QUESTION : Analyze the present changing face and significance of organisations like World Bank, ADB and NDB, in the developmental process of countries like India.
Topic- A DEVELOPMENT THAT WILL HARDLY PUT INDIA AT EASE
- World Bank and its ‘Ease of doing Business ‘ Report
WHY IN NEWS ?
- The World Bank has halted its annual publication, the Doing Business’ report as it detected irregularities of data for a few countries. The bank is conducting a systematic review and assessment of data changes that occurred after the institutional data review process for the last five Doing Business reports.
EASE OF DOING BUSINESS INDEX :
- It is an index published by the World Bank which is a benchmark study of the regulations across different Countries of the World.
- EASE OF DOING BUSINESS REPORT was introduced in 2003 to provide an assessment of objective measures of business regulations and their enforcement across 190 economies on ten parameters affecting a business through its life cycle.
The report measures the performance of countries across 10 different parameters namely-
o Starting a Business,
o Dealing with Construction permits,
o Electricity availability,
o Property registration,
o Credit availability,
o Protecting minority Investors,
o Paying Taxes,
o Trading across borders,
o Contracts enforcement, and
o Resolving Insolvency.
o This time two more parameters were considered namely, employing workers and contracting with the government but these are not included in the score and rankings.
- India still lags in areas such as enforcing contracts (163rd) and registering property (154th).
- It takes 58 days and costs on average 7.8% of a property’s value to register it, longer and at greater cost than among OECD high-income economies.
- It takes 1,445 days for a company to resolve a commercial dispute through a local first-instance court, almost three times the average time in OECD high-income economies.
What helped India improve its ranking?
- Sustained business reforms over the past several years.
- India conducted four reforms in the 12-month period to May 1. Among other improvements, India made the process of obtaining a building permit more efficient.
- Importing and exporting also became easier for companies with the creation of a single electronic platform for trade stakeholders, upgrades to port infrastructure and improvements to electronic submission of documents.
RANKINGS AND MAKE IN INDIA :
- India has worked to improve its ease of doing business index ranking, as a means to attract investments to achieve targets set for Make in India (announced in 2014).
- Make in India aims at raising the manufacturing sector’s share in GDP to 25% (from 16-17% per cent) and creating 100 million additional jobs in the manufacturing sector by 2022.
- India’s ranked 63rd in the 2019 index, up from the 142nd position in 2014.
- It was seen as India’s commitment to minimum government and maximum governance.
- However, the World Bank decision to audit the Doing Business report for the last five years may implications on India.
- It has been alleged that the improvement in India’s ranking was almost entirely due to methodological changes in the ranking process.
GROUND REALITY OF THE INDEX :
- Going beyond the data and methodology, the ease of doing business index meant nothing on the ground for India.
- While India’s ranking jumped, the share of the manufacturing sector has stagnated around 16-17% of GDP, and 3.5 million jobs were lost between 2011-12 and 2017-18.
- The annual GDP growth rate in manufacturing fell from 13.1% in 2015-16 to zero in 2019-20, as per the National Accounts Statistics.
CASE OF COUNTRIES AROUND THE WORLD :
- Chile’s global rank went down sharply, from 34th position in 2014 to 67th in 2017.
- The World Bank was accused of manipulating the ease of doing business index methodology, which has pointed questions to the integrity of the Index.
- Russia’s rank jumped from 120 in 2012 to 20, in six years taking Russia ahead of China, Brazil, and India.
- China attracted one of the highest capital inflows but its rank was low, between 78 and 96 for years between 2006 to 2017.
- Azerbaijan’s ranking changed from 80th to 34th, UAE from 22nd to 16th and Saudi Arabia has slipped from 49th position to 62nd in the last five years.
- The decision to suspend the publication and conduct a systematic review of the reports of the last five years is undoubtedly welcome.
FLAWS IN THE INDEX :
- There are many shortcomings in the design and implementation of the index.
- The Indicators used for the index are de jure (as per the statute) and not de facto (in reality).
- There is no credible association between improvement in ranking and a rise in capital formation and output growth.
- The data for computing the index in India are obtained from larger enterprises in two cities, Mumbai and Delhi, by lawyers, accountants and brokers — not from entrepreneurs.
- The World Bank conducts a global enterprise survey collecting information from companies.
- However, there is no correlation between the rankings obtained and the enterprise surveys.
- Further, such surveys, as to meet the ease of doing business targets were to the disadvantage of workers.
Objectives and Functions of World Bank?
- World Bank is also know as the International Bank for Reconstruction and Development (IBRD) was created in 1944 to help Europe rebuild after World War II. Today, IBRD provides loans and other assistance primarily to middle income countries. IBRD is the original World Bank institution.
To achieve this goal, the World Bank focuses on six areas:
- Overcome poverty by spurring growth;
- Help reconstruct countries emerging from war;
- Provide a customized solution to help middle-income countries remain out of poverty;
- Spur governments to prevent climate change;
- It helps them control communicable diseases, especially HIV/AIDS, and malaria;
- It also manages international financial crises and promotes free trade
WORLD BANK GROUP :
The World Bank Group is an international partnership comprising 189 countries and five constituent institutions that works towards eradicating poverty and creating prosperity.
The five development institutions under the World Bank Group are:
- International Bank for Reconstruction and Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Guarantee Agency (MIGA)
- International Centre for the Settlement of Investment Disputes (ICSID).
WORLD BANK’S STARS PROJECT :
- STARS stands for Strengthening Teaching-Learning and Results for States Program (STARS).
- It is a project to improve the quality and governance of school education in six Indian states.
- Six states are- Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Odisha, and Rajasthan.
- Some 250 million students (between the age of 6 and 17) in 1.5 million schools, and over 10 million teachers will benefit from the program.
WBG AND INDIA :
- IBRD lending to India commenced in 1949 with a loan to the Indian railways; the first investment by the IFC in India took place in 1959, and by IDA in 1961 (a highway construction project).
- During the 1950s, the IBRD was India’s sole source of World Bank borrowings.
- By the end of the decade, India’s mounting debt problems became an important factor in the launch of the IDA, the soft loan affiliate of the World Bank (WB) group.
- By the end of the 1960s, the United States, until then India’s largest source of external resources, sharply cut its bilateral aid program. Since then, the WB emerged as the most important source of official long-term finance.
- During the 1960s and 1970s, the IDA accounted for nearly three-fourths of all WB lending to India and, in turn, India was by far the largest recipient of IDA funds, accounting for more than two-fifths of all its lending.
- The subsequent decade, with China joining the WB in 1980 and accordingly entering its own claims to limited IDA resources, the worsening economic fortunes of Africa, and India’s better performance, saw a sharp decline in India’s share in IDA.
- Instead, its share of IBRD lending grew sharply in the 1980s, buoyed by its improving credit-worthiness and the Indian government’s waning inhibitions with regard to non-concessional borrowing.
- Economic history shows rich variations in performance across countries and policy regimes, which are against the simplistic generalisations in the index.
- There is no solid proof that minimally regulated markets for labour and capital produce superior outcomes in terms of output and employment.
- The Analytical and empirical foundations of the index are weak and it is time the World Bank should rethink the methodology adopted in thereport.
- India must also do the ground reality check as to why the much-hyped rise in global ranking has failed miserably on the ground.
QUESTION : “Reservation in India is a system of affirmative action that provides representation for historically and currently disadvantaged groups in Indian society.” Discuss the statement.
Topic- FOR THE WEAKEST
- Sub-classification among SCs
WHY IN NEWS ?
- The Supreme Court has given convincing reasons for a reconsideration of the verdict given by a five-judge Bench in 2004 and 2004 order stated that State legislatures have no power to create sub-classifications among the list of Scheduled Castes notified by the President.
- A five-judge Bench of the Supreme Court has held that States can sub-classify Scheduled Castes and Scheduled Tribes in the Central List to provide preferential treatment to the “weakest of the weak”.
- “Citizens cannot be treated to be socially and educationally backward till perpetuity; those who have come up must be excluded like the creamy layer,” the judgment said.
- With this, the Bench took a contrary view to a 2004 judgment delivered by another Coordinate Bench of five judges in the E.V. Chinnaiah case.
- The Chinnaiah judgment had held that allowing the States to unilaterally make a class within a class of members of the Scheduled Castes would amount to tinkering with the Presidential list.
- Justice Mishra disagreed with this and reasoned that sub-classifications within the Presidential/Central List does not amount to tinkering with it as no caste is excluded from the list.
- The Constitution Bench, led by Justice Arun Mishra, said reservation has created inequalities within the reserved castes itself.
- The court pointed out that there is a caste struggle within the reserved class as the benefits of reservation are being usurped by a few.
- The judgment is significant as it fully endorses the push to extend the creamy layer concept to the Scheduled Castes and Scheduled Tribes.
IDENTIFICATION OF SC/ST :
- The Constitution, while providing for special treatment of SCs and STs to achieve equality, does not specify the castes and tribes that are to be called Scheduled Castes and Scheduled Tribes.
- This power is left to the central executive, The President, under Article 341
- As per Article 341, those castes notified by the President are called SCs and STs.
- A caste notified as SC in one state may not be a SC in another state.
- 342(1): The President may with respect to any State or Union Territory, and where it is a State, after consultation with the Governor, by a public notification, specify the tribes or tribal communities or part of or groups within tribes or tribal communities as Scheduled Tribe in relation to that State or Union Territory.
- Scheduled Castes (SC) are given 15% quota in jobs/higher educational institutions while Schedule Tribes (ST) are given 7.5% quota in jobs/higher educational institutions.
- Reservation is provided not only with respect to direct recruitment but also with respect to promotions for SC/ST category (Article 16(4A)).
MEANING OF SUB-CATEGORISATION/SUB-CLASSIFICATION :
- Scheduled Castes or Scheduled Tribes are made up of several castes which are not homogenous.
- It is argued that some of the castes among the category remain grossly under-represented despite reservation in comparison to other Scheduled Castes.
- This inequality within the Scheduled Castes is underlined in several reports, and special quotas have been framed to address it.
- The “creamy layer” concept puts an income ceiling on those eligible for reservation.
- While this concept applies to Other Backward Castes (OBCs), it was applied to promotions of Scheduled Castes for the first time in 2018.
- The central government has sought a review of the 2018 verdict and the case is currently pending.
ARGUMENTS For Sub-categorisation :
- As India is a welfare state, its obligation is to undertake the emancipation of the deprived section of the community and eradicate inequalities.
- When the reservation creates inequalities within the reserved castes itself, it is required to be taken care of by the State making sub-classification and adopting a distributive justice method so that State resources do not concentrate in few hands and equal justice to all is provided.
- Justice involves redistribution and reallocation of resources and opportunities and equitable access to all public and social goods to fulfil the very purpose of the constitutional mandate of equal justice to all.
- Reservation was not contemplated for all the time by the framers of the Constitution.
- If sub-classification is denied, it would defeat the right to equality by treating unequal as equal.
- There are unequals within the list of Scheduled Castes, Scheduled Tribes, and socially and educationally backward classes.
- Various reports indicate that Scheduled Castes and Scheduled Tribes do not constitute a homogenous group.
- The Supreme Court has also stated that States can sub-classify SC and ST in the Central List to provide preferential treatment to the “weakest out of the weak”.
ARGUMENTS AGAINST Sub-categorisation:
- The argument is that the test or requirement of social and educational backwardness cannot be applied to Scheduled Castes and Scheduled Tribes.
- The special treatment is given to the SCs due to untouchability with which they suffer since ages.
- In the N M Thomas V/S State Of Kerala case in 1976, the Supreme Court itself has admitted that Scheduled Castes are not castes but they are a class and hence should be treated as a class.
- Sub categorisation will be used to appease one vote-bank or the other among the SC/ST and thus a cause of social justice would end being politicised.
GOVT. INITIATIVE TO IMPROVE SITUATION OF SCs AND STs :
The Constitution provides a three-pronged
- PROTECTIVE ARRANGEMENTS :
Such measures as are required to enforce equality, to provide punitive measures for transgressions, and to eliminate established practices that perpetuate inequities. A number of laws were enacted to implement the provisions in the Constitution. Examples of such laws include the Untouchability Practices Act, 1955, Scheduled Caste and Scheduled Tribe (Prevention of Atrocities) Act, 1989, The Employment of Manual Scavengers and Construction of Dry Latrines (Prohibition) Act, 1993, etc. Despite legislation, social discrimination and atrocities against the backward castes continued to persist.
- AFFIRMATIVE ARRANGEMENTS :
Provide positive treatment in allotment of jobs and access to higher education as a means to accelerate the integration of the SCs and STs with mainstream society. Affirmative action is popularly known as reservation. Article 16 of the Constitution states “nothing in this article shall prevent the State from making any provisions for the reservation of appointments or posts in favor of any backward class of citizens, which, in the opinion of the state, is not adequately represented in the services under the State”.
Provide resources and benefits to bridge the socioeconomic gap between the SCs and STs and other communities. Major part played by the Hidayatullah National Law University. Legislation to improve the socioeconomic situation of SCs and STs because twenty-seven percent of SC and thirty-seven percent of ST households lived below the poverty line, compared to the mere eleven percent among other households. Additionally, the backward castes were poorer than other groups in Indian society, and they suffered from higher morbidity and mortality rates.
- In the present case, the affected State was Punjab, which wanted to give preference to Balmikies and Mazhabi Sikhs among seats reserved for SC candidates. This measure was struck down by the HC, citing E.V. Chinnaiah.
- Tamil Nadu has also carved out 3% compartment for Arundhatiyars within the 18% SC quota.
- Such affirmative action programmes will be protected if a larger Bench overturns the Chinnaiah formulation. However, the outcome may not be an unmixed blessing for Dalits at large.
- Recent jurisprudence is veering towards the view that the ‘creamy layer’ concept should be applied to SC/ST candidates too.
- Given the oppression and marginalisation(seclusion) Dalits continue to face, it is a moot question whether this is the appropriate time to begin excluding some of them on the ground that they are better off than the rest of the community.
WHAT IS CREAMY LAYER ?
The expression ‘means-test and creamy layer’ first found its mention in the Supreme Court’s landmark judgment in the Indra Sawhney vs Union of India case of 1992 (also known as Mandal Commission case), that was delivered by a nine-judge Bench on November 16, 1992.
o The creamy layer was then described as- “some members of a backward class who are socially, economically as well as educationally advanced as compared to the rest of the members of that community. They constitute the forward section of that particular backward class and eat up all the benefits of reservations meant for that class, without allowing benefits to reach the truly backward members”.
- In exercise of the powers conferred by Article 340 of the Constitution, the President appointed a backward class commission in December 1978 under the chairmanship of B. P. Mandal.
- The commission was formed to determine the criteria for defining India’s “socially and educationally backward classes” and to recommend steps to be taken for the advancement of those classes.
- The Mandal Commission concluded that India’s population consisted of approximately 52 percent OBCs, therefore 27% government jobs should be reserved for them.
- The commission has developed eleven indicators of social, educational, and economic backwardness.
- Apart from identifying backward classes among Hindus, the Commission has also identified backward classes among non-Hindus (e.g., Muslims, Sikhs, Christians, and Buddhists.
- It has generated an all-India other backward classes (OBC) list of 3,743 castes and a more underprivileged “depressed backward classes” list of 2,108 castes.
PROS OF RESERVATION :
- It ensures diversity in advanced education, equality in the workplace and offers protection from hatred.
- It helps in the emancipation of disadvantaged individuals and thereby promotes equality for all.
- It breaks stereotypes regarding caste, religion, and ethnicity.
- It increases social mobility.
- It is needed to compensate for centuries of oppression and discrimination and provides level-playing fields.
- It seeks to bring equity in society by addressing ‘graded inequalities’.
CONS OF RESERVATION :
- There is concerns that leads to erosion of meritocracy.
- It can still reinforce stereotypes as it demeans the achievements of marginalized sections.
o People coming under the ambit of reservation, their success is labelled as a result of Reservation, instead of their capabilities and hard work.
- There are concerns that reservation can serve as a medium for reverse discrimination.
- Due to vote bank politics, even after discrimination issues have been diminishing, it is difficult to withdraw the reservation.
- The concern should be less about the ‘creamy layer’ occupying posts under SCquota and more about ensuring adequate representation to the most marginalised among