Content:

1. India’s ‘steel frame’ does need a check
2. The GATT-ification of the World Trade Organization
3. Selective indecision
4. Canary in the canopy

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India’s ‘Steel Frame’ Does Need A Check

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The IAS, inheriting its framework from the colonial Indian Civil Service (ICS), has been the backbone of Indian administration post-independence.

Relevance : GS 2 (Governance )

Practice Question : Examine the major challenges faced by the Indian Administrative Service (IAS) and suggest key reforms to address them. (250 words)

Challenges of the IAS

• Politicisation: Frequent transfers, promotions based on political loyalty, and suspensions have eroded professionalism and morale.

• Lack of Specialisation: Rotational postings prevent domain expertise, weakening officers’ ability to handle complex governance challenges effectively.

• Corruption and Inefficiency:
  • Reflected in moderate rankings in the World Bank’s government effectiveness index.
  • Hinders policy implementation and administrative independence.

Mixed Outcomes:

• Enabled rapid reforms and infrastructure development.
  • Created bottlenecks in policy execution and sidelined bureaucratic expertise.

Reform Recommendations Over the Years

• First Administrative Reforms Commission (1966):
  • Highlighted the need for accountability, merit-based promotions, and specialisation.

• Second Administrative Reforms Commission (2005):
  • Proposed lowering the age of civil service entry, lateral entry, and safeguards against arbitrary transfers.
  • Recommendations largely unimplemented due to political resistance and bureaucratic inertia.

Lateral Entry as a Reform Initiative

• Objective: Diversify governance by integrating domain experts from private sectors and other services.

• Implementation:
  • Since 2018, 57 lateral entrants appointed to senior roles.
  • UPSC recently advertised 45 lateral entry positions.

• Impact: Reduced IAS dominance in senior roles (33% of Joint Secretaries now from the IAS).

International Models and Lessons

• U.S. Department of Government Efficiency (DOGE):
  • Focus on streamlining operations, reducing inefficiency, and leveraging expert leadership.
  • Provides a template for creating an advisory body in India to identify inefficiencies and track bureaucratic performance.

Challenges to Reform

• Resistance Within the IAS:
  • Institutionalised seniority–based progression and generalist approaches impede adoption of reforms.

• Political Interference:
  • Reform bills like the Civil Services Standards, Performance, and Accountability Bill (2010) remain stalled.

• Judicial Limitations:
  • Supreme Court’s 2013 directive for civil services boards has seen poor implementation.

Recommendations for Multifaceted Reform

• Merit-Based Recruitment and Promotions:
  • Align recruitment with domain expertise and tie promotions to performance metrics.

• Protection from Political Influence:
  • Implement safeguards against arbitrary transfers to ensure bureaucratic independence.

• Specialisation in Roles:
  • Foster domain expertise through long-term assignments.

• Data-Driven Performance Monitoring:
  • Build robust data systems to track and evaluate bureaucratic performance.

• Lateral Entry Expansion:
  • Address concerns of equity while leveraging external expertise.

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The GATT-Ification of the World Trade Organization

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The WTO’s transition from a rule–based legal order to a GATT-like diplomacy highlights its struggle to balance multilateralism and rising unilateral trade policies.

Relevance : GS 2( International Relations )

Practice Question : Examine the challenges faced by the World Trade Organization (WTO) in maintaining a rule-based global trading system and discuss the implications of its “GATT-ification” on international trade governance. (250 words)

WTO Dispute Settlement System

• Two-Tier System:
  • Comprises the Panels (first stage) and the Appellate Body (AB).
  • AB’s role is crucial for ensuring binding and enforceable dispute resolution.

• Crisis of the Appellate Body:
  • Non-operational since 2019 due to the U.S.’s consistent blocking of member appointments.
  • Stalemate persists across successive U.S. administrations (Obama, Trump, Biden).
  • Losing countries exploit the right to appeal to the non-functional AB, stalling dispute resolution.

Underlying Causes of the Crisis

• U.S. Resistance to WTO’s Appellate Body:
  • Stemming from bipartisan consensus, driven by protectionist tendencies.
  • Escalation anticipated under a possible Trump 2.0 administration.

• China’s Role in the Unraveling:
  • Post-2001 WTO accession, China retained state–led industrial policies, contrary to U.S. expectations of free-market reforms.
  • Perception in the U.S.: WTO framework enabled China to leverage trade rules for its advantage while limiting U.S. responses.

The Promise of the WTO

• Evolution from GATT to WTO (1995):
  • Shift from diplomacy-based trade multilateralism to a rule-based legal system.
  • Comprehensive coverage: Trade in goods, services, intellectual property.
  • Binding jurisdiction and enforcement mechanisms signified a thickening of legality in global trade.

• Neoliberal Triumph:
  • Hailed as a constitutional project of international law, ensuring the dominance of law over politics.

The WTO’s Institutional Erosion

• Regime Change:
  • Scholars argue the WTO is experiencing a “thinning of legality,” reversing the progress of rule-based governance.
  • Countries reclaim autonomy, reducing reliance on WTO mechanisms, akin to GATT-era diplomacy.

• Examples of U.S. Actions:
  • 2018: Trump imposed a 25% tariff on Chinese imports, disregarding WTO rules.
  • Future: Promises of additional tariffs highlight a shift towards unilateralism.

Key Concepts in the Current Context

• GATT-ification:
  • Prof. Geraldo Vidigal describes the rollback of WTO’s legal revolution as a return to GATT-style diplomacy.
  • Trade relations increasingly influenced by international politics rather than international law.

• Impact on Global Trade Governance:
  • Legal multilateralism paused, and deference to state sovereignty amplified.

Challenges and Implications

• WTO’s Existential Crisis:
  • The AB stalemate highlights broader questions about the WTO’s relevance in global trade.
  • Efforts to restore the AB seen as insufficient to address the systemic issues.

• Shifting Trade Dynamics:
  • Countries increasingly employ unilateral trade measures and industrial policies outside WTO frameworks.
  • Weak enforcement of WTO rules undermines its credibility.

Future of the WTO

• Relevance vs. Obsolescence:
  • WTO needs structural reforms to adapt to changing geopolitical and economic realities.
  • Mere technical negotiations are unlikely to restore its earlier influence.

• Towards a New Multilateralism:
  • The international trading order must reconcile the tensions between national interests and global trade governance.

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Selective Indecision

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Context : The GST Council took its 55th meeting to clarify basic ambiguities

Relevance : GS 2 (Governance ), GS 3(Economic Development )

Practice Question :Examine the impact of delays and clarifications in the GST Council’s decision-making process on India’s tax system.(250 Words )

• Farmers’ supplies of pepper and raisins deemed non-taxable.
  • Gift vouchers and penalties by banks/NBFCs clarified as outside GST scope.

• Implications:
  • Such delays undermine the efficiency of GST, a system marketed as a “Good and Simple Tax.”
  • Highlights a reactive rather than proactive policy-making approach.

Complicated Tax Adjustments

Three-tiered GST levy on popcorn introduced:

• Rationale: Higher taxes on sweetenedvarieties for healthconsiderations.
  • Concerns:
    • Adds complexity to an already convoluted GST structure.
    • Distracts from the need for comprehensive rate rationalisation, delayed for over three years.

Failure to Act on Key Recommendations

• The Council did not address crucial reports and panels’ suggestions:
  • Ministerial panel on GST rate rejigging: Initial recommendations ignored.
  • Panel on insurance policy taxation: Proposals deferred despite long-standing government promises.

• Industry Impact:
  • Life insurance sales dipped in November 2024 due to consumer anticipation of GST cuts.
  • Prolonged indecision affects consumption trends and industry planning.

Impact on Broader Economic Objectives

• Rate Rationalisation Stalled:
  • Uncertainty discourages consumption, already weak in India’s economic recovery phase.
  • Private investment dampened due to lack of tax certainty.

• Consumption-Linked Investment Plans:
  • Delay in reforms affects industries relying on predictable taxation to forecast demand.

Retroactive Legal Reversals

• Supreme Court ruling (October 2024):
  • Allowed realty players to claim input tax credits (ITCs) for commercial construction meant for leasing/renting.

• GST Council’s Decision:
  • Reversed this ruling with retrospective effect from July 2017.

• Investor Implications:
  • Retroactive tax changes evoke memories of past taxation misadventures (e.g., Vodafone tax cases).
  • Dents India’s investment climate by increasing unpredictability.

Perceived Governance Issues

• The casual handling of critical matters:
  • Panel chair leaving the meeting early signifies a lack of urgency.
  • Promises made during the Budget session remain unfulfilled.

• Questions Raised:
  • Does the GST Council have a robust framework for prioritizing key reforms?
  • Are state and central governments aligned on long-term GST rationalisation?

Economic and Policy Implications

• Consumption Impact:
  • Rising ambiguities and delays discourage discretionary spending.
  • Erosion of trust in policy predictability among businesses and consumers alike.

• Global and Domestic Investment:
  • Investors increasingly wary of inconsistent tax policies.
  • Retroactive changes risk scaring away foreign direct investment (FDI).

Way Forward

• Urgent Rate Rationalisation:
  • Simplify GST structure by reducing slabs and clarifying ambiguities.
  • Prioritise recommendations from expert panels to address structural issues.

• Tax Certainty:
  • Avoid retrospective changes to boost investor confidence.
  • Provide clear timelines for decisions on pending reforms to instill confidence in the system.

• Coordination Between Stakeholders:
  • Ensure better alignment between Centre and States for smoother decision-making.

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Canary In The Canopy

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The balance between ecological conservation and economic growth is at stake as India faces challenges in forest governance and management.

Relevance :GS 3( Environment )

Practice Question : Discuss the impact of weakened environmental safeguards on India’s forest conservation efforts and the trade-off between economic growth and ecological preservation.(250 Words )

Current Coverage of Forest :

• According to the India State of Forest Report 2023:25% of India’s land is under forest or tree cover.This aligns with the National Forest Policy’s goals but masks underlying issues.

Post-Independence Forest Governance

• Shift from colonial timber-centric policies:
  • Introduction of the Forest (Conservation) Act, 1980: Focused on conservation.
  • Enactment of the Forest (Rights) Act, 2006: Recognized community rights over forests.

• Challenges in implementation:
  • Industrial development pressures.
  • Climate change exacerbating stress on ecosystems.

Flawed Definitions of Forests

• Ambiguities in Definitions:
  • Conservationists and courts advocate a strict definition, while the government adopts broader terms.
  • Issues:
    • Excludes “community forests.”
    • Includes plantations and orchards with limited ecological benefits.

• Policy Implications:
  • Boosts claims of expanding carbon sinks to meet climate goals.
  • Facilitates developmental activities, often at the cost of biodiverse areas.

Hidden Losses in Forest Cover

• Regions Impacted:
  • Decline in forest cover in the Western Ghats, Nilgiris, Northeast, Kutch, and Andamans.
  • Shrinking of mangroves and moderately dense forests.

• Mismatch in Accounting:
  • Replacement of natural forests with commercial plantations:
    • Lower carbon sequestration.
    • Reduced ecological value.
  • Use of the Compensatory Afforestation Fund Act exacerbates these issues.

Challenges in Fire Management

• Rising Forest Fires:
  • Northern districts show exponential increases in fire-affected forest areas over two years.

• Resource Shortages:
  • Ground reports highlight:
    • Lack of human resources and training.
    • Insufficient equipment for fire control.

• Impact:
  • Increases pressure on already degraded forests.

Weakening of Environmental Safeguards

• Forest (Conservation) Amendment Act, 2023:
  • Further narrowed the scope of the 1980 Act, reducing protections.

• Distortion of Data:
  • Inflated inventory of forest cover masks ecological degradation.

• Implications:
  • Undermines the friction that environmental laws should impose on unregulated growth.
  • Facilitates unchecked economic development at ecological costs.

Ecological vs. Economic Growth Trade-offs

• Economic Reality:
  • Growth inevitably leads to some forest loss.

• Role of Laws:
  • Environmental laws provide necessary friction to balance development and conservation.

• Government Actions:
  • Weakening safeguards undermines the ability to manage this balance effectively.

Broader Implications

• Carbon Sequestration Gaps:
  • Reports lack clarity on whether degraded land’s current usage is factored into carbon sink estimates.

• Biodiversity at Risk:
  • Natural ecosystems cannot be replaced by plantations.

• No Winners:
  • The current trajectory may lead to long-term ecological and economic losses.

Way Forward

• Policy Reform:
  • Strengthen environmental laws rather than diluting them.
  • Define forests clearly to prioritize natural ecosystems.

• Fire Management:
  • Invest in resources, training, and equipment to combat forest fires.

• Sustainable Development:
  • Ensure economic growth aligns with ecological conservation.

• Transparent Reporting:
  • Avoid inflating forest cover data; focus on quality rather than quantity.