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18th June Current Affairs

What is the Inter-State Council (ISC)?

(GS-II: Statutory, regulatory and various quasi-judicial bodies)

In News:

Tamil Nadu Chief Minister M K Stalin wrote to Prime Minister, asking that at least three meetings of the Inter-State Council should be held every year to “strengthen the spirit of cooperative federalism”.

Other suggestions:

Discuss important bills in ISC first: Bills of national importance should be placed before the Council before being tabled in Parliament.

This will enable “effective and interactive communication” between the states and the Centre on issues of common interest.

Sarkaria Commission recommendation: In 1988, the Sarkaria Commission suggested the Council should exist as a permanent body, and in 1990 it came into existence through a Presidential Order.

Effective working of ISC will reduce judicial intervention: What could be settled amicably among the executive branches is often taken to the doorsteps of the judicial branch.

Reconstitution of ISC:

Last month ISC was reconstituted:  The body will now have 10 Union Ministers as permanent invitees, and the standing committee of the Council has been reconstituted with Home Minister Amit Shah as Chairman. The Finance minister and the Chief Ministers of Maharashtra, UP, and Gujarat are some of the other standing committee members.

Amit Shah as Chairman. The Finance minister and the Chief Ministers of Maharashtra, UP, and Gujarat are some of the other standing committee members.

Issues with the ISC:

Irregular meetings: Council has met only once in the last six years — and there has been no meeting since July 2016.

Since its constitution in 1990, the body has met only 11 times, although its procedure states it should meet at least three times every year.

Recommendations are advisory in nature: non-binding in nature and therefore sometimes ignored by government and states

Lack of expertise: No presence of technical and management/administrative experts

No engagement with Civil society/NGO

Not a permanent body: President can establish it at any time if it appears to him that the public interests would be served

Standing Committee of ISC:

It was set up in 1996 for continuous consultation and processing of matters for the consideration of the Council.

Members: (i) Union Home Minister as the Chairman (ii) Five Union Cabinet Ministers (iii) Nine Chief Ministers the Council is assisted by a secretariat called the Inter-State Council Secretariat.

Since 2011, it is also functioning as the secretariat of the Zonal Councils.

Functions: Continuous consultation, monitor implementation and process all matters pertaining to centre-state relations before they are taken up for consideration in the inter-state council.

WTO strikes global trade deals

(GS-III: Effects of liberalisation on the economy (post-1991 changes), changes in industrial policy and their effects on industrial growth)

In News:

The World Trade Organization’s164 members (12th Ministerial Conference) in a historic step approved a series of trade agreements including commitments on fish, a partial waiver of intellectual property (IP) rights for COVID-19 vaccines, and pledges on health and food security.

Important Deals struck:

On Fisheries: prohibited certain forms of fisheries subsidies that contribute to overcapacity and overfishing, and eliminates subsidies that contribute to IUU-fishing recognizing that appropriate and effective special and differential treatment for developing country Members and least developed countries.

The accord to curb fishing subsidies is only the second multilateral agreement setting new global trading rules struck in the WTO’s 27-year history and is far more ambitious than the first, which was designed to cut red tape.

The fishing subsidies deal has the potential to reverse collapsing fish stocks

On partial IP waiver: Allowed the developing countries to produce and export Covid vaccines

Maintaining a moratorium on e-commerce tariffs: It is considered vital to allow the free flow of data worldwide.

India’s Leadership:

India has been able to secure a favourable outcome at the WTO after many years, despite a strong global campaign against Indian farmers and fishermen.

What were the concerns raised by India at WTO:

On issues of Fisheries and E-commerce: Revmoval of subsidies will hurt fishermen. So, India demanded to make extensive exceptions on a 20-year negotiation to cur harmful government fishery subsidies.

India is seeking broad exemptions for its fishing industry, including a 25-year phase-in period and a 200-nautical-mile exclusion for its artisanal anglers.

On E-commerce: India fears that new rules could provide the pretext for unfair mandatory market access to foreign companies. This will hurt the rapidly growing domestic e-commerce sector, which is still developing in India.

On Food: WTO should renegotiate subsidy rules for government-backed food purchasing programs aimed at feeding poor citizens in developing and poor countries.

India wants assurances that its public stock-holding program, which buys exclusively from the nation’s farmers and has exported in the past, cannot be challenged at the WTO as illegal.

On vaccines: India wants to waive IP rights for vaccines and extend the WTO ban on digital duties

Special and differential treatment (S&D) must continue, as such treatment has been a treaty-embedded and non-negotiable right for all developing members

Principles are sacrosanct: Ensure that multilateral rule-making processes are neither bypassed nor diluted. The principles of non-discrimination, predictability, transparency and most importantly, the tradition of decision-making by consensus need to remain sacrosanct.

Govt to tweak ancient monuments act to make it flexible

(GS-I: Indian Culture – Salient aspects of Art Forms, Literature and Architecture from ancient to modern times)

In News:

The government is working to bring amendments to the Ancient Monuments and Archaeological Sites and Remains (AMASR) Act-1958, which stipulates area around the protected monuments to make it “more flexible and friendly”.

What is AMASR Act 1958?

The Ancient Monuments and Archaeological Sites and Remains Act (or AMASR Act) is an act of parliament of the government of India that provides for the preservation of ancient and historical monuments and archaeological sites and remains of national importance, for the regulation of archaeological excavations and for the protection of sculptures, carvings and other like objects.

Need for new amendment:

To rationalize prohibited and regulated zones following controversies over development projects pertaining to different monuments.

To give more teeth to the ASI to remove encroachments from regulated zones around the monuments and hold the local authorities liable.

To create standardization for the inclusion of site/monument in the ASI list and if the need arises, monuments can also be dropped from the list.

To recheck the reason for having 100-metre and 300-metre limits as a recent Parliamentary Standing Committee report had also alluded to the fact that there was no specific reason behind these.

RBI to regulate bigtech and fintech

(GS-III: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment)

In News:

RBI governor has asked for regulation of Bigtech and Fintech companies. For this, With an aim to provide secure and affordable e-payments, the Reserve Bank of India (RBI) has come up with a document ‘Payments Vision 2025’.

Document ‘Payments Vision 2025’:

As part of its Vision 2025, the RBI will attempt

  • regulation of big tech and fintech in the payments space
  • explore guidelines on payments that involve BNPL(buy now pay later) services
  • work towards the introduction of CBDC (central bank digital currency)
  • seek inclusion of rupee in continuous linked settlement (CLS) (CLS provides protection for cross-currency settlement in 18 currencies)

Why the need for such regulation?

To avoid systemic concerns: Big Tech’s play in lending activities using customer data and sophisticated algorithms can lead to “systemic concerns” like over-leverage and inadequate quality assessment of borrowers.

Other Concerns: The entry of firms like Google, Amazon and Meta, which are referred to as Big Tech, also poses concerns related to competition, data sharing, data protection and operational resilience of critical services in situations where banks and NBFCs utilise their services.

Also, risks relating to cybersecurity, software development limitations in transaction capacity, the privacy of customer data and data security.

Last year’s Financial Stability Report, had raised some broad concerns, including about such companies’ products accepting deposits for some regulated financial sector entities.

Sensitive user data: Big-tech and fintech companies offer sophisticated services which use sensitive data from various sources to issue loans to users, including those not having collateral or credit history.

Issues of lending through digital channels, including mobile apps: Issues related to unfair practices, data privacy, documentation, transparency, and breach of licensing conditions.

Multiple regulators: The fintechs’ require multiple regulators to work together because a single technology like blockchain or de-centralised finance (DeFi) can have multiple uses coming under different watchdogs’ ambit.

Anonymity: DeFi poses unique challenges to regulators as it is anonymous. The lack of a centralised governance body and legal uncertainties can make the traditional approach to regulation somewhat ineffective.

What needs to be done?

Authorities and regulators have to strike a fine balance between enabling innovation and preventing systemic risks.

Guidelines: RBI will soon be issuing guidelines to make digital lending ecosystems “safe and sound while enhancing customer protection and encouraging innovation”.

Need for entity-based and outcome-based regulation.

Globally coordinated regulatory approach and inter-regulatory coordination: This will enable comprehensive assessment of such activities, activities and mitigation of risks.

Use of technology: Use of artificial intelligence and machine learning to determine the creditworthiness of a borrower.

Transparency: The methodology of algorithms underpinning digital financial services has to be “clear, transparent, explainable and free from exclusionary biases”.

In the age of technological changes, banks should not just work like banking service firms but like technology companies.