News & Editorial Analysis 18 May 2023

The Hindu News Analysis

1 – Delhi Government vs LG Case:

GS II

Topic à Federalism related issues

Context:

Except for public order, police, and land, the National Capital Territory of Delhi (NCTD) administrative functions are entirely under the state government of Delhi’s control, according to the Supreme Court of India.

Background Information:

Since 2015, a legal dispute over control of Delhi’s “services” has been going on between the Delhi administration and the Lieutenant Governor. A five-judge Constitution Bench has now reached a decision on the question of control and whether personnel assigned to Delhi come under the administrative supervision of the Delhi government or Delhi LG, following a split decision from the Supreme Court in 2019. The constitutionality of the Government of National Capital Territory of Delhi (Amendment) Act 2021, which designated the Lieutenant Governor as the “government” in any bill passed by the Delhi Legislative Assembly, was another issue in the case.

What is the Supreme Court’s ruling?

Verdict:

Authority of LG:

Apart from matters of public order, law enforcement, and land, the Lt. Governor must abide by Delhi’s government’s decision about services.

Powers of the Central Government According to Article 239AA, the Centre had exclusive legislative and executive power over “services” related to public order, land, and police.

In UT, federalism:

As far as UTs are concerned, the Centre has maintained that the Constitution is a federal document with a strong unitary bias.

The SC disagreed, stating that Indian federalism is not unitary and that any further growth in the Union’s authority would be in violation of the Constitutional framework.

The elected government’s authority:

The idea of the triple chain of responsibility (political, administrative, and public accountability) will become obsolete if a democratically elected government is not given the authority to supervise the officers.

Collective responsibility principleIt includes the duty of officers, who in turn answer to ministers. The entire concept of collective responsibility is impacted if the officers stop reporting to the ministers or disobey their orders.

About Article 239 AA:

Article 239 AA was added to the Constitution by the Constitution (69th Amendment) Act of 1991, giving Delhi special status and creating an Administrator and Legislative Assembly. With the exception of the police, public order, and land, the Assembly has the authority to enact legislation for the NCT of Delhi. With dual control, the L-G has the option to act with the support and counsel of the Council of Ministers or to bring a difference of opinion before the President. A source of discontent has been this power struggle between the elected administration and the L-G.

How are UTs carried out?

The President of India administers the Union Territories (UTs) through a designated administrator, who acts as the President’s representative and has administrative authority within the UT. The Constitution and regulations passed by the Parliament regulate the judiciary in the UTs. The administrator’s authority varies by UT; in some, like Delhi and Puducherry, it includes the power to enact laws and regulations; in others, it is restricted to giving recommendations to the elected government.

Unique clause for Delhi UT:

For several UTs with a legislative assembly and a Council of Ministers led by a Chief Minister, including Puducherry, Delhi, and Jammu and Kashmir (yet to be formed), special provisions have been provided. Insofar as these concerns are relevant to the UT, the legislative assembly of these UTs has the authority to enact legislation with regard to the items included in List II or List III in the Seventh Schedule of the Constitution.

Some items on List II, such as public order, police, and land, do not fall under the purview of the legislative authority of the Delhi legislative assembly.

Source à The Hindu

2 – PoSH Act:

GS I

Topic à Women Empowerment

Context:

The Protection of Women from Sexual Harassment (PoSH) Act has been implemented, and the Indian Supreme Court has expressed worry over the “sorry state of affairs” in this regard.

Important points raised by the Supreme Court in relation to the application of the PoSH Act:

Problem Highlighted:

Implementation Uncertainty:

Uncertainty over who to contact in the event of workplace sexual harassment.

Reluctance:

Lack of faith in the PoSH method and its results. Women who experience sexual harassment at work are hesitant to report the behaviour.

Insulting remarks:

The success of the Act is hampered by a hostile, insensitive, and unresponsive workplace atmosphere towards female employees.

ICC formation non-compliance:

For instance, just 16 of the country’s 30 national sports federations had established the Internal Complaints Committees (ICCs) required by the 2013 Act.

Fear of Leaving the House:

Women will be afraid to leave their homes in order to earn a living in a dignified manner and will be exploited to the fullest if authorities, management, and employers cannot guarantee them a safe and secure workplace.

Process of InquiryInquiry procedures have frequently been completed in a “hurry” without adhering to the standards of natural justice.

Recommendations:

The Supreme Court has ordered the Union, States, and UTs to conduct an 8-week exercise to determine if Ministries, Departments, government agencies, etc. have established Internal Complaints Committees (ICCs), Local Committees (LCs), and Internal Committees (ICs) in accordance with the Act.

These organisations were told to post information about their respective committees on their websites.

Previously:

The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redress) Act of 2013 has been strictly enforced in coaching centres and educational institutions, according to a request made to all states by the National Commission for Women (NCW).

Source à The Hindu

3 – LIBOR:

GS III

Topic à Indian Economy

Context:

Banks and other organisations under RBI regulation have been urged by the Reserve Bank of India (RBI) to take action to ensure a full transition away from the London Interbank Offered Rate (LIBOR).

Explanation:

LIBOR is what?

In the international interbank market for short-term loans, it serves as a benchmark interest rate at which large international banks lend to one another.

With maturities ranging from Overnight to One Year, it provides short-term loans.

It serves as the foundation for mortgages, student loans, credit cards, derivatives, and other financial products in addition to corporate and government bonds.

How is LIBOR calculated?

managed by ICE Benchmark Administration (IBA), which is subject to FCA regulation in the UK.

It has seven different maturity periods and is based on five different currencies: the US dollar, the euro, the British pound, the Japanese yen, and the Swiss franc.

Why is LIBOR being discontinued?

Rate-fixing allegations in 2012 harmed LIBOR’s reputation.

Submissions made by the panel banks were allegedly manipulated or inaccurately projected market strength.

A number of changes were made following the 2012 Wheatley Review to lessen subjective input and transform LIBOR into a transaction-based benchmark.

The volume of transactions in the short-term wholesale Funding Market did, however, gradually decline in spite of the changes made. As a result, LIBOR became more susceptible to price fluctuations that could lead to systemic hazards and short-term market illiquidity.

What other reference rates are there?

Worldwide, the Secured Overnight Financing Rate (SOFR) is frequently used in place of LIBOR.

What additional difficulties arise when moving away from LIBOR?

The financial markets may experience significant volatility as the deadline approaches. The RBI has released two circulars outlining the transition’s timeline and the necessary preparations.

Source à The Hindu

4 – Oil Pipelines:

GS III

Topic à Infrastructure related issues

Context:

India is one of the top five nations producing oil pipelines, both proposed and under construction, according to a study by Global Energy Monitor.

Findings:

Size of the Pipeline:

India is currently building a 1,630 km long oil transmission pipeline, placing it second internationally in the category of pipelines that are being built, and it has also planned pipelines that would be 1,194 km long, placing it in tenth place.

The longest pipeline:

The New Mundra-Panipat Oil Pipeline and the Paradip Numaligarh Crude Pipeline, two of the world’s longest oil pipelines, are both now under development.

Leading Nations:

Tanzania, the United States, India, Iraq, and Iran.

Advantages of pipelines:

more effective at moving oil and gas than traditional shipments; takes less time to build a pipeline; transit losses are small.

Concerns:

Leakage, eviction, and disturbance of local residents’ livelihoods are all consequences of its construction.

Governmental Programmes:

City Gas Distribution Project, One Nation & One Gas Grid, and Pradhan Mantri Urja Ganga Project.

About Global Energy Monitor:

A non-governmental organisation called Global Energy Monitor, established in 2008 in San Francisco, keeps track of all the world’s fossil fuel and renewable energy projects. Governments, the media, and academic academics frequently use GEM’s data and publications on energy trends and its information sharing in support of renewable energy.

Source à The Hindu

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The Hindu Editorial Analysis

EDITORIAL ANALYSIS à18 MAY 2023 à THE HINDU

TRIPPING TRADE:

Context:

The value of Indian exports of products fell to $34.6 billion in April, the lowest level since October of last year, and the value of imports fell by a sharper 14% to a 15-month low of under $50 billion, resulting in a trade deficit.

Implications:

Exports and imports have both experienced a deepening of the pace of recession. During the same month, imports fell by 8.2% and merchandise exports fell by 8.8%. These numbers reflect declines in exports and imports of 6.6% and 3.6%, respectively, in January.

Trade Deficit Shrinks: As a result of the decline, the trade deficit shrank even more in February, falling to $17.4 billion.

Impact on Export Destinations: According to the Nomura analysis, India’s exports to the US, China, Japan, and the rest of Asia have experienced the biggest drops.

Overall Growth: The overall growth for the year to date (April to February) was 7.55% thanks to the stronger export growth in the first half of the fiscal year.

Industries Affected:

the exports side:

Data that has been broken down shows that core exports, which do not include shipments of gold, diamonds, or jewellery, have been declining.

February saw declines in 16 of the top 30 export categories, including labor-intensive categories like leather and textiles.

Exports of goods other than oil, diamonds, and jewellery are practically at the same level as in 2017.

Regarding imports:

Core imports, which do not include items like gold, jewels, or jewellery, have also decreased.

This suggests that imports of consumer and investment products have slowed, which is a sign of declining domestic demand.

Trade shortfall:

A country has a trade imbalance when its imports cost more than its exports by a certain percentage. It is also referred to as a negative trade balance and is one method of evaluating global commerce.

By deducting the total value of a nation’s imports from the total value of its exports, a trade deficit can be determined.

Effects of a Trade Deficit That Could Happen:

Lower prices: A nation may have a trade deficit because it is less expensive to buy things abroad than to create them domestically. This suggests that consumer products and service prices could go down.

Currency depreciation: A trade deficit may cause a nation’s currency to depreciate.

Deflation: When a nation has a trade imbalance, some of its currency is sent elsewhere. Deflation is a condition when there is less demand, which results in falling prices.

Changes in employment: Unemployment may rise if a nation imports more than it exports. The job market for automobile manufacturing, for instance, will suffer if a nation switches from producing vehicles to importing them from foreign automakers.

GDP decline: The trade deficit is one of the variables used to determine a nation’s Gross Domestic Product (GDP), which is a gauge of the size of its economy. The GDP declines as the trade deficit widens.

Conclusion:

A little trade imbalance is essential for the nation’s development since it spurs demand, consumption, and economic growth. However, an unregulated trade deficit can result in an overreliance on imports for the economy, and any slight changes to the geopolitical environment or the supply chain would have a significant impact and induce uncontrollable inflation.

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The Indian Express Editorial Analysis

EDITORIAL ANALYSIS à18 MAY 2023 à THE INDIAN EXPRESS

SARKAR AND BAZAAR:

Context:

Recently, the Centre ordered the participation of food delivery services and e-commerce firms in the government-sponsored Open Network for Digital Commerce (ONDC).

About the ONDC:

The Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India formed the Open Network for Digital Commerce (ONDC), a private non-profit organisation, under the Companies Act 2013 to foster open e-commerce.

Protean eGov Technologies Limited (formerly NSDL e-Governance Infrastructure Limited) and the Quality Council of India provided the initial funding for its incorporation on December 31, 2021.

It is built utilising an open-sourced process that is independent of any one platform, employing open specs and open network protocols.

The ONDC is a set of specifications intended to promote open communication and connectivity between consumers, technological platforms, and retailers. It is not an application, a middleman, or software.

Why ONDC is required:

There was a “huge disconnect” between the size of internet demand and the local retail ecosystem’s capacity to engage during the Covid-19 outbreak.

Digital Divide: Local small businesses were unable to utilise the internet.

Due to the platform-centric strategy, there are not enough equal playing fields in e-commerce.

A small number of players control the market, and they are being investigated for unfair trade practises across numerous nations.

Goals & Purpose of ONDC:

The purpose of the ONDC is to support open networks for all facets of the trade of goods and services across digital or electronic networks.

Attempting to democratise digital commerce by switching it from a platform-centric paradigm to an open-network, it is a first-of-its-kind worldwide endeavour.

Its formation was motivated by companies like Amazon and Flipkart’s desire to dominate the US$810 billion domestic retail sector.

The ONDC network is made up of five different categories of network participants who collaborate:

Apps for consumers: These are known as buyer apps. Their primary duty is to link buyers and sellers across the ONDC network.

Seller Apps: In order to connect with every network user, sellers and service providers use seller apps.

TSPs: On both the buyer and seller sides of end-user facing apps, TSPs serve as the technological foundation. They offer services such catalogue digitization, network analytics, vertical integration of CRM and other applications, and accounting.

Providers of Logistics: Providers of Logistics accept delivery requests from vendors and carry them out. They serve as the connecting link between buyers and sellers in the real world.

Online Dispute Resolution (ODR) Providers: ODRs take on the responsibility of resolving disputes, refunds, and returns in a world where no single central authority is in control of governance.

Existence and Future Prospects of Indian Retail Market:

In India, e-commerce accounts for about 6% of all retail sales.

Over 90% of India’s business is conducted by its 63 million small firms.

The Indian e-commerce market is expanding quickly and is projected to increase from its current $63 billion value to $163 billion over the next three years.

According to certain (conservative) projections, the ONDC Network might boost India’s economy by 60–80 billion USD by 2030.

With more than 500 million users and 15 million sellers, ONDC is a population-scale network where more than $100 billion in sales are anticipated.

Benefits of ONDC:

The action was praised as the “UPI-moment” of e-commerce, helping to build India’s digital public infrastructure.

In order to prevent Big Tech Companies from breaking the Consumer Protection (E-Commerce) (Amendment) Rules, 2021, ONDC was created.

By incorporating them into an open-source, decentralised network, where data portability breaks down data silos and data interoperability fosters innovation, it will prevent the consolidation of market power.

Providing solace to the community of traders in India who have been uneasy due to the growth of e-commerce driven by foreign capital.

The ONDC is open to anyone and is not a direct rival to any e-commerce portal. It will enable all participants in the market to coexist.

For tier-2 and tier-3 cities, it will increase eCommerce accessibility.

It will enable MSMEs to offer same-day delivery alternatives to a wider audience.

technological independence through a digital infrastructure that is both unique to India and a benchmark for the rest of the globe.

The ONDC Network is a piece of digital public infrastructure primarily designed for India, whereas the ONDC API Specifications are a digital public good for the entire world.

Make sure there is adequate market competition, price, and subscriber base access, producing value for users.

It will level the playing field for small retailers, especially, and lower the entry and discovery barriers online.

It will support the adoption of an open digital environment in important industries.

The majority of investment firms have started enquiring about the ONDC strategy of the start-ups they are looking to invest in.

Problems & Concerns:

It is far more complicated than UPI because the UPI loop shuts after a transaction is finished. However, the loop is substantially longer with ONDC because you must purchase an offline delivery as well as a system for returns and grievance redressal.

Since banks and financial institutions are the stakeholders in ONDC as opposed to the government, which has constantly backed UPI, it is unlikely that it would get the same kind of financial or policy support.

Sellers in marketplace businesses must be autonomous, as stipulated by the FDI policy for e-commerce. A marketplace model like those of Amazon and Flipkart cannot join a network like ONDC without the support of vendors.

Other significant companies, including Amazon and Swiggy, have so far opted to refrain.

Additionally, the goal of democratising e-commerce may not be achieved because customers are more likely to patronise well-known businesses than local vendors.

Many businesses are not enlisting their current clientele, which will defeat the purpose of inclusion.

Some competitors, including Flipkart and Zomato, are making efforts to establish step-down subsidiaries.

There are questions about whether a government-backed organisation can match the effectiveness of a streamlined e-commerce operation with a service interface that has many moving elements, from taking orders to delivering items to handling returns to resolving complaints.

Due to a monopoly-like structure in many e-commerce domains, it could result in margin compression.

Actions taken:

The Open Network for Digital Commerce (ONDC) advisory council was established to standardise procedures, encourage supplier engagement, and increase logistical efficiency.

As part of its intentions to expand into industries like electronics, fashion, and others, ONDC is bringing on partners on both the buyer and seller side. This month, it hopes to be in 75 cities.

SellerApp and Yes Bank collaborated to make ONDC implementation easier.

If the complaint is not resolved within 7 days, ONDC will assign a Grievance Redressal Officer (GRO) and escalate it to an ODR like Presolv360.

The ONDC will be in conformity with the Information Technology Act of 2000 and built to adhere to the upcoming personal data protection legislation.

The government will create a separate e-commerce regulatory body, similar to Sebi.

Steps to Take:

Tech, Governance, and Community, the three “layers” of an open digital ecosystem, offer a helpful conceptual framework for thinking about adoption and security measures.

The “tech layer” needs to be decentralised and kept to a minimum.

If at all possible, the government should limit its involvement to promoting open access standards and protocols and assisting in their organic adoption.

The platform should be created using “privacy by design” principles, if it is ever constructed.

To provide technical safeguards that cannot be overturned without active consent, tools like blockchain could be deployed.

This has a “governance layer” that should ease concerns among businesses about overreaching government involvement in online commerce.

Any implementation of standards or technology should be accompanied by legislation or regulations outlining the project’s parameters.

Finally, a “community layer” might encourage a process that is genuinely inclusive and interactive. Making the public and civil society active participants can help achieve this.

For instance, making the minutes or recordings of this committee’s meetings available to the public and requesting widespread input on the proposal’s draughts.

After the framework is put into place, guaranteeing prompt and timely redress of complaints will aid in fostering systemic trust.

Create optional “reference applications” and other financial or non-financial incentives to encourage the use of ONDC.

The government sponsored the rollout of BHIM as a reference app and provided cash incentives through a lottery programme to encourage early adoption, which are lessons that may be derived from the adoption of UPI.

Conclusion:

The ONDC represents a singular fusion of business, policy, and technology. The pandemic-driven push for digitization and the lessons learned from UPI gave rise to ONDC, which has the potential to be the next great startup catalyst. By increasing its GDP, India may greatly advance towards its objective of having a $5 trillion economy by 2024. The open-source movement’s guiding principles—transparency, cooperation, frequent early releases, inclusive meritocracy, and community—must be upheld. By fostering startups, employment, and a competitive market, it will also support the growth of MSMEs, the retail sector, and a higher standard of life for all.