CAO Daily Editorial analysis for UPSC IAS 24-August, 2017
Current Affairs Only Daily Editorial Analysis for Competitive Exams
1.A BIT of critique
The recent report of the Justice B.N. Srikrishna committee, constituted to prepare a road map to make India a hub of international arbitration, has recommended many changes in Indian arbitration law and institutional mechanisms to promote arbitration in India.
Bilateral Investment Treaties (BITs)
It establish the terms and conditions for private investments made by individuals and business entities from one sovereign state in another sovereign state. BITs are often negotiated as part of a larger trade agreement between the contracting states.
BITs grant investors from a contracting state certain guarantees, including “fair and equitable treatment,” protection from expropriation, and the free transfer of funds. In addition, they provide investors recourse to arbitration, often under the auspices of ICSID, to resolve disputes with the host state.
Rights and protections
- National treatment.
- Most-favoured-nation treatment.
- Fair and equitable treatment.
- Compensation in the event of expropriation.
One of the main protections under a BIT is that it allows foreign investors to sue states directly by submitting claims for breach of the BIT to arbitration rather than to local courts.
India is currently battling 20-odd BIT disputes.
- The committee recommends the creation of an inter-ministerial committee (IMC), with officials from the Ministries of Finance, External Affairs and Law. It also recommends hiring external lawyers having expertise in BITs to boost the government’s legal expertise
- Creating a designated fund to fight BIT disputes; appointing counsels qualified in BITs to defend India against BIT claims.
- Boosting the capacity of Central and State governments to better understand the implications of their policy decisions on India’s BIT obligations.
- creation of the post of an ‘international law adviser’ (ILA) to advise the government on international legal disputes, particularly BIT disputes,
- Mentioning the possibility of establishing a BIT appellate mechanism and a multilateral investment court.
- Article 15 requires foreign investors to litigate in domestic courts at least for a period of five years.
- The ISDS mechanism in the Indian Model BIT extends from Articles 13 to 30 covering issues such as appointment of arbitrators, transparency provisions, enforcement of awards, standard of review, which have a bearing on the efficiency of the ISDS mechanism
2.Sharing the future
India and Nepal must build on the socio-cultural foundations of their relationship to meet the economic and ecological challenges of the 21st century
Nepal today is a progressive country, propelled by the democratic mass movements of 1950, 1990 and 2006, heading in earnest towards building a deeply inclusive state.
Few Achievements of Nepal in last 2 decades
- It dramatically reduced rates of child and maternal mortality.
- Primary school enrolment, with gender parity, exceeds 97 per cent, and average life expectancy has crossed 70.
- Nepal also stands out on several measures of civic engagement, from well-managed community forests to community radio.
Nepal and India are among the closest of neighbours in the world
To build on our socio-cultural foundations to leapfrog economically.
Clusters of development issues that could lift us all.
We now need to mould our thinking to the possibilities and challenges of the 21st century.
- How do we groom young people for jobs with technology-aided skills?
- How do we cooperate on mutually beneficial terms on water and clean energy, and help mitigate climate change? How do we accelerate the reduction of poverty, inequality and vulnerability?
- How do we build sustainable cities and livable habitats?
- How do we adopt new paradigms of production and exchange?
Areas where India can invest in Nepal
- The availability of clean energy, an affordable workforce and the unexploited bounties in niche sectors with high value-to-weight ratios make Nepal uniquely tempting to investors.
- Tourism and landscape marketing can be an anchor of prosperity.
- The fertile Tarai lands and agro-climates in the hills could support a much more productive agriculture than they do today
New economic possibilities
- Nepal today faces an enormous trade deficit with India, as production competencies shrink and large inflows of remittances fuel growth in imports. The share of Nepal’s manufacturing sector has plunged from a peak of 10 per cent of GDP in 1996 to around 5 per cent today.
- Nepal is an early champion of welfare schemes even at a low stage of development, spending about 4 per cent of national income on social transfers.
3.Why India fails to deliver health and education
In the last 70 years, the Indian state has clearly failed at delivering quality education and public health to its citizens.
Questions raised by the author
1) Why have democratic institutions not been able to generate sufficient pressure upon successive governments to deliver better health and education services?
2) Why has high economic growth in the last quarter-century not created an improvement in government provision of services?
Answer for the first Question
- In general, democratic institutions in India have negatively affected the provision of public health because “electorates typically prefer public funds to be used to provide private goods (such as medical care), rather than public goods (such as sanitary measures to protect the health of the population as a whole).”
- The non-democratic regimes of East Asia were more successful in delivering quality public health services.
- Social justice happens only when the bottom of the pyramid perceives equality of opportunity. On the one hand, since its independence India has demonstrated a longstanding political willingness to recognise different forms of inequality and exclusion and to use constitutional and legislative measures to address them.
- On the other hand, there continue to be large disparities in poverty levels, mortality rates, educational attainments and access to resources between regions, social groups and the sexes.
What can be done?
The government has to play the role of initiator, regulator and facilitator of change in varying degrees depending upon the internal and external environment.
Governance can be broken into two levels.
- At an aggregate level, the purpose of governance is to provide an environment that supports and encourages private initiative in a non-discriminatory and inclusive manner.
- At an individual level, it is concerned with provision of basic services universally to all citizens.
Answer for the second question
- The causality is better established in the other direction. However, there is some evidence that higher economic growth may actually lead to degradation in governance quality.
- A 2002 paper by Daniel Kaufmann and Aart Kraay came to this very conclusion and the duo speculated that “elite influence and state capture” might be the reason that a virtuous cycle between economic growth and quality of governance doesn’t manifest.
What can be done ?
- A deeper understanding of state capacity itself would be required to reach some conclusions.
- The key for us here is the distinction that Pritchett draws between “thick accountability” and “thin accountability”.
- For an organization, thin accountability is based on measures of objective performance and is judicable. On the other hand, thick accountability comprises justification of organizational actions to internal culture and external stakeholders.