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Daily Brief

rd
3 February 2017

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 Editorial/OPINION
Front Page / NATIONAL
A season to repair relations

The Hindu
Andhra Pradesh working on system to DNA-tag convicts Context
The Hindu Nirupama Rao, a former ambassador to China, makes a case for Indo-
China dialogue to promote connectivity, communication & betterment of
Context bilateral relations b/w the two countries
State drafting legislation that will enable collection of genetic fingerprints to Backdrop
solve crime, track offenders
Article takes the backdrop of recent suggestions made by Chinese
What has happened? ambassador for improvement of bilateral ties between China and India
The Andhra Pradesh government plans to bring in legislation that will allow Issues that concern India vis--vis China
the State police and investigating agencies to collect and store DNA
samples in a centralised database
Chinas blocking of Indias entry to NSG
Backdrop:-
Vetoing Indias efforts to get Masood Azhar listed under UNSCs
Draft bill on the issue by centre in 2012: Centre had first prepared a 1267 Committee
draft bill on the issue in 2012, but the legislation ran into severe opposition Deployment of Chinese military and engineering assets in
from activists on the ground that it violated privacy. It has since been on Pakistan-occupied Kashmir (PoK)
hold The development of the China-Pakistan Economic Corridor
(CPEC)
The Centres Human DNA Profiling Bill, 2015, was prepared
by the Department of Biotechnology and the Hyderabad-based Suggestions made by ambassador
Centre for DNA-Fingerprinting and Diagnostics but is yet to be
cleared by the Union Cabinet. Several organisations and Chinese ambassador suggested a
individuals, however, raised concerns that the bill gave sweeping
powers to government to mine the database and use it for
purposes beyond just solving crime Friendship and cooperation treaty
A free trade agreement (FTA) to boost bilateral relations
DNA collection-kit launched Joining of hands on Chinas One Belt, One Road (OBOR)
initiative
In August 2016, the Andhra Pradesh government, in an event attended by Resolution of Boundary disputes: Ambassador expressed that
Chief Minister N. Chandrababu Naidu, launched a DNA collection-kit time is ripe for both countries to reap some early harvest
developed by IntegenX, Inc, a US company that enables DNA to be outcomes from unresolved boundary issues
extracted from saliva and blood samples within a matter of two hours

Rationale behind the move Early harvest: A term, in trade negotiations, for agreeing to
accept and implement the results of a portion of the negotiations
Tracking repeat offenders: The reasoning is that a centralised DNA before the rest of the negotiations are completed
database on convicts would help track repeat offenders in sexual assault
and rape In here, it indicates that both India & China need to build upon
existing points of agreement while working to resolve the issue
Issues fully

Database might be compromised

Significance: A policy shift within Chinese establishment vis--vis
India!

Counter: So far, about 70 million samples have been collected in 54 That the Ambassador chose to make these remarks at the newly-
countries over 20 years, and there have been no instances of databases established Ji Xianlin Centre for India-China Studies at the University of
being compromised Mumbai campus could mean that

Database needs a supportive central legislation to be of any There is an effort within Chinese establishment to review
use relations with neighbors like India
Need to first train people in collecting DNA from crime scenes
and storing them properly. A database can come later Who was Ji Xanlin?

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Ji Xianlin was one of Chinas foremost modern Indologists and a Chinese ambassador has suggested resolving boundary issues
protagonist of friendship and civilizational understanding between India and and joining of OBOR by India but it should be noted that China
China conveniently undermined Indian apprehensions and sensitivities
over CPEC despite recognizing the disputed nature of the area
Why, such a shift might be taking place within Chinese
under 1963 China-Pakistan Boundary Agreement
establishment?
Reviving connectivity b/w India & Tibet: Author states that
Author states that the recent suggestions by Chinese ambassador might India can consider reviving connectivity between Tibet and India,
indicate a shift in Chinas policy towards India because of strategic especially through the Sikkim sector into Bengal. The old route
uncertainties generated by the advent of Donald Trumps administration in between Lhasa and Kolkata via Nathu La was the most easily
the U.S. and his open negativity towards China. Moreover, Mr Trumps traversed route and may still be, despite the road networks
following actions have spurred concern in Beijing, constructed by the Chinese in Tibet between Tibet and
mainland China, via land and sea, up until the mid-20th century.
This is a road that provided for the transport of goods and
His phone call with the Taiwanese President, Tsai Ing-wen, services between Tibet and the outside world through India
before he took office (It should be noted that as per People
Republic of Chinas (PRC) One China policy, Taiwan (or
Republic Of China (ROC)) is its inalienable part while ROC
considers itself a fully sovereign country)
His proclaimed intention to impose punitive tariffs on Chinese
goods
The new U.S. Secretary of State, Rex Tillersons thinly disguised
threats against Chinas building of artificial islands in the disputed
areas in the South China Sea

Dissecting the suggestions:

Treaty of friendship & Cooperation

Author states that the suggestion of a friendship & cooperation treaty made
by Chinese ambassador recalls the 1954 Panchsheel Agreement which
outlined the 5 principles of peaceful co-existence & were broken with
impunity by China in 1962

Previous agreements: The 1993 and 1996 agreements on

peace and tranquility and confidence-building in the India-China
border areas reiterated the five principles and also spoke of the
non-use of force and the concept of mutual and equal security
Mere symbolism: Given the difference in size & strength of both
the nations, a treaty here would be only a symbolic gesture rather
than having any transformative value
Free Trade Agreement
Author terms the suggestion of an FTA to be forward-looking idea
Opening ties b/w India & Xinjiang region: An opening of ties
between India and the Xinjiang region of China is also worth
examining. Providing for air connectivity between Urumqi, the
capital of Xinjiang province, and New Delhi as one of the OBOR
linkages, for instance, would help the promotion of people-to-
people ties and trade and commercial contact and could also
help open a new chapter in counter-terrorism cooperation
between India and China
o Common challenges:Kashmir and Xinjiang, both
contiguous neighbors, have similar challenges posed
by terrorism and separatist movements

Growth in Indo-China trade: Trade between India and China

has grown to an annual volume of $70 billion (2015-16)
India wants Chinese investment:India has made a strong pitch
for Chinese investments under Make in India in infrastructure
development, solar energy and smart cities
Only a comprehensive FTA will help India: An FTA that is
goods-centred will obviously not benefit India given the huge
trade in goods imbalance that favours China. An FTA that is
comprehensive, covering goods and services, cross-border
investment, R&D, standards and dispute resolution would be
worth exploring.
Connectivity: Joining OBOR
Indias reservations against OBOR are mainly due to the following reason,
Way forward
Author states that the longstanding peace b/w two countries should be
preserved and the suggestions made by Chinese ambassador, howsoever,
modest they may be, are worth a consideration
Competitive coexistence with a clear listing out of differences b/w
two nations and how to manage them, the promotion of business
and people-centered connectivity, and mutual confidence-
building present a way forward
The border problem will take time to resolve owing to its
complexity

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Neither transparent nor accountable

The Hindu
First among allies?
Context
The Hindu
Author states that the recent move proposed by Union Budget to reign in
political financing is bound to fail. Why does he thinks so? Let us find out Context

What has been proposed? The pressing urgency of post-Brexit trade agreements is forcing the British
government into a closer embrace of the Trump administration despite
protests
Limiting anonymous donations: In the Union Budget presented
on 1st Feb 2017, it was proposed that political parties would now
have to mention details of anonymous donations above Rs 2000
unlike the previous limit of Rs 20000.
o This announcement should be seen in the light of ECONOMY
recent ADR report which cited that maximum portion of
political funding is composed of such anonymous
donations
Allowing donors to purchase electoral bonds: Budget further
proposed to allow donors to purchase electoral bonds from banks NPS subscribers can prematurely withdraw 25% of corpus tax-free
against cheque and digital payments to be given to registered
political parties for redemption The Hindu
Filing Return within time limit: The Budget makes it mandatory
Context
for political parties to file returns within a time limit
Article talks about proposals related to National Pension Scheme (NPS) in
Authors contention the recent Budget

Proposal aredoomed to fail, not because they doesnt go far enough but Proposals
because they go in the wrong direction

Authors reasons Withdrawal limit increased: Subscribers are now allowed to

No disruption to the flow of illicit money: The proposal does
not disrupt the flow of illicit political donations but only channels it
differently, and will not reduce the proportion of cash from
unverifiable sources in the total donations received
Circumvention is easy: Author states that all that political
parties would now have to do is to find more people to lend their
names to these donations, or better still, find more names of
unsuspecting people to be listed as cash donors
Against transparency: The proposal to allow donors to
purchase electoral bonds from banks against cheque and digital
payments to be given to registered political parties for
redemption, meant to cater to donors need to remain
anonymous to rival political parties, hardly contributes to
transparency
Low compliance in absence of strict punitive measures: The
Budget makes it mandatory for political parties to file returns
within a time limit, but in the absence of extreme penal provisions
compliance is likely to be low
withdraw up to 25% of their accumulated corpus before
retirement without tax
Investment ceiling increased for self-employed: Self-
employed individuals have also been allowed to invest up to 20%
of their income into the NPS as opposed to 10% earlier
No tax on premature withdrawal if NPS allows: If the NPS
Trust allows premature withdrawal after five or ten years as per
its rules, there will be no tax on that
Exemption on partial withdrawal: It has also been proposed to
insert a new clause (12B) in the section 10 of the Income Tax
Act, 1961 to provide exemption on partial withdrawal not
exceeding 25% of the contribution made by an employee. This
benefit will be effective on partial withdrawals made by the
subscriber after April 1, 2017
Contribution up to 20% of the gross income of the self-employed
individual (individual other than salaried class) will be deductible
from the taxable income under Section 80CCD (1) of the Income
Tax Act, 1961, as against 10% earlier

What should have been done?

The Triple Agenda

Limit the amount that can be received in cash as donations:

Author states that instead of existing proposal budget should
have placed a cap on the amount a party may receive in cash as The Hindu
a donation
Context
There should be no anonymity for donors: Donors should not
enjoy any anonymity, before tax authorities or the general public. The budget presented yesterday marks a paradigm shift in multiple ways
The absence of such anonymity, of course, will bring down the
level of contributions from corporate houses and other entities to Author delineates positives of the budget and juxtaposes reasons as to why
parties, not such a bad thing it is a step in the right direction.

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Read it once.
Note: Everything relevant about Union Budget vis--vis UPSC
preparation
Indian Express
The less cash budget
Indian Express
Context
Article juxtaposes the budgets digital strategy to spur a less cash economy
as envisaged by the present government in the aftermath of demonetization
move
Two schemes
Author states that at the heart of Budgets strategy to spur a digital
ecosystem lies a push towards increased usage of BHIM app. Government
has tried to achieve this through introduction of two incentive schemes,
Referral Bonus scheme
Cash back scheme for merchants who accept the payment
system
Further steps taken
A merchant version of the Aadhaar Pay system will be launched
soon
To stimulate adoption in different situations, the government
plans to mandate digital payments at petrol stations, hospitals
and universities
Cash transactions over Rs 3 lakh have been banned altogether
Removal of service charge: Indian Railways will no longer levy
a service charge on train tickets booked online through
the IRCTC website
Boosting digital infrastructure:
1. Improving point of sale digital infrastructure: Government is
going to remove duties on point-of-sale devices and fingerprint
readers and there are plans for 10 lakh point-of-sale machines to
be introduced by banks by March and another 20 lakh Aadhaar-
based point-of-sale machines by September 2017
2. Broadband connectivity to 150000 gram panchayats by the
end of 2017-18 under BharatNetalong with a DigiGaon initiative
to be launched to provide tele-medicine, education and skills
through digital technology. Overall, the governments target is to
achieve 25 billion digital transactions in 2017-18
Payments Board: A Payments Regulatory Board has also been
proposed under the Reserve Bank of India to supervise and
regulate payment and settlement systems
Bridging gender gap: Allocation of Rs 1.84 lakh crore for female
skill development which will help to close the gender gap and will
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further help in closing other gaps likeboth socio-economic and
digital
Why, government is right in incentivizing BHIM usage?
Because of the following features,
Simple to use: It is relatively simple to use and based on the
Unified Payments Interface (UPI) technology
No concerns about interoperability: It allows for bank-to-bank
and bank-to-e-wallet payments without concerns about inter-
operability
No need for internet connectivity: Currently, there are five
payment options on the BHIM app; the Aadhaar number will be
the sixth. There is no need for internet connectivity or a
smartphone
How does this budget help wallet players like paytym?
Author states that although much of the focus has been around BHIM, a
strategy that builds a trustworthy digital payments ecosystem and educates
consumers could create benefits for all digital payment players
Point of worry
Author points out that
Concern over cyber-attacks: With growing number of digital
transactions the threat of cyber-attacks also increases. While the
budget does provide for a Computer Emergency Response Team
for the financial sector, which would work in close coordination
with all financial sector regulators and other stakeholders, more
scenarios could have been anticipated and more resources
allocated to bolster cyber defences
Current state of security of Aadhaar-based payment
systems: The applications will use the biometric details
registered in the Aadhaar card system. Even top-of-the-line
fingerprint scanners can be fooled. Fingerprint data can be
stolen. Technology against this is being developed but is far from
being fool-proof
Way forward: A lot of ground to cover
Author states that despite obvious difficulties India still presents an
attractive destination to build up the right digital ecosystem and
environment
Study of digital trust by Fletcher school: In a first-of-its-kind
study of digital trust around the world that we are currently
conducting at The Fletcher School, in collaboration with
MasterCard, we find that out of 40 countries studied,
o A dismal rank: India ranks 36th in the quality of
consumer experience and trustworthiness of the digital
environment, as measured by security, accountability
and privacy features
o Ranked in the middle: In terms of how tolerant
consumers are to all the frictions in the digital system,
we find the Indian consumer in the middle of the pack
24th out of 40 countries
What does above rankings imply?
 There is a lot of ground to cover in creating a trustworthy
environment and enhancing consumer experience
The Indian consumer is both patient and adaptable and is likely
to give the government and the providers room to improve
Conclusion
The Budget is a step in the right direction as it incentivizes the people to
move towards digital transactions unlike demonetization which forced them
to do so.
Read More: BharatNet, All relevant points from Budget
Context
The budget has done some things right but there is a limit to what can be
achieved through stroke-of-the-pen reforms
Let us take a look at meaning of the word Structural reforms
Structural Reforms
At its simplest, structural reforms imply changes to the way the government
works. Structural reform is about the correction of government as it
functions at the ground level, a process which calls for deep immersion and
follow-through.

Read More: Please go through this article to have a thorough

A moment wasted
understanding as to what is actually meant by the word structural reform
Indian Express
Rest of the article is a brief commentary on steps taken in the budget
Context
Read it once
Budget makes some good moves on agriculture. But they dont add up to
reforms necessary to meet aspirations in rural India

Welcome initiatives

Author states that the Union budget has provided some welcome initiatives
like

1. Boosting rural roads: Support for rural roads (Pradhan Mantri

Gram Sadak Yojana) in the current as well as coming fiscal, at
Rs 19,000 crore each, is more than double the Rs 8,885 crore
and Rs 9,806 crore allocated in 2012-13 and 2013-14,
respectively
2. Boosting rural housing: The budgeted expenditure of Rs
23,000 crore for rural housing (Pradhan Mantri Awas Yojana) in
2017-18 is, again, almost twice the Rs 12,982 crore that was
spent in 2013-14
3. Helping Agri & farm sector:The creation of a Long-Term
Irrigation Fund with a total corpus of Rs 40,000 crore, a new
Pradhan Mantri FasalBima Yojana that is certainly an
improvement over previous crop insurance schemes in terms of
coverage and sums insured (though the subsidy provision of Rs
9,000 crore may prove inadequate)
4. Improving MGNREGS: Crediting of MGNREGA wages directly
into the accounts of beneficiaries alongside efforts to link the
programme with building of productive assets (farm ponds, dub
wells, compost pits, etc.)

Authors contention

The reforms are good but are inadequate wrt the necessary reforms to
meet the rising aspirations in rural India. Government could have taken the
lead for these bold reforms replacing subsidies with direct benefit
transfers and deregulating urea prices, among other things in the first
half of its tenure

Live Mint

Union budget and the need for structural reforms

Live Mint

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