27 June 2023 : The Hindu Editorial
The Hindu Editorial
27-June-2023
Daily Current Affairs For UPSC ,The Hindu Editorial Summary
1. A grand revival: on India-Egypt ties.
Topic: GS2 – International relations.
Context:
- India and Egypt have decided to upgrade their ties to a Strategic Partnership during Prime Minister Narendra Modi’s meeting with Egypt President Abdel Fattah El-Sisi.
More about India – Egypt relations:
- India and Egypt signed a Friendship Treaty in 1955 and were founders of the Non-Aligned Movement and instrumental in the G-77 grouping.
- They had similar positions on the Ukraine war, refusing to criticize Russia’s actions but calling for a diplomatic resolution.
- India’s decision to supply wheat to Egypt last year, amid a blockade on exports from Russia and Ukraine, garnered goodwill.
- The two countries are pursuing closer cooperation in green energy, pharmaceuticals, defence, and have signed MoUs in various fields.
- President El-Sisi conferred Egypt’s highest State Honour, “The Order of The Nile,” on Prime Minister Modi.
- Both leaders discussed multilateral issues, India’s ties in Egypt’s neighbourhood, food and energy security, and cooperation with the Global South.
- Egypt joined the New Development Bank set up by BRICS and seeks India’s support for membership in the group.
- The closer relationship between India and Egypt focuses on future economies and autonomous foreign policies.
Source: https://www.thehindu.com/opinion/editorial/a-grand-revival-on-india-egypt-ties/article67012330.ece
Note: for more details on this issue, refer The Hindu editorial – 24 June 2023.
2. Reduced ceiling, increased anger.
Topic: GS3 – Economy.
Context:
- Kerala’s open market borrowing limit has become a subject of political contention between the CPI(M)-led LDF government and the Centre.
- The Kerala Finance Minister criticized the Centre for drastically reducing the borrowing limit without providing a valid reason, describing it as an attempt to financially suffocate the state.
What is the issue?
- The dispute arose when the Union Finance Ministry communicated a borrowing limit of ₹15,390 crore, lower than the state’s projections.
- The Kerala government argued that it was eligible to borrow ₹32,442 crore, equivalent to 3% of GSDP, based on Finance Commission recommendations.
- The Centre later clarified that the open market borrowing limit for 2023-24 was set at ₹20,521 crore, with ₹15,390 crore permitted for the first nine months of the fiscal year.
- The Finance Minister of Kerala blamed the Centre for the lack of explanation and detailed breakdown of the borrowing space.
- The Kerala government indicated that Kerala intends to approach the Supreme Court, considering the matter as an important political question regarding the state’s fiscal rights.
- Kerala’s open market borrowing has been a subject of debate, with concerns raised by the Comptroller and Auditor General of India regarding off-budget borrowings.
- The Centre treated these borrowings as direct liabilities, resulting in deductions from the state’s borrowing limit.
- The matter has escalated tensions between Centre and Kerala government.
Importance of open market borrowing for state governments:
- Financial Autonomy: Open market borrowing allows state governments to exercise financial autonomy by raising funds from the market. It provides them with the flexibility to meet their financial requirements independently.
- Infrastructure Development: State governments often need significant funds to invest in infrastructure development projects such as roads, bridges, schools, hospitals, and other public facilities. Open market borrowing enables them to access capital for these projects, promoting economic growth and improving the quality of life for citizens.
- Budgetary Flexibility: Open market borrowing allows state governments to bridge the gap between revenue inflows and expenditure needs. It provides them with additional resources to manage their budgetary requirements effectively.
- Meeting Revenue Shortfalls: State governments may face revenue shortfalls due to various factors such as economic slowdown, natural disasters, or unforeseen circumstances. Open market borrowing offers a mechanism to fill these gaps and maintain fiscal stability.
- Developmental Initiatives: State governments can utilize open market borrowing to support developmental initiatives in sectors like healthcare, education, agriculture, industry, and social welfare. These initiatives contribute to overall socio-economic progress and address the needs of the population.
- Countercyclical Fiscal Policy: Open market borrowing allows state governments to adopt countercyclical fiscal policies during economic downturns. They can increase borrowing to boost spending, stimulate demand, and support the economy during challenging times.
- Public Debt Management: Open market borrowing helps state governments manage their public debt portfolio by diversifying funding sources. It reduces reliance on specific revenue streams and promotes effective debt management practices.
- Fiscal Responsibility: Open market borrowing is subject to certain norms and regulations, ensuring that state governments adhere to fiscal responsibility. This helps in maintaining financial discipline and preventing excessive debt accumulation.
- Revenue Generation: State governments often undertake revenue-generating projects and activities. Open market borrowing enables them to finance these initiatives and leverage potential income streams in the long run.
Impact on limitations by central government on open market borrowing for state governments:
- Financial Constraint: Limitations on open market borrowing restrict the borrowing capacity of state governments, creating financial constraints. This can hinder their ability to meet expenditure requirements, implement developmental projects, and address critical needs in sectors such as infrastructure, healthcare, education, and social welfare.
- Reduced Autonomy: Imposing limitations on open market borrowing curtails the financial autonomy of state governments. It reduces their flexibility to manage their finances independently and make decisions based on their specific needs and priorities.
- Developmental Projects Delayed: Insufficient funds can lead to stalled infrastructure projects, which can impact economic growth and hinder progress in various sectors.
- Compromised Fiscal Stimulus: Limitations on borrowing can restrict their ability to implement measures during economic downturn or crisis situations, potentially prolonging the recovery period.
- Impact on State Finances: They may face challenges in managing revenue shortfalls, meeting debt obligations, and maintaining fiscal stability. This can lead to increased dependence on central government transfers and grants, which may not always be adequate or timely.
- Hindered Private Investment Climate: Limitations on open market borrowing can create an unfavorable investment climate in the state. Private investors may perceive it as a signal of financial instability or limited growth potential, impacting the inflow of investments and hindering economic development.
- Inequality Among States: If limitations on open market borrowing are not uniformly applied among states, it can lead to disparities in their financial capabilities. States with higher borrowing limits may have an advantage in implementing development projects and attracting investments, creating imbalances in regional development.
- Strained Centre – State Relations: Imposing limitations on open market borrowing can strain the relationship between the central and state governments. Disputes and disagreements may arise regarding the adequacy of borrowing limits, resulting in political conflicts and legal battles, as seen in the case of Kerala mentioned earlier.
Conclusion:
The impact of limitations on open market borrowing can vary depending on the specific context, the magnitude of the restrictions, and the financial position of individual states. However, Centre must take into consideration the importance of open market borrowings for states before applying any limitations.
Source: https://www.thehindu.com/opinion/op-ed/reduced-ceiling-increased-anger/article67012102.ece
3. Laying the foundation for a future-ready digital India
Topic: GS2 – Governance
Context:
- The Ministry of Electronics and IT in India is working on a proposed “Digital India Bill” to replace the existing Information Technology Act, which is 23 years old.
- The aim is to update the legal framework to address emerging challenges in the digital space, including user harm, competition, and misinformation.
- The Union Minister of State for Electronics and Technology, Rajeev Chandrasekhar, has stated that the first draft of the bill is expected to be released by the end of June.
Why the present regime is untenable?
- The current IT Act in India defines intermediaries broadly and categorizes them into three main categories: Social Media Intermediaries (SMIs), Significant Social Media Intermediaries (SSMIs), and Online Gaming Intermediaries.
- The definition of SMIs is so broad that it can include various services like video communications, matrimonial websites, email, and online comment sections on websites.
- The IT Rules impose strict obligations on intermediaries, including a 72-hour timeline for responding to law enforcement requests and content takedown requests.
- However, this approach treats different types of intermediaries, such as licensed platforms with closed user bases, the same as conventional social media platforms, leading to increased costs and liability without effectively reducing risks.
Some other issues with present regime:
- Lack of Clarity: The current IT Act and rules lack clarity on various aspects, including definitions and categorizations of intermediaries. The broad and ambiguous definitions can lead to confusion and inconsistent application of regulations.
- Burden on Small Intermediaries: The stringent obligations and timelines for compliance imposed on intermediaries can disproportionately burden small and medium-sized intermediaries, including startups and emerging platforms. Compliance costs can hinder innovation and limit the entry of new players in the digital space.
- Overreach and Chilling Effect: The rules’ extensive powers granted to law enforcement agencies and government authorities. This can have a chilling effect on online expression and user-generated content.
- Lack of Accountability: While the rules place responsibilities and liabilities on intermediaries, there is a need for clear guidelines and mechanisms to hold intermediaries accountable for their actions. This includes addressing issues of transparency, fairness, and due process in content moderation and user data handling.
- International Compliance Challenges: With the global nature of the internet, intermediaries face challenges in complying with multiple and sometimes conflicting regulations across different jurisdictions.
- Emerging Technologies: The current regime may not adequately address the regulatory challenges posed by emerging technologies such as artificial intelligence, blockchain, and the Internet of Things. There is a need for flexible and future-proof regulations that can adapt to evolving technological advancements.
Focus areas for India under new regime:
- A classification framework should involve risk assessments to categorize intermediaries.
- Micro and small enterprises and caching and conduit services could be exempt from major obligations.
- Communication services should be distinguished from other intermediaries, such as search engines and online marketplaces.
- Obligations for non-communication service intermediaries should be lesser but may include appointing a grievance officer, cooperating with law enforcement, identifying advertising, and content takedown.
- Communication service intermediaries should undertake risk assessments based on active users, risk of harm, and potential for virality of harmful content.
- The framework should also aim to establish accountability, online safety, and reduce legal obligations for intermediaries, while promoting a thriving business environment.
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