> Potholes on the digital payment superhighway – The National Payments Corporation of India must be supported and there has to be a rational structure of pricing
Mains (GS-III : Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment, Inclusive growth and issues arising from it.)
[This article talks about the issues related NPCI, Digital payment system & how government must support it]
Digital payments have found strong ground, especially in India, increasingly relegating all other modes of payments to the background.
It embraces all kinds of operators (including direct benefit transfer by the government) across the country and even internationally.
How RBI modernised the payment system?
The Real Time Gross Settlement System, or RTGS, launched by the RBI in March 2004.
The RBI introduced National Electronic Funds Transfer, or NEFT and bulk debits and credits to support retail payments around the same time. Now, NEFT is available round the clock and RTGS will follow from December 2020 — only a few countries have achieved this.
The sterling contribution of this robust payment system, especially retail payments, was seeded and reinforced with the setting up of the National Payments Corporation of India (NPCI) by 10 lead banks at the instance of the RBI in 2009.
However, there were many within and outside the RBI, including in the Indian Banks’ Association, who had apprehensions about the success of such a model for the NPCI.
The Bank for International Settlement’s endorsement of the NPCI model in 2019 is a major accolade.
What is new demand about NPCI?
There is a demand from some quarters that the NPCI should be converted into a for-profit company to withstand competition. The shareholders of the NPCI can have windfall gains too.
Why this demand is wrong?
This will be a retrograde step with huge potential for loss of consumer surplus along with other strategic implications.
The MDR issue: In Budget 2020-21, the government prescribed zero Merchant Discount Rate (MDR).
What is government’s justification?
Depositors implicitly pay around 3% to banks as net interest margin, being the difference between saving and risk free bond rate, for enjoying certain payments services traditionally. When banks enjoy such a huge amount of current account savings account (CASA) deposits, in return, is it not incumbent on them to provide such payment services, costing only a small fraction of such a gain?
What happened recently in response to this move?
The government left out other providers of digital payment products from this MDR prescription, which is unjustified and had adverse effects.
Taking advantage of this dichotomy, many issuing banks switched to mainly Visa and Master cards for monetary gains.
As customers were induced by such supplier banks, it created a kind of indirect market segmentation and cartel formation, though there is hardly any quality difference in payment products.
It may be noted that even the European Central Bank imposed a ceiling on MDR for all, protecting consumer interest.
What must be done?
With digital payment being a public good like currency notes, it was necessary that the corporation was fully supported by the RBI and the government as an extended arm of the sovereign.
It was also necessary to contain expectations on profits, avoiding gyrations of the stock market along with direct or indirect control by powerful private interests which had the potential to dilute the public good character of the outfit.
like the RBI providing free use of the RTGS and other products, the strategy should be to assist the NPCI financially, either by the RBI or the government, to provide retail payment services at reduced price (in certain priority areas). This may also help support expansion of the payment system network and infrastructure in rural and semi-urban areas in partnership with Fin-Tech companies and banks.
The ideal pricing for digital payments products should be based on an analysis of producer surplus, consumer surplus (i.e. gain or loss of utility due to pricing) and social welfare for which we need cost volume price data.
A factor which needs to be reckoned is the float funds digital payments allow (cash withdrawal is a drain on the banking system), which is a source of sizeable income for banks.
The RBI will do well to study and arrive at a rational structure of pricing including MDR (possibly also penalty on default by customer), given that the digital payment system is like a national superhighway, for which the government has a crucial role to play in protecting consumers against exploitation.
It is not the intention to deny a fair amount of return to payment service providers including Fin-Tech companies. But should this be at the cost of huge loss of consumer surplus? Ideally, it should be a case of win-win for all.
> The manacles of caste in sanitation work – The manacles of caste in sanitation work
Mains (GS-I : Salient features of Indian Society, Social empowerment, GS-IV : empathy, tolerance and compassion towards the weaker-sections.)
[This article talks about the issue of manual scavenging in India]
Even in 2020, the Indian government and our civil society continue to grapple with the inhuman nature of manual scavenging.
While civil society started a movement in the 1990s to abolish dry latrines, the focus now is on manhole deaths and provision of safety equipment to sanitation workers.
The movement has been demanding the abolition of the dehumanising practice of the manual removal of human excreta and calls for the introduction of mechanisation for handling waste.
What are some issues associated with manual scavenging?
The government’s description of dry latrine was a problem, as it defined dry latrine as “latrine other than a water-seal latrine”.
Manual scavenging was not just a practice related to dry latrines, but also to insanitary latrines and open defecation. (Until the introduction of the Employment of Manual Scavengers and Construction of Dry Latrines (Prohibition) Act in 1993, State governments had a post called ‘scavengers’.)
There have hardly been any organised movements to demand permanent job status for sanitation workers.
Most sanitation contracts are given to private contractors or self help groups, and such staff hardly have ID cards, leave alone the protection of medical insurance policies.
The situation is so dire that while we find volunteers to distribute food and undertake rescue operations during natural calamities, hardly any volunteer offers to do cleanup work or dispose of dead bodies.
This situation has continued even during the COVID19 pandemic. In Tamil Nadu, sanitation workers are asked to work in newly formed COVID19 wards.
Similarly, in Kotagiri town panchayat, officials asked the sons of sanitation workers to work in COVID19 wards. (use this example in Ethics answer)
Unlike other labour forces, sanitation workers do not have a separate rulebook that lays down guidelines for their work timings, holidays, a proper place for roll call, removal from duty, etc.
There are no vehicles for sanitation workers to travel to their designated workspaces, and they have to either walk for kilometres or use garbage vehicles .
To put this in contrast, no supervisor would stand and travel with the sanitation workers.
There are hardly any exclusive trade unions for sweepers, and unlike other sections in government or private workforce, their problems are voiced by only those who are not associated with sanitation work — often NGOs.
Reasons behind the issue:
Majority of the Society lacks the empathy for manual scavengers in India.
Manual scavenging exists mainly due to the continued presence of unsanitary latrines where human waste has to be cleaned physically, rather than by a machine or sewage system. The majority of such unsanitary latrines are dry latrines that don’t use water.
Increasing urbanization in the country requires more manual scavengers for the cleaning of sewers or septic tanks
Poor enforcement of existing laws against the practice.
Even if they want to leave their profession, their uncleanliness tag and the resultant social stigma makes it impossible for them to find alternative jobs.
What government has done in the past?
Mounting pressure from civil society, coupled with the intervention of the Supreme Court, forced the Central government to conduct a survey of manual scavengers in 2013.
The survey found that dry latrines and manual removal of human excreta still persisted. In the same year, the government introduced the Prohibition of Employment as Manual Scavengers and their Rehabilitation Act.
In 1993, the then government promulgated an Act prohibiting the construction of unsanitary dry latrines and employing manual scavengers.
In July 2018, the Ministry of Housing and Urban Affairs has launched a ‘technology challenge” with an aim of eliminating human entry into septic tanks and drains for cleaning
Manual Scavenging is regulated by the Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013 which further reinforces the ban.
National Commission for Safai Karmacharis (NCSK) is a statutory body established under National Commission for Safai Karamcharis Act, 1993.
Self-Employment Scheme for Rehabilitation of Manual Scavengers (SRMS) was introduced in 2007 with the aim to rehabilitate remaining manual scavengers and their dependents in alternative occupations.
Swachh Bharat Mission focuses on the conversion of insanitary latrines into sanitary latrines.
Supreme Court of India gave landmark judgement to identify and award compensation of Rs 10 lakh to dependents in deaths of sewerage workers who died while cleaning sewerage and septic tanks since 1993.
In India, sanitation work is caste-ridden and hence, there is an urgent need to dissociate caste from labour.
Mechanization of sanitation work is the way forward to eliminate manual scavenging.
New alternatives like Bio-toilets in the railway shall be implemented everywhere.
> US sues Google in biggest anti-trust case: What it means for India
Mains (GS-III : Science and Technology, Economy)
[This article talks about How Google is monopolising the economy globally as well as in India.]
The United States Department of Justice (DoJ) sued Google on Tuesday, alleging that the company had abused its dominant position in a way that had harmed its competitors as well as customers.
What is the lawsuit about?
Deputy Attorney General of the DoJ said the main concerns are business practices that may have led to “massive concentrations of economic power” in a few companies such as Google.
Google has maintained its monopoly power through exclusionary practices that harm competition. So the Justice Department has determined that an antitrust response is necessary to benefit consumers.
What led to the lawsuit?
Earlier this month, a US House of Representatives panel submitted the report of a bipartisan investigation into the working of Amazon, Apple, Google and Facebook. The probe had started in July 2019.
These companies have been on the radar of governments in many countries for being big spenders and trying to steamroll competition by either buying out their rivals or pushing vendors to avoid working with these rivals.
The report called for the big technology companies to be broken up and for a “presumptive prohibition against future mergers and acquisitions by the dominant platform”.
Why is the lawsuit important?
In the April-June quarter, the company had earned nearly $38 billion, mainly from advertisements.
The last time Google faced legal action for allegedly abusing its dominance in the search market was almost a decade ago — in 2011
Google is a global market player. This (lawsuit) would have a worldwide impact where Google’s practices could potentially be looked at. But having said that, the CCI (Competition Commission of India) is already looking into such practices and has already fined Google previously. This is very much under the CCI radar to keep these practices under check.
What are the allegations that Google faces in India?
Over the last three years, Google has had multiple run-ins with the CCI for alleged abuse of its dominant position in the search engine market, the Android smartphone and television market, as well as the Google Flights service.
In February 2018, the CCI had fined Google Rs 136 crore for unfair business practices in the online search market. It said that Google had “allocated disproportionate real estate” for its affiliates, to the disadvantage of other companies that were trying to gain market access.
Besides, it was also found that Google has provided a further link in such commercial units which leads users to its specialised search result page (Google Flight) resulting into unfair imposition upon the users of general search services as well.
What could the US Justice Department action mean for Google?
The lawsuit is just the beginning of something formal, after the House panel report. Going ahead, Google may argue before the courts that it is being singled out from amongst the other companies, or try to explain why it does not really abuse its dominance in any market segment.
There can be a spiralling effect but every country will have to conduct its own separate investigation if the same conduct has been done there. Regulators will definitely have a sense of looking into the practices of Google.
> Having ensconced itself as core of Free and Open Indo-Pacific vision, Quad needs a definitive blueprint
Mains (GS-II : Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests)
[This article focuses on how QUAD is important in Indo-pacific & what it means to India as well as China]
The second ministerial meeting of the four-nation Quadrilateral Security Dialogue (Quad) in Tokyo on October 6 has been followed by a decision to include Australia in the Malabar 2020 naval exercise after a gap of 13 years.
The threat posed by China to the geo-strategic and geo-economic landscape of the Indo-Pacific region ranks alongside the challenge of the pandemic in terms of disruption.
Indo-pacific region & China:
The “Indo-Pacific” concept has gained fresh currency should not come as a surprise. It is an inclusive and representative term that reflects the contemporary interconnectedness of trade, technology and supply chains in a wider region.
Beijing views the “Indo-Pacific” as a direct threat to the BRI, and in classical wei qi calculus, as an “encirclement” strategy.
In the South China Sea, China’s preposterous claims, island-building spree and militarisation of oceanic space continue to grab headlines. China is a member of UNCLOS yet disregards its precepts.
In the Indian Ocean, China uses the cloak of anti-piracy deployments to maintain a quasi-permanent presence, with bases in Gwadar and Djibouti as beachheads for penetrating South Asia, the Gulf region and littoral Africa.
What does china think about QUAD?
During his recent visit to Malaysia, Chinese Foreign Minister Wang Yi criticised the Quad, stating that Washington was aiming to build an “Indo-Pacific NATO” through the Quad.
How China can response to QUAD?
One can expect China to use wei qi principles and guanxi (networks and connections) to weaken the Quad, especially in Japan and Australia. The economies of these two key Quad members remain heavily dependent on China.
What role did India play against China?
Once a solitary voice, India’s concerns about the BRI are now echoed by several countries. India took the lead in banning Chinese apps.
Notably, it was India’s decision that had elevated the Quad dialogue to ministerial-level in 2019.
Yet again, it is India which has shed its reticence and decided to welcome Australia to the Malabar 2020 exercise.
USA in Indo-pacific:
An ambitious China has consistently sought the expulsion of the US from its periphery.
The US has played a key role in the region’s stability and prosperity following the Second World War.
The US position on the South China Sea is now fully in alignment with the Permanent Court of Arbitration (PCA) tribunal award of 2016.
While it cannot restore status quo ante in the South China Sea, it does boost the morale of disputants such as the Philippines, who are routinely bullied by China.
The way forward for QUAD:
The Quad, having ensconced itself as the core of the Free and Open Indo-Pacific (FOIP) vision, now needs a definitive blueprint in order to have a meaningful impact.
It should have a tough security-oriented core with a softer and inclusive exoskeleton that prioritises the developmental agenda.
The Quad Plus format should cater to the region’s economic needs, including infrastructure, connectivity and capacity-building.
Looking ahead, there is scope to convene a future Quad meeting in the 2+2 format, with diplomats and civilian defence officials participating at the level of director general.
Such an expanded format could gradually be elevated to the level of vice minister and minister.
> Virtual courts cannot fully replace a process that demands direct human interaction
Mains (GS-II : Structure, organization and functioning of the Executive and the Judiciary)
[This article talks about disadvantages of virtual courts]
Introduction: The Parliamentary Standing Committee on personnel, public grievances, law and justice, in its recent report, recommended holding virtual courts even after the pandemic ends.
Why they have emphasised on virtual courts?
Digital justice is cheaper and faster besides addressing locational and economic handicaps.
Ensures safety of vulnerable witnesses providing testimony.
Expedites processes and procedures and are an improvement over traditional courts as they are most affordable.
Citizen-friendly and offer greater access to justice.
What is the magnitude of pendency in courts?
There are 3.1 crore cases pending in the lower courts (83 lakh pending for over 10 years).
44 lakh in the high courts (32 lakh pending for over 10 years).
60,000 cases pending in the Supreme Court (the figures are as of 2019).
Prisons are over capacity by 114 per cent, of which two-thirds are undertrials, who have had no justice at all.
Do we know reasons behind pendency of cases?
When government agencies file cases or appeals, they ignore these costs as they come out of the public exchequer.
Very often, the police and other criminal investigative agencies take years to produce witnesses. Judges hesitate to compel them.
Repeated adjournments are sought, not just by the accused, but by prosecuting agencies who are nonchalant. Examination of the causes of pendency should, therefore, extend far wider afield.
What are some concerns regarding virtual courts?
Major policy changes always have unintended consequences, so careful thought is required on what types of cases and what parts of the judicial process are amenable to going online.
Technologies alone do not improve the system, people do. Adoption of new and evolving technologies requires careful preparation to ensure that “justice delivery services” created by software engineers is matched by local court systems and the level of training given to those who handle them in India’s courts.
Today, court rulings have been applied not only to human beings but to animals, rivers and even gods. Therefore, any case involving decisions affecting the life and liberty of persons must remain in the realm of physical courtrooms.
Appealing for compassion for the elderly and the disabled, and pleas for leniency of punishment for senior citizens with co-morbidities in COVID-19 times are easily ignored by judges, when the accused is only a small square on a screen and not a frail human being standing before them in flesh and blood.
Issues related to virtual courts:
Lawyers have been compelled to argue cases from inside their cars if the network in their homes is faulty.
There are audio failures, and lack of connectivity in rural areas. Unless connectivity is established, it cannot be presumed and compelled.
Rushing into new protocols without understanding uses and applications will disempower the poor even further, especially undertrials who cannot afford lawyers.
Forceful interventions, and often repeated stressing of a point is required in a courtroom.
Lawyers need to interrupt when they feel the arguments of their counterparts are factually inaccurate.
Facial expressions such as fear, guilt, regret, sadness, anger, which can affect a case, are constricted and almost frozen into a small space.
Faces are often out of proportion and distorted.
Nuanced arguments that are most important in law sometimes need perseverance to get across, as is the ability to display evidence creatively.
The dispensation of justice is a human endeavour made up of laws, ethics, morality, wisdom and compassion.
The absence of any one of these five ingredients, short-changed by restrictive virtual situations, would render the exercise of justice only partially satisfactory or even downright unjust.