Political Funding | Business Standard

The laws relating to electoral and political funding have gained traction of late. Let us look at the regulatory space regarding the funding of political activities and how they compare to other common law jurisdictions of the UK and the US.

Political Funding in INDIA

Political Funding | Contributions to political parties

  • The laws that govern electoral funding in India are the Representation of People Act 1951(RP Act), Conduct of Election Rules 1961, Companies Act 2013 and Foreign Contribution (Regulation) Act 2010 (FCRA).
  • There are no limits on contributions made by individuals under the RP Act.
  • Under the Companies Act, companies are allowed to contribute subject to certain requirements: (1) the company must be a non­government company; (2) it has to be over three years old and the contribution cannot be more than 7.5 per cent of the aggregate net profit in the past three years; (3) the contribution must be approved by a board resolution.
  • ‘Foreign contribution’ is not allowed by virtue of Section 3 of the FCRA.
  • The Finance Act 2016 permitted foreign companies allowed to operate in India to contribute.
  • Contributors are entitled to claim tax deductions under Section 80GGC and Section 80GGB of the Income­Tax Act 1961.

Political Funding | Disclosure requirements

  • Political parties must report all contributions above Rs 20,000 received from any individual or company to the EC.
  • Under the Companies Act 2013, a company must detail the total amount of contribution and the name of the party in its P&L account.
  • In 2013, the EC framed a scheme for contributions to electoral trust companies, making them liable to disclosures in their Annual Reports.

Political Funding | Penalties for violations

  • For political parties, failure to comply with regulations may lead to loss of income tax exemptions.
  • For companies there may be loss of tax exemptions and fines that may extend to five times of contribution and imprisonment of up to six months for directors.

Political Funding in UNITED KINGDOM

Political Funding | Contributions to political parties

  • The rules governing electoral funding in the UK are primarily found under the Representation of People Act 1983 and Political Parties, Elections and Referendums Act, 2000.
  • No restriction on political contributions made by individuals or companies that have obtained prior shareholder approval.
  • No restriction on contributions for companies with partial government ownership or firms undertaking.
  • However, contributions above £200 may be received only from ‘permissible donors’.
  • There are restrictions on anonymous donations above £500.
  • Foreign contributions are not allowed under UK law.

Political Funding | Disclosure requirements

  • Registered political parties must maintain accounts of all donations on a quarterly basis.
  • Parties must detail the names and addresses of donors contributing over £7,500 per year.
  • Compulsory audits for parties with contributions over £250,000 in any financial year.
  • All reported information is made available on the website of the Electoral Commission.

Political Funding | Penalties for violations

Fines, forfeiture of contribution amounts and imprisonment (eg. Up to one year for making of a false statement to an auditor).

Political Funding in UNITED STATES

Political Funding | Contribution to parties


  • US election activity is governed by the Federal Election Campaign Act 1971 and the Federal Election Commission (FEC).
  • No limits are prescribed on individual expenditures (Buckley v Valeo 1976 & McCutcheon v FEC 2014).
  • Independent expenditures by corporates, associations and labour unions are now permitted (vide Citizens United v FEC 2010, which followed the rationale laid down in Buckley) on grounds of free speech.
  • There is a ban on direct corporate contributions and limits on individual contributions to a single candidate or a Political Action Committee (PAC).

Political Funding | Disclosure requirements

  • The Federal Election Campaign Act 1971 (FECA) mandates the disclosure of all donations to candidates, parties’ committees and PACs.
  • The appointment of a treasurer is mandatory for each party (Section 432 of FECA) and details of all contributions to be sent to the treasurer within prescribed timeframes – the treasurer must file a report of such contributions with FEC.
  • There are reporting requirements for various types of committees – any committee receiving total contributions of over $10,000 per annum must report all contributions over $200 per year.
  • Contributions, of $1,000 and above, received within 20 days of an election must be notified to the FEC within 48 hours.
  • All candidates, party committees and PACs must submit reportable data to the FEC for maintenance of a public database.

Political Funding | Penalties for violations

Violation of regulations may lead to a Matter Under Review or a FEC enforcement case and/or fines under FECA’s Administrative Fine Program

Towards a Clean Energy Workforce | Business Standard

The current median age in India is 27.6 years. Over the next 20-25 years, about 600 million additional people will join the workforce. Automation is going to hit annual job growth in almost all existing industries, whether agriculture, construction, textiles or IT. India needs new Clean Energy sources and new types of jobs. Whereas, renewable energy is on a rapid growth trajectory in India.

Job potential in Clean Energy

  • Solar capacity increased from less than 20 megawatts (Mw) in 2010 to above 12,000 Mw (March 2017). In fact, in the last three years, investments in the power sector have been primarily in renewables, accompanied by sharp falls in solar and wind tariffs and increasing investor confidence. Yet, little attention is given to the employment potential in renewable energy.
  • In February 2015, the Council on Energy, Environment and Water (CEEW) and the Natural Resources Defence Council (NRDC) had projected that India’s 160,000 Mw of solar and wind targets would generate about 1.3 million full-time equivalent (FTE) jobs. These jobs are segmented into technical, financial, legal and regulatory due diligence for business development, preparing engineering designs in the design phase, erecting mounting structures, wind towers, etc. during the construction phase, and regular O&M activities.
  • The seven times greater potential in rooftop projects means that 238,000 people could be employed in this segment. Another 58,000 workers will find jobs in utility-scale solar and 34,000 in wind energy.
  • Decentralised energy also increases the potential for creating jobs locally, giving opportunities to local entrepreneurs or for recruiting workers from near project sites.
  • In addition, new jobs could be created to manufacture solar photovoltaic modules, solar PV installation structures, wind turbines, towers, wind blades, etc.
  • Existing manufacturing industries, which supply balance of plant equipment (transformers, inverters, cables and wires) for solar and wind plants will also provide employment to cater to the growing renewables sector.

Concerns | Clean Energy

  • There is a difference between FTE jobs and a permanent workforce. This is because not all activities require a person to be employed throughout the year. Many jobs are one-time, especially during the initial three phases of the project deployment cycle where employees move from one project to another, as each phase lasts for less than a year. O&M, by contrast, provides full-time jobs through the year.
  • Even though every state has potential for jobs in solar (maximum in Maharashtra, Uttar Pradesh, Karnataka, and Gujarat), wind sector employment is concentrated in seven states (Tamil Nadu, Gujarat, Rajasthan, Andhra Pradesh, Maharashtra, Karnataka, and Madhya Pradesh).

Conclusion | Clean Energy

As the sector expands, new employment segments will emerge, such as renewable energy scheduling and forecasting, grid integration and balancing, energy storage, and re-powering and recycling of existing plants. Renewable energy could be at the forefront of new forms of job creation in India. It will need greater attention to decentralised service provision, continuing skilling, and increasing ambitions for clean energy — nationwide and within each state.

Cities – Our Policy Orphans | Editorial Simplified


  1. the only way to help farmers is to have less of them,
  2. our farm to non-farm transition is being murdered by the lack of good urbanisation,
  3. bad urbanisation is a child of city leadership that is either impotent or unelected.

Having Fewer Farmers : 

India has too many farmers (250 million) and too many poor farmers (they are about 50 percent of the labour force but only produce 12 percent of gross domestic product). Farmers have a productivity problem just like India does not have a jobs problem but a wages problem. India’s wages will only rise sustainably when we cross the “Lewisian” turning point which states that wages rise only after critical mass is reached in the farm to non-farm transition. Hence, the only sustainable way to help farmers is to have less of them.

Lack of Good Urbanisation

The unstoppable migration of people to our 50 cities, with more than a million people, is being retarded by bad urbanisation that has created a divergence between real wages (what employees care about) and nominal wages (what employers care about). Urbanisation is inevitable but the mispricing of land, patchy public transport, and poor suburb connectivity mean that India is not realising the true upside of cities by making them magnets for evacuating farmers seeking decent wages.

City Leadership

Cities are complicated organisations all over the world but Indian cities suffer the friendly fire of being policy orphans for three reasons

  • Firstly, state chief ministers are unwilling to cut the tree they are sitting on (Bengaluru contributes may be 60 per cent to Karnataka’s GDP).
  • Secondly, cities don’t have the plumbing or mandate to generate their own resources e.g. reasonable property taxes.
  • Finally, and probably most importantly, city leadership is either unelected (bureaucrats serving as development authority or municipality heads) or impotent (city politicians who win elections but don’t wield power).


Getting power from State Governments would need state politicians to sacrifice self-interest. Politicians in states and the Centre face two important human capital decisions over the next decade – Civil service reform and the creation of elected and empowered city leadership.

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Indo-China Border Skirmishes | Recent Updates

The territorial and boundary dispute between Indo-China is a complex, historical, multi-layered wrangle across a sprawling 3,500-kilometre-long border.

What is the current Indo-China issue?

  • At issue is sovereignty over a scenic, 4,000-metrehigh pasture called Doklam — less than 100 square kilometres in spread.
  • India claims that the Chumbi Valley, a dagger shaped wedge of Chinese territory protruding southward from the Tibetan plateau, ends north of Doklam at the Batang La pass.
  • China asserts ownership of Doklam, too, claiming the boundary runs south of the pasture, along the dominating Gyemo Chen mountain, which China calls Mount Gipmochi.
  • Complicating this otherwise straightforward dispute is Bhutan, since the tri-junction of the Sikkim-Tibet-Bhutan boundary falls here. Bhutan’s claims are supportive of India’s.

History of border disputes between Indo-China

  • The 1962 war was sparked off near Ziminthang by disagreement over whether the boundary ran along the Thagla Ridge, as India claimed, or along the Hathungla ridgeline to its south, as China contended.
  • The 1986 Sumdorong Chu confrontation, which saw India moving tens of thousands of troops to the trouble spot, was over the tiny Thangdrong grazing ground near Tawang, with India claiming the watershed ran north of that meadow, and China claiming it was to the south.
  • At Walong, too, at the eastern end of the Indo-China boundary, disagreement centres on which ridgeline constitutes the watershed.

Concerns of India

  • Many of the 14 sub-disputes on the LAC are over relatively inconsequential grazing grounds and meadows. However, the on-going standoff at tri-junction, at the southern tip of the Chumbi Valley, is over territory that both Beijing and New Delhi regard as strategically important.
  • Indian military planners worry that letting Beijing extend the boundary southwards to Mount Gipmochi would bring China closer to the Siliguri corridor.
  • Assuming that China obtained control over the Siliguri corridor, India could simply bypass the corridor, moving through Nepal or Bangladesh.

Chumbi Valley – China’s vulnerability

  • Of all China’s border vulnerabilities, the Chumbi Valley is perhaps the greatest. It is a narrow salient overlooked by Indian defences, which can cut off the valley from Tibet by wheeling east from north Sikkim.
  • Strategists regard the capture of the Chumbi Valley as an obvious wartime target for India’s “mountain strike corps” when it is operational. By extending the Chumbi Valley southwards, therefore, China would only be expanding a key vulnerability.

Chinese argument over Doklam plateau

  • China’s foreign ministry spokesperson spelt out in tedious detail last week, the 1890 Anglo-Chinese Convention Relating to Sikkim and Tibet specifically mentioned Mount Gipmochi as tri-junction of China, India and Bhutan. True, Beijing rejects as “colonial impositions” other British era agreements, like the 1914 Simla Convention that birthed the McMahon Line. But, there is a difference — China actually signed the 1890 agreement, and not the 1914 one.
  • Beijing also argues that Jawaharlal Nehru endorsed the 1890 agreement in a 1959 letter to Zhou Enlai.
  • Beijing also cites a pastureland claim over Doklam, arguing that the yak graziers of Yadong have long held grazing rights over Doklam, and that graziers from Bhutan paid a “grass tax” to Yadong graziers if they wanted to herd there.
  • China’s foreign ministry claims the Tibet Archives still possess “grass tax” receipts from earlier times. The grazier argument is a powerful one in border lands peopled by nomadic herders. Both China and India use it to back their territorial claims in other disputed sectors.

Current position of India

  • Although Beijing has made Indian withdrawal a precondition for de-escalating the Doklam faceoff, Indian forces are showing no sign of blinking.
  • Over the preceding decade, India’s defensive posture has been greatly stiffened by raising two new divisions in the Northeast; an armoured brigade each for Ladakh and the Northeast; a mountain strike corps currently being raised and major improvements in India’s air defence and air strike capabilities.
  • Whereas once, China bullied India on the LAC and — as it is attempting in Doklam — built roads, tracks and bunkers as “facts on the ground” to consolidate its position in any future negotiation; today the Indian Army is rightly willing to, and capable of, physically blocking such attempts.

Conclusion Indo-China

There has been no shooting on the Indo-China LAC since 1975, a peace bolstered by the successful “Peace and Tranquillity Agreement” that New Delhi and Beijing signed in 1993. Paradoxically, India’s pro-active Indo-China LAC stance is creating incentives in Beijing for a LAC settlement. Yet, calibrating the aggression and managing each patrol confrontation remain tricky balancing acts. Until a Indo-China LAC agreement comes about, New Delhi must develop the instruments and expertise needed for managing such crises.

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Editorial Simplified : 13th June

Editorial Simplified : 13th Day of June 2016

This Series of posts covers the essential Editorial from prominent newspapers. The Editorial from the newspapers are compiled by the Subject Teachers form the Academy and provided in notes format so that the aspirants does not waste their precious time in sifting through the newspapers. 

The aspirants are advised to bookmark this page for future reference 

Click on the tab below to read the Editorial Simplified for each newspaper

[accordion_content accordion_label=”Business Standard”]

Editorial : The April blues


Industrial output numbers warn against policy complacency

What is the news?

The IIP number, released last Friday,

Points to be noted (Not to be remembered)

  • Headline number for industrial output, as measured by the Index of Industrial Production (IIP), showed a decline of about one per cent for April 2016.
  • In the last five years, annual industrial growth has stayed below three per cent, including a decline in 2013-14.

Declining Sectors

  • Manufacturing sector, which has a weight of over 75 per cent in IIP.
  • Food products and beverages, tobacco products and electrical machinery.
  • Capital goods sector
  • Consumer non-durables sector

Positive Sectors

  • Electricity sector
  • gems and jewellery,
  • telephone instruents,
  • commercial vehicles and diesel.
  • mining sector

Implications of such volatality

  • Retail inflation has inched up to over five per cent
  • food inflation in particular has crossed the six per cent mark,
  • Crude oil prices are on the rise, putting pressure on fuel prices and the government’s subsidy numbers.
  • Exports with a decline


With industrial output in contraction mode, the current financial year has not begun too well for the economy, and the government ought not to relax on fiscal consolidation and further reforms that can revive both investment and consumption demand.

Editorial : Internet opportunities


Internet opportunities

What is the news?

  • The Indian internet user-base reached 317 million by October 2015, overtaking the United States, courtesy year-on-year growth of 40 per cent.
  • The report by Ms Meeker, a general partner at Kleiner Perkins Caufield & Byers LLC, has come up with a report for “ internet oppurtunities “ in India.

What does the report say?

Growth should zoom in

  • voice-operated computer interfaces,
  • image-based e-commerce platforms,
  • mobile video advertising,
  • messenger-based marketing
  • communication
  • on-demand transportation.
  • live streaming of sports events with value-addition like real-time statistical updates and interactions on social media

What should be done?

  • review of the telecom policy to enable the building of better physica infrastructure.
  • removal of barriers that hinder investment into multi-brand retail and above all, legislation to ensure data security and privacy of users.
  • Data privacy

[accordion_content accordion_label=”Indian Express”]

Editorial : A rejig in time


Six months after the operationalisation of the National Infrastructure Investment Fund (NIIF), the government has indicated that the investment model would be altered.

NIIF Tweak

  • The NIIF had been conceived as a fund of funds to finance projects, both greenfield and brownfield, and also those stuck on the ground with a substantial initial corpus of Rs 40,000 crore.
  • The economic signals have been mixed, with some segments such as commercial vehicle sales and cement production showing improvement besides consumption demand, while railway freight fell 13.5 per cent, and exports continue to be on a negative trajectory.
  • Any changes in the NIIF’s investment framework which could lead to higher capital expenditure, especially in infrastructure projects, is bound to be welcomed.

Role of Government

  • State owned banks are also lobbying for a fund or a “bad bank” which will buy out some of their bad loans
  • If the vision is to create an investment vehicle which will be run professionally without undue pressure on returns like in the case of private equity funds, the investment focus ought to stay on infrastructure projects
  • That’s where long term investors such as global sovereign wealth funds are willing to partner a venture where the government too has a stake.
  • It is all the more important, therefore, for the government to act as a facilitator to get more projects off the ground.

[accordion_content accordion_label=”The Hindu”]

Editorial : Voting to defeat


The editorial studies the results of recently concluded elections to Rajya Sabha.

Important points

  • Surprise victories and shock defeats which are usually a part of direct elections were unexpectedly a part of recent elections (indirect) to the Rajya Sabha.
  • The unexpected jolts in the last round of Rajya Sabha elections were caused by by MLA’s in Congress in Haryana and Janata Dal (Secular) in Karnataka.
  • Strategies drawn at party levels failed as legislators dissatisfied with the choice of candidates or the style of decision making ensured defeat of official nominees.
  • In Haryana the strategy of Congress joining hands with Lok Dal back fired.
  • The national leadership of Congress now needs to delve into the message from Haryana.
  • In Karnataka, the Congress was the beneficiary of bickering in Janta Dal(Secular).
  • The cross voting in Karnataka is alleged to have happened due to dissatisfaction with the leadership’s style of functioning.


  • Like in some earlier Rajya Sabha elections there was evidence of wealthy candidates securing votes across party lines.
  • This has reinforced the belief that elections to Upper House continue to be influenced by power of  money.


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Editorial Simplified : 10th June

Editorial Simplified : 10th Day of June 2016

This Series of posts covers the essential Editorial from prominent newspapers. The Editorial from the newspapers are compiled by the Subject Teachers form the Academy and provided in notes format so that the aspirants does not waste their precious time in sifting through the newspapers. 

The aspirants are advised to bookmark this page for future reference 

Click on the tab below to read the Editorial Simplified for each newspaper

[accordion_content accordion_label=”The Hindu”]

Editorial : The new symphony in India-U.S. ties


Recently Indian Prime Minister visited the USA. The editorial delves into the trip and budding Indo-US relations.

Present scenario

  • Bilateral relations between India and USA have been becoming better and better especially since past two years.
  • Defence ties have consolidated in three ways:
    1. In defence procurement and co development.
    2. Co-ordination between the two forces
    3. Working together on piracy etc.
  • Most importantly the strategic alliance between India and USA has also changed for the better with declarations such as the one declaring ” India as a major defence partner”
  • The Indian side has also made statements such as ” A stronger and more prosperous India is in America’s strategic interest” suggesting proximity of strategies for both nations.

Issues and Challenges ahead

  • The US government is going to change as elections are just around the corner. India must thus reassess the situation after the change in regime.
  • India must also consider its alliances with neighbouring countries like China and Russia before making any statements on security etc.
  • The editor also feels the need to explain to the Parliament of India the details of the new Info-US relation.

Editorial : Preparing cities for high water


The editorial lays emphasis on the need for protection of cities from calamities.

Important points

  • Indian cities are estimated to produce 80% of total economic goods and services of the country.
  • Events such as floods in Chennai and Mumbai and huge losses to life and property along with a haphazard response from the administration underscore the vulnerability of the cities.
  • Mindless encroachments, construction in flood plains and lack of information systems have increased the vulnerability of the cities.

What needs to be done

The following steps need to be taken to strengthen the cities and reduce vulnerability :

  1. More facilities for water harvesting must be provided.
  2. Suburban lakes should be revived.
  3. A transparent building code should be devised.
  4. Smooth supply of basic requirements like water should be ensured during all times.

Concluding remarks

On the positive side city residents have higher degree of education and financial resources and these might help administrators find durable solutions. Much of urban India is yet to be built and it may be built safer.

[accordion_content accordion_label=”Indian Express”]

Editorial : Close your eyes


The Central Board of Film Certification (CBFC) determination to trip up the film Udta Punjab on the ground that it defames Punjab by projecting the state’s drug problem has created a controversy.

CBFC’s role

  • When Bollywood seems to be emerging from its cocoon of fantasy films to create works that reflect India’s current realities, the CBFC seems to be making a deliberate attempt to stall it.
  • Chairperson Pahlaj Nihalani has got it all wrong that the CBFC has not been established to provide a moral compass to filmmakers or act as a political filter.
  • Films, like all works of art, try to speak the uncomfortable and inconvenient truth.

Drug problem in Punjab

  • The drug problem in Punjab, has many layers. It’s as much about politics as it is about law and justice.
  • With the assembly elections a few months away, the State govt seem to attack any discussion of Punjab’s drug problem as “a conspiracy to defame” the youth of the state.
  • It was better if movie was taken as timely and much needed wake-up call to a social problem that needs to be addressed urgently.

[accordion_content accordion_label=”Business Standard”]

Editorial : Ending uncertainty


New Spectrum Formula

What is the news?

Uncertainty over new rate at which Indian mobile telecom service operators should pay spectrum usage fees to the Govt. is likely to come soon.

Recommendations by Telecom Commission

Telecom Commission has made two recommendations:

  • It has prescribed a weighted average formula for calculating the spectrum usage fee for all bands available to a telecom service provider.
  • Usage fee for the spectrum to be auctioned later this year would be 3 % of adjusted gross revenues of telecom service operators. Then this rate would be included for calculating the weighted average formula for spectrum usage fee to be paid by an operator.

How is it calculated presently

  • Spectrum usage fee varies depending on the bands and the manner in which the spectrum has been acquired.
  • For instance, spectrum allocated through administrative orders attracts an escalating charge linked to the usage pattern; the auctioned spectrum is charged at the rate of five per cent of the service provider’s adjusted gross revenues; and the spectrum in the 2,300 MHz band auctioned in 2010 for broadband wireless access is levied a charge at the rate of only one per cent.

What have been the past issues regarding spectrum allocation?

  • confusion and uncertainty over what the spectrum usage fee ought to be for different bands.
  • Varying rates have also given rise to continuing lobbying by telecom companies.

Benefits of the recommendations:

  • It is reassuring that the government did not succumb to enforce a flat fee for all operators using all kinds of spectrum bands..
  • A weighted average formula is based on logic, as it respects the sanctity of the rate that was fixed at the time of allocating the spectrum and also links the levy to the extent of use of a certain spectrum band.

Way forward

Commission’s recommendations will now be taken up by the Union Cabinet and the new spectrum usage charge regime should address many of these concerns.


  • There will be no immediate benefit for the companies since they would continue to pay the amount they paid last year.
  • Hopefully, the weighted average formula would lay the foundation of a more stable regime for levying spectrum user charges in the future.


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Editorial Simplified | Backlog

Editorial Simplified : Backlog

This is a special post for the Editorials which we think are important in the last few days

Editorial : Dangerous bottled water


Food safety authority’s puzzling regulations.


FSSAI is displaying inconsistencies on the presence of potentially hazardous potassium bromate in bakery products and drinking water.


It would ban the use of this chemical as an additive in breads and other bakery products.


But, at the same time, it sought to defend its earlier proposition to permit limited amounts of bromate in packaged drinking water. It ignored the fact that bottled drinking water is consumed in substantial quantities and that the presence of even a small amount of this toxin can be potentially highly hazardous.


  • Proposal was meant only to seek stakeholders’ feedback and that it might revisit it now.
  • Proposal to allow bromate (up to 10 microgram per litre of drinking water) was based on “ground realities” that this contaminant might, in any case, be found in water in some cases.


  • 1999 ; study by the International Agency for Research on Cancer which had revealed that potassium bromate could be a possible human carcinogen.
  • Some other laboratory studies on animals exposed to this toxin have also concluded that ingestion of this chemical resulted in a significant increase in the incidence of cancer of kidneys, thyroid and other organs.


When ozone is used as a reagent to disinfect water, some amount of bromate tends to develop. But ozone is no longer the only disinfecting agent available now.


  • Toxic contaminants should ideally not be present in it at all.


  • The Codex Alimentarius, which has laid down globally accepted food quality standard states: “All treatment of water intended for bottling should be carried out under controlled conditions to avoid any type of contamination, including the formation of toxic products (particularly bromates).”


  • This is a proviso that merits attention of all stakeholders, particularly the FSSAI.

Editorial : Signs of recovery


Investment numbers are still a worry


The provisional estimates of national income for the year 2015-16, and the quarterly estimates of gross domestic product or GDP for the fourth quarter of that year – from January to March – were released on Tuesday by the Central Statistics Office of the Ministry of Statistics & Programme Implementation.


  • Whole year’s statistic for economic growth is at 7.6 per cent.
  • Estimate for GDP growth at constant 2011-12 prices for the final quarter of 2015-16, is 7.9 per cent.
  • Almost eight per cent growth relays India’s position as the fastest-growing large economy in the world.
  • Real growth in 2014-15 was 7.2 per cent, and in 2015-16 it was 7.6 per cent.


While the headline numbers suggest that India is on a path to recovery, two important caveats remain.

  1. ISSUE:The first is that this release of GDP numbers continues the puzzling anomalies that have long been noted when it comes to India’s manufacturing sector growth.


  • According to the gross value added (GVA) numbers for 2015-16, manufacturing grew at 9.3 per cent.
  • The private corporate sector grew at 10 per cent, according to the numbers. It continues to be difficult to reconcile these numbers with other indicators.
  • The anomaly is most stark when the index of industrial production or IIP is taken into account. The IIP grew at 2.4 per cent for the whole year of 2015-16 (two per cent for manufacturing), which according to the GDP calculation corresponded to manufacturing growth of 9.3 per cent. But in 2014-15, IIP grew at 2.8 per cent, faster than in 2015-16, but manufacturing growth according to the GVA estimates was only 5.5 per cent.

CONCLUSION: India’s statisticians are yet to set minds at rest about the manufacturing growth puzzle.

  1. ISSUE: The other caveat is about the sustainability of this growth.


  • Sustained high growth requires high investment. But India is yet to recover the high levels of gross fixed capital formation (GFCF) seen in the boom years of 2003-08.
  • In fact, GFCF grew at only 3.9 per cent in 2015-16, as compared to 4.9 per cent in 2014-15.
  • This means that it is only 31.2 per cent of GDP in 2015-16, down from 32.3 per cent in 2014-15. An investment recovery is still awaited.

CONCLUSION: Indeed, GFCF as per cent of GDP has shrunk for the fourth successive year, even as GDP growth has accelerated in each of the last three years. This is a puzzling trend.

Click on the tab below to read the Editorial Simplified for each newspaper


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Editorial Simplified : 30th May

Editorial Simplified : 30th day of May 2016

This Series of posts covers the essential Editorial from prominent newspapers. The Editorial from the newspapers are compiled by the Subject Teachers form the Academy and provided in notes format so that the aspirants does not waste their precious time in sifting through the newspapers. 

The aspirants are advised to bookmark this page for future reference 

Click on the tab below to read the Editorial Simplified for each newspaper

[accordion_content accordion_label=”Business Standard”]

Editorial : Avoiding reform


Two years of the Govt, major reforms seem off the table

What is the news?

Appraisal of two years of Modi Govt.

What is the issue?

There is a mismatch between the over-the-top tone of the publicity blitz and the relatively limited ambitions of the government with regard to future policy reforms.

What are the achievements?

Signs of green shoots in the economy.

Policy areas that stand out and should be addressed:

  • Labour law reform
  • Land acquisition law
  • Privatisation of Govt Sector Enterprises.


 Recognition of how many major reforms have been actually effective in past two years.

Editorial : Only a price controller


Pharmaceuticals department has achieved little.

What is the news?

Department of pharmaceuticals has released the list of its achievements in the past 2 years.

Achievements as per the govt

Government‘s greatest achievement in the sector: expanding the scope of price control.

Issues to be addresses

  • Quality medicines at affordable prices to all.
  • Drug quality control in India: Central Drug Standard Control Organization (CDSCO) under the Union health ministry and the state-level drug authorities that have to address the issue of substandard drugs in India
  • Merely placing price caps on drugs can be counterproductive as this deters the drug industry to produce more to meet demand and encourages it to find clever ways of dodging the system.
  • Efficient public procurement system under which the state negotiates for bulk discounts with the producers of drugs of adequate quality.
  • To have an approved list of quality drug manufacturers.
  • Inability to revive prosperity in public sector pharmaceutical companies.
  • Expanding the footprint of the National Institute of Pharmaceutical Education and Research.

Has there been any committee on the issue yet?

Pronab Sen committee recommended “malpractices” be curbed in bulk purchase mechanisms but little has been done since then.

Health care in other countries

One reason why European health care costs are lower than the US’ is that the former negotiates bulk procurement of drugs for the public health care system whereas the latter does not.

Way forward

  • As for the robust private pharma sector, it can only keep growing fast if there is greater ease of doing business.
  • For this it is critical to have a smooth, transparent and predictable approval procedure for new drugs.
  • It may be a good idea to disband the pharmaceuticals department and consider options such as placing drug price control under the Tariff Commission into which the Bureau of Industrial Costs and Prices has already been merged.

[accordion_content accordion_label=”Indian Express”]

Editorial : Task undone


Even after coming out with new Defence Procurement Policy (DPP), India’s armed forces are still ill equipped.

Requirements galore

  • The Indian Air Force has only 33 fighter squadrons while it needs 45.
  • The navy has only 14 submarines, half the number it wants.
  • The army doesn’t have equipment for the new strike corps being raised on the China border


  • The new DPP is still not out in its entirety.
  • A major chapter on the strategic partnership model is still pending, as are the details on other new models that have been proposed.
  • Both foreign and domestic defence manufacturers are thus awaiting clarity on the business models they need to build for the future

New committees

  • After Dhirendra Singh Committee report on defence procurement, two more expert committees are formed by Defence Minister.
  • One of them, headed by Vivek Rae, has been tasked to reform the organisation, system and process of acquisition in the ministry.
  • Another committee, headed by Lt General (retd) D.B. Shekatkar, has been tasked with rationalizing expenditure

Editorial : A grim reality


Masunda Kitada Oliver, who was beaten to death in the capital following an altercation, has let face of prevalent racism in India come out in open.


  • Incident has stirred diplomats from the African nations to anguished action, and had caused them to consider boycotting Africa Day
  • Citizens of Kinshasa capital of Congo, had retaliated, targeting shops and establishments owned by Indians in the city
  • Government is of view that the issue of racism would go away if it was ignored with sufficient obstinacy

Racism in India

  • People of African origin are being baited and attacked in India with shocking regularity
  • Racism is a social affliction which cannot be cured overnight, but the government and social organisations must acknowledge the gravity of the problem and act on it
  • India hopes to compete with China for land, resources and markets in the African continent, but it does not stand a chance if its citizens’ view of humanity is coloured by racist ideas

[accordion_content accordion_label=”The Hindu”]

Editorial : Enter the superbug?




A woman in the U.S. was detected with bacteria resistant to a last-resort antibiotic.


The 49-year-old was carrying E. coli bearing a new gene, mcr-1.

What is the worry all about?

This new gene is resistant to even colistin, which is last available antibiotic that works against strains that have acquired protection against all other medication.

Has there been such cases before this?

First reported case of the mcr-1 gene in an E. coli strain found in a person living in America, but it raises worries about how far it may have spread.

Has there been any study on this particular issue?

The results of mcr-1 gene identification were published recently in the journal Antimicrobial Agents and Chemotherapy.

When was the gene first identified?

The mcr-1 gene was first identified in China in November 2015, following which there were similar reports from Europe and Canada.

What are the issues to be addressd?

  • In this case a small piece of DNA (plasmid) found outside the chromosome carries a gene responsible for antibiotic resistance.
  • But were the gene to spread to bugs treatable by only last-resort antibiotics, we could be facing the dreaded — and indeed, long-anticipated — superbug.
  • Thus, the discovery of mcr-1 in more countries and settings increases the chances of the emergence and spread of resistance against all available antibiotics.
  • It could well lead to an era without effective drugs to treat bacterial infections .

Effect on animals

  • Unchecked use of antibiotics in livestock is a major reason for the development of drug resistance.
  • Given the widespread use of colistin in animals, the connection to the drug-resistant mcr-1 gene appears quite clear.
  • A November 2015 paper in The Lancet noted that a significantly higher proportion of mcr-1 positive samples was found in animals compared with humans, suggesting that the mcr-1 gene had emerged in animals before spreading to humans.


Besides being administered for veterinary purposes, colistin is used in agriculture.

Is it communicable?

Since the gene is found outside the chromosome, it can spread easily among different types of bacteria, as well as among patients.


Global community needs to urgently address the indiscriminate use of antibiotics in an actionable manner, and fast-track research on the next generation of drugs.

Editorial : Awash in red ink



What is the news?

It’s been a year since the RBI came up with norm that allowed banks to avoid treating restructured loans as substandard.

Facts about the NPA issue:

  • Forced by the central bank’s time-bound Asset Quality Review to classify troubled loans correctly and make appropriate provisions for them, lender after lender has reported sizeable losses or dramatic declines in profit in recent quarters.
  • The SBI, has said that while gross NPAs (as a percentage of the entire Rs.15 lakh crore it has advanced to borrowers) jumped to 6.5 per cent, or Rs.98,173 crore, at the end of March, it was placing loans amounting to another Rs.31,000 crore on a watch list for ‘exposure under stress’.

What does this reflect?

  • Disclosures of bad and stressed loans reflect the extent of distress its borrowers representing various sectors of the real economy are experiencing.
  • Iron and steel, engineering, power and construction are some of these key industries that undergird the economy.

Way forward

  • An autonomous Banks Board Bureau is now in place, tasked with the specific brief of ensuring that state-owned lenders will hereafter be ring-fenced from political interference in the selection of top management and on business strategy.
  • A Bankruptcy Code intended to improve the legal framework for assisting creditors in taking defaulters’ assets through liquidation and recovery process has won parliamentary backing and could soon be in operation.


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Editorial Simplified : 26th May

Editorial Simplified : 26th day of May 2016

This Series of posts covers the essential Editorial from prominent newspapers. The Editorial from the newspapers are compiled by the Subject Teachers form the Academy and provided in notes format so that the aspirants does not waste their precious time in sifting through the newspapers. 

The aspirants are advised to bookmark this page for future reference 

Click on the tab below to read the Editorial Simplified for each newspaper

[accordion_content accordion_label=”Business Standard”]

Editorial : Royalty and risk


Welcome decision to revoke order on GM seeds royalty.

What is the news?

Union Govt has revoked set of licensing guidelines it issued on May 18 for the agricultural technology sector.

What made the govt issue these guidelines initially

Proposed guidelines arose out of a disagreement  between the government and the world’s largest seed company, Monsanto, over the local prices of GM seeds in India, in particular for Bt-cotton.

What is the issue exactly?

  • Last December, the agriculture ministry notified the Cotton Seeds Price (Control) Order, which returned cotton seeds to the ambit of the Essential Commodities Act, making their prices a matter of government intervention.
  • Subsequently, it had notified new licensing guidelines, which would have put a lid on royalty payments from Indian seed farms for all new varieties of Bt-cotton seeds to Monsanto’s local joint venture (with Maharashtra Hybrid Seeds).

What is worrisome?

  • With the revocation of the earlier notification on the royalty cap, the immediate concerns are over, but there is no clarity yet on how the government wishes to approach the question of royalties for seeds technology.
  • Implications for other IPR-heavy sectors are also worrying.
  • Bt-cotton was not developed with financial support from the Indian government. If the government was concerned about distress in the cotton sector – and that is its right and its duty – then it should have found some other way to target assistance to cotton farmers and avoided imposing a cap on royalty.
  • If royalties are being used to evade international transfer pricing regulations, then it is necessary to examine royalty payments in a prospective manner.


Any such decision should be taken not only transparently but also prospectively so that it does not raise questions in investors’ minds about the predictability and stability of the policy environment.

Editorial : A bumpy ride?


India’s policy makers will need to respond to US Fed

What is the news?

Indian stock market posted its biggest single-day gain on Wednesday as the BSE’s benchmark index, Sensex, gained over two per cent.

What might be the reason for  gain?

It was attributed to the prospects of good rains and a marked improvement in the global perception of how the Indian economy is likely to fare in the coming months.

What is U.S. Planning w.r.t their markets?

They are going to raise the policy rate and that has serious implications for the global economy, and for India.

What would be the generic effect?

  • There would be shifts in the pattern of global fund flows and corresponding readjustments in currency exchange rates.
  • Those effects would require policy makers elsewhere to review their policy stances.

Effect on Indian markets

  • Changes may not be favourable for India, which has benefitted from cheap commodity prices in general, and low energy prices in particular, over the past two years.
  • Substantial portfolio investments have flowed into rupee treasuries and equity in past two years.
  • These favourable factors may now be playing out.
  • But an increase in dollar interest rates will lead to US treasury yields moving upwards — and the dollar may rise.Hence, portfolio investors may pull some of their corpus out of emerging markets and head for the American bond market instead.
  • This could mean a falling rupee.
  • If the rupee falls even as prices of crude oil and gas rise, a larger CAD is likely.
  • Higher energy prices could lead to higher inflation in India.
  • If any of this happens, the RBI would be forced to respond. There would be less room to cut interest rates.
  • The Budgetary assumptions and calculations with respect to the fiscal deficit and to energy and fertilizer subsidies might need to be revisited
  • Subsidy assumptions also would need to be reallocated.
  • If the stock market slides lower, the disinvestment programme would be hit hard.
  • A weaker currency may not be enough to revive exports. Exports have been shrinking for the past six quarters and the current account has stayed under control only due to the low energy prices.


  • Policy makers cannot simply continue to rely on low energy prices and high portfolio inflows.
  • Rather, they have to tackle the issues, which hobble Indian manufacturing and make exports uncompetitive.

[accordion_content accordion_label=”Indian Express”]

Editorial : Keep inspectors away


India has been marred with problem of license raj which is showing no signs of stopping

A recurring problem

  • Recent move by the government to regulate the licensing of genetic modification crop technology along with imposing stock controls and turnover limits and raiding of warehouses reinforces the belief that a License raj is here to stay
  • Various measures like light regulation for start-up ventures, including ensuring no inspection for three years for a business relating to labour and environment, and compliance with law, post self-certification have yielded slow results

Lighter regulations

  • Many have made a strong case for a system of self-certification, with some checks built in, especially for small and medium enterprises
  • Global oil prices have started climbing back again, limiting the gains of the government (lower oil import bill and inflation)
  • It offers the government an opportunity to review outdated laws and regulations

[accordion_content accordion_label=”The Hindu”]

Editorial : Raising the stakes with Chabahar

Context :

Chabahar port

What is the news?

Trilateral transport corridor project has been inked in Tehran by PM Modi and Iran and Afghanistan.

Background of Chabahar port

  • New Delhi and Tehran had agreed in 2003 to develop the port.
  • But the project did not take off,owing to international sanctions against Iran over its nuclear programme, but also on account of inertia in Delhi.
  • Removal of sanctions after Iran’s nuclear deal has provided Delhi an opportunity to revitalise bilateral ties.

What will be the benefits to India

  • Road, rail and port development projects will change the way India, Afghanistan and Iran do business.
  • Economic and strategic significance for India.
  • India and Afghanistan will be able to utilize full economic potential now due to connectivity issues being reolved.
  • Once the Chabahar port is developed, Indian ships will get direct access to the Iranian coast; a rail line to the Afghan border town of Zaranj will allow India a route around Pakistan. This will boost trade with Iran and Afghanistan.
  • Proposed free trade zone in the Chabahar area offers Indian companies a new investment destination.
  • From a strategic point of view, Chabahar is situated just 100 km from Pakistan’s Gwadar port, the centre piece of a $46 billion economic corridor that China is building. Hence, Chabahar port will act as a gateway for India to Central Asia bypassing the China-Pakistan arc.

What will be the challenges to India?

  • India’s record in  executing and finishing big-ticket projects abroad is far from consistent.
  • Also, with Tehran becoming the new destination of global powers, India needs to energise its diplomacy to keep engagement with Iran on an even keel, irrespective of outside pressure.

Way forward

With the Chabahar project, India has raised the stakes in Tehran substantially, and also raised the bar on its own regional ambitions. It cannot afford to let bilateral ties drift again, as it happened over the past decade.

Editorial : ISRO’s new frontiers


Reusable Launch Vehicle (RLV) BY ISRO

What is the news?

With the successful launch of the first technology demonstrator of the indigenously made Reusable Launch Vehicle (RLV), ISRO has taken a step in building  vehicle that can be reused multiple times to launch satellites into orbit.

Certain details of the project

  • Hypersonic flight lasted about 770 seconds from lift-off to splashdown in the Bay of Bengal, reached an altitude of 65 km before re-entering the atmosphere at nearly five times the speed of sound.
  • Some of the objectives of this week’s launch were to test the aero-thermodynamic characterization of the vehicle with wings when it re-enters the atmosphere at hypersonic speed; the control and guidance system; the control system to land the vehicle at a specific location; and the hot structure, the basic body-carrying part of the vehicle with heat protecting tiles.
  • The ultimate objective is to test the vehicle’s performance when it travels at a speed of Mach 25 using air-breathing propulsion.


  • Learning from the mistakes of the U.S. National Aeronautics and Space Administration (NASA) in its space shuttle programme, ISRO will not use the same reusable vehicle to launch satellites and carry astronauts as it drastically reduces the payload capacity and thereby increases the cost per kg.
  • ISRO will shield the launch vehicle from intense heat to reduce, if not completely eliminate, refurbishment expenses.

 How long till ITZ  commercial usage?

10 to 15 years, and several more launches.

 Benefits for India

  • Cutting down by as much as 80 per cent the cost of launching satellites into orbit.
  • Enables the vehicle to be reused within a very short span of time.
  • Launching satellites at a far cheaper cost than other space agencies.
  • Currently, the bulk of the launch cost comes from building the rocket, which can be used just once, as the rockets get burnt on re-entry into the atmosphere.
  • No other space agency has reusable launch vehicles in operation, and ISRO has taken a lead in developing one.

Way forward

If all works as per plan, ISRO should be able to break even after 25 to 50 launches, bringing down the cost of further launches on the same vehicle.

Editorial : On the road to smartness


Smart Cities

What is the news?

With the second round of 13 cities making it to the  list, there are 33 urban agglomerations that have become “smart cities”.

What are the usual trend w.r.t smart cities?

  • Idea of city managers accepting a ‘challenge’ to make specific ‘smart’ proposals is being followed in different countries.
  • Cities in the developed world are focused on self-driving cars, electric vehicles and smart grids, while those in India are yet to meaningfully address basic issues such as walkability, public transport, waste management and pollution.

Expectation from a smart city in India

  • By integrating IT, motorists could be guided to available parking spaces in various locations in a city, using real-time information.
  • It should be possible to even predict the availability of parking spaces based on usage patterns.
  • Robust IT connectivity and digitalization.

What would be the benefit from a smart city?

  • Bound to increase property values, and governments should tap into the surplus to fund more programmes, especially affordable housing.

Certain issues with the whole scenario

  • City administrations have done a poor job of gathering data available from multiple sources and analyzing them to make informed decisions on civic services.
  • Cities that have successfully bid for Central seed funding face the real challenge of attracting private partners to raise the massive resources needed.
  • The 20 cities chosen in the first round are expected to spend Rs.48,063 crore on projects, and the 13 in the second round, Rs.30,229 crore. Intelligent parking could be one way to mobilise funds and cut congestion.
  • Cities have not integrated the databases of their service agencies for water, transport, property and energy, and are therefore unable to serve citizens online.

Way forward

All cities can become smart, if the Urban Development Ministry makes available off-the-shelf open source technology solutions for management.


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Editorial Simplified : 25th May

Editorial Simplified : 25th day of May 2016

This Series of posts covers the essential Editorial from prominent newspapers. The Editorial from the newspapers are compiled by the Subject Teachers form the Academy and provided in notes format so that the aspirants does not waste their precious time in sifting through the newspapers. 

The aspirants are advised to bookmark this page for future reference 

Click on the tab below to read the Editorial Simplified for each newspaper

[accordion_content accordion_label=”Indian Express”]

Editorial : Chabahar takeoff


India has signed Chabahar port deal with Iran. The $500 million deal promises to lead to the development of a deep-water port, a 500-km rail line linking it to Iran’s rail network, and new aluminum and urea plants


  • The Chabahar agreement marks a new level in India’s overseas ambitions and potentially giving Indian business access to Iran’s economy freed of
  • There’s little doubt about the region’s long-term potential (hydrocarbons).
  • The deal will also allow India to expand its strategic presence in Afghanistan, allowing businesses in both countries to bypass a Pakistan
  • The deal signals that India, like China, has big-league ambitions.

Un-realized potential and difficulties

  • India’s ambitions haven’t quite been matched by its ability to realize international projects like Kaladan multimodal transport project (to link the Northeastern states to Myanmar’s Sittwe port), which was supposed to have been operational by 2013 and India-US nuclear deal.
  • Relations between Tehran and the West, though vastly improved, remain fraught as well doubts over Iran’s role in Syria and Afghanistan.
  • Indian governments will also have to incentivize private corporations for using the Iranian route to transit goods to Central Asia, rather than the fast, cheap networks they now use through Singapore and China.
  • Finally, the project can only be successful if Indian manufacturing is globally

[accordion_content accordion_label=”Business Standard”]

Editorial : Guarding each drop


Water conservation has become a necessity

What is the news?

PM Modi’s well-meaning plea in his monthly Mann Ki Baat programme to preserve every drop of water may .

What are the issues to be addressed?

  • India’s 91 major reservoirs has plunged close to minimum levels, and most other surface water bodies, have dried up.
  • Water level in subsurface aquifers, has dipped to “critical” levels.
  • Central Groundwater Board report indicates that nearly half of India’s groundwater is heavily polluted with toxins like fluoride, nitrates and even arsenic, which cause dreaded .
  • Seepage of agro-chemicals and discharge of untreated industrial effluents and urban wastes into water bodies are adding to the pollution of surface and groundwater sources.
  • Most water woes are the result of mismanagement.
  • Official policies governing the water sector arefar from conducive to achieving this vital goal.
  • Treating water as an economic good and putting a proper price on it has been ignored for long.
  • States are supplying free water for irrigation and domestic use and are even providing free or subsidised power to encourage its wasteful use.
  • Since the bulk of water goes in crop irrigation, cropping patterns need to be tailored according to its availability.
  • Where replacement of water-guzzling crops like paddy and sugarcane with low water-requiring ones is unfeasible, micro-irrigation systems like drip and sprinkler irrigation should be promoted.
  • Promotion of proper use of pesticides and Fertilisers .

Initiatives in certain states

  • Punjab’s well-advised move to ban paddy planting in the hot and dry month of May, when water losses due to evaporation are the highest, seems to have paid off.
  • The water table has begun to recover in that state.


  • First logical step towards eliciting people’s support for a policy to price water and ensure its efficient conservation, judicious upkeep and use.
  • National Water Policy 2002 disapproved of indiscriminate use of the available water. It suggested that water should be priced in such a manner as to reflect its scarcity value.

Editorial : The emergence of Iran


India must deepen its economic, strategic ties with Iran

What is the news?

The visit of Prime Minister Narendra Modi to Iran .


  • It comes at a time when the Islamic Republic, freshly empowered by an agreement on its nuclear programme that allows it to emerge from a years-long debilitating regime of international sanctions, is poised to connect with the world again.
  • In that period of isolationIndia maintained a comparative independence from the West-led sanctions regime.
  • Connectivity and economic relations topped the agenda.
  • Regional security and counter-terrorism were also on the agenda.
  • Highlight of the visit was a trilateral agreement signed on transit through Iran’s Chabahar port – in the presence of not just Mr Modi and his Iranian counterpart, Hassan Rouhani, but also the president of Afghanistan, Ashraf Ghani. One major purpose of Chabahar has always been to cut Pakistan out of the route between India and Afghanistan”.
  • Several MOU were signed, for railway services and aluminium manufacturing. .
  • Potential investments in the area of petrochemicals and natural gas-based industries in the Chabahar area .
  • Linking up with the International North-South Transport Corridor, which goes from Iran through Azerbaijan and then further north into Russia.
  • India has been rightly wary of the Chinese international infrastructure investment programme “One Belt, One Road”; but the extent that it plans to link Iran to eastern China through Central Asia should not be ignored in the development planning for Chabahar.
  • The joint statement released by the Iranian and Indian prime ministers specifically condemned “states that aid, abet and indirectly or directly support terrorism” and referred to “sanctuaries” for terrorist groups.


On both security and economic grounds, therefore, the re-emergence of Iran has given India a big new card to play in its neighbourhood. It must use the additional strategic space wisely, and follow up on commitments swiftly.

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