic system, nonetheless, has also resulted in growing inequality. 
    • A report by the World Inequality Lab states that the top 10% of the country’s population have a share of 65% and 57% of the wealth and income respectively as of 2022-23. 

Need for Redistribution of Wealth in India

• To Combat Rising Inequality: According to a study published by the World Inequality Lab, the richest 1% of Indians now own as much as 40% of the country’s wealth. 
  • Inequalities will not close on their own and need specific policy interventions such as a super tax on billionaires and millionaires. 
    • Also, the wealth of the rich must be taxed.
    • Economists such as Thomas Piketty have called for greater redistribution of wealth.
• To Achieve Inclusive Growth: According to a report by the State Bank of India (SBI), India has witnessed a significant fall in inequality over the last decade. The report claims that the Gini coefficient has fallen from 0.472 in 2014-15 to 0.402 in 2022-23. 
  • A fall of almost 15% in the Gini coefficient indicates a significant reduction in inequality.

• Provide Opportunities to All: The objectives of income redistribution are to increase economic stability and opportunity for the less wealthy members of society and thus usually include the funding of public services for the welfare of the weaker sections of the society and further led to the inclusive growth.
  • By helping equalise inter-generational wealth distribution in the long run, inheritance tax enhances equality of opportunity and social mobility.
  • Inheritance tax also increases horizontal equity in the fiscal sphere.
• To Address Social Issues and ensure Social Justice: Property is a scarce resource that needs wise redistribution of wealth enables the government to address social issues like poverty, homelessness, or environmental degradation.
  • Redistribution of the wealth and income is in line with the principles of Preamble of the Constitution which strives to ensure social justice.

Challenges to Redistribution of Wealth in India

• Impact on Economy & Growth: Redistribution of wealth will smother innovation and hit productivity eventually causing the economy to slow. 
  • The excessive taxation and redistribution can stifle economic incentives, discourage investment and entrepreneurship, and undermine economic efficiency and productivity.
  • If profits of capitalists are to be taxed to redistribute wealth to the poor, big businesses may escape by moving politically to shift the burden of taxation onto small or medium businesses. 
  • Alternatively, all businesses may unite to shift the burden of such redistributive taxation onto higher-paid employees’ wages and salaries, and away from business profits.
• Political Resistance: Redistributive policies face resistance from powerful interest groups and vested interests, including wealthy individuals and corporations. 
  • Politics typically becomes the arena where demonisations and conflicts over redistribution occur. 
  • Those at risk of being deprived due to redistributions aim either to oppose redistribution or else to escape it. If the opposition is impossible or difficult, escape is the chosen strategy.
  • Example: Opposition by the dominant landholding classes to the Land reform policy in India.
• Large Informal Economy: A high informal economy of India makes it challenging to effectively address income inequality for the redistribution of wealth, which is characterized by low wages, lack of job security, and limited access to social protection. 
  • As per World Economics, the size of India’s informal economy is estimated to be 38.9% which represents approximately $4,228 billion in gross domestic product (GDP) at purchasing power parity (PPP)  levels.
• Operational Challenges: India’s institutional capacity to implement redistributive policies effectively is limited by bureaucratic inefficiencies, inadequate infrastructure, and resource constraints such as corruption and leakages in the welfare schemes.
• Existence of Social Inequalities: Recipients of redistributions face parallel political problems of whom to target for contributing to wealth redistribution. 
  • In India, there are deep-rooted caste, gender, religious, and ethnic inequalities that hinder the effectiveness of redistributive policies, as marginalized groups face barriers in accessing resources and opportunities.

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Strategies for Equitable Wealth Distribution and Economic Inclusion

• Responsibility of Government: Growing inequality is a worldwide problem of a liberalized open-market economic system. It is the responsibility of the government to protect the interest of the poorer classes who are most dependent on the state machinery for their livelihood. 
  • The benefits of growth should reach all sections, especially the marginalized. The policies may vary and need to be framed after adequate debate in line with current economic models. 
    • Example: Resource based Development Policies.
• Appropriate Inclusion of Inheritance Tax: For redistribution of wealth in India, it needs to be introduced. 
  • Example: An inheritance tax of 10-15% similar to the Philippines, Taiwan and Thailand could create a financial base of wealth redistribution.
• Strengthening of Institutional Capacity & Governance: They need to be strengthened to ensure the efficient delivery of welfare services and enhance the welfare of the society. 
• Consensus before Application: Socio-Political consensus must be created among all associated stakeholders on progressive taxation and welfare programs to address income inequality and promote equitable wealth distribution.
• Need for a Level-playing Field: Social justice demands a level-playing field for all in society. That requires high-quality education and health for all and a generation of productive employment for all. 
  • For employment generation, education, and health infrastructure, resources are required. These can be obtained via direct taxation of income and wealth.
• Democratize the Decision: Decision about democratizing the distributing wealth is required as it emerges from production. This can be accomplished by democratizing the enterprise. Each worker has one vote, and all basic workplace issues are decided by majority vote after a free and open debate. 
• Alternative Approaches: Instead of direct wealth redistribution, expanding access to education, promoting economic growth, and fostering a conducive business environment are required.
  • The policies aimed at enhancing human capital, promoting innovation, and reducing barriers to entrepreneurship can generate inclusive prosperity and empower individuals to improve their economic circumstances.

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