AUGUST 26 CURRENT EVENTS

Economic criterion not sole basis for creamy layer: SC

Context:

Haryana state government had recently issued two notifications under the Haryana Backward Classes (Reservation in Services and Admission in Educational Institutions) Act of 2016.

The notification had sub-classified backward classes solely on an economic basis while fixing the criteria for the creamy layer. Backward community members earning above ₹6 lakh annually were to be treated as ‘creamy layer’ as per the new criterion.

Relevance:

GS-II: Polity and Constitution (Constitutional Provisions, Fundamental Rights), GS-II: Social Justice and Governance (Issues related to Poverty, Government Policies and Initiatives)

Dimensions of the Article:

1. What is the Creamy Layer?
2. How is the Creamy Layer determined?
3. What did the SC rule?
4. Indra Sawhney Case

What is the Creamy Layer?

• Creamy Layer is a concept that sets a threshold within which OBC reservation benefits are applicable.
• While there is a 27% quota for OBCs in government jobs and higher educational institutions, those falling within the “creamy layer” cannot get the benefits of this quota.
• Creamy Layer is based on the recommendation of the Second Backward Classes Commission (Mandal Commission).
• The government in 1990 had notified 27% reservation for Socially and Educationally Backward Classes (SEBCs) in vacancies in civil posts and services that are to be filled on direct recruitment.
• After this was challenged, the Supreme Court in the Indira Sawhney case (1992) upheld 27% reservation for OBCs, subject to exclusion of the creamy layer.

How is the Creamy Layer determined?

• Following the order in Indra Sawhney, an expert committee headed by Justice (retired) R N Prasad was constituted for fixing the criteria for determining the creamy layer.
• In 1993, the Department of Personnel and Training (DoPT) listed out various categories of people of certain rank/status/income whose children cannot avail the benefit of OBC reservation.
• For those not in government, the current threshold is an income of Rs 8 lakh per year.
• For children of government employees, the threshold is based on their parents’ rank and not income.
• For instance, an individual is considered to fall within the creamy layer if either of his or her parents is in a constitutional post; if either parent has been directly recruited in Group-A; or if both parents are in Group-B services.
• If the parents enter Group-A through promotion before the age of 40, their children will be in the creamy layer.
• Children of a Colonel or higher-ranked officer in the Army, and children of officers of similar ranks in the Navy and Air Force, too, come under the creamy layer.
• Income from salaries or agricultural land is not clubbed while determining the creamy layer (2004).

Has it ever been revised?

• Other than the income limit, the current definition of the creamy layer remains the same as the DoPT had spelled out in 1993 and 2004.
• The income limit has been revised over the years.
• No other orders for the definition of the creamy layer have been issued.
• While the DoPT had stipulated that it would be revised every three years, the first revision since 1993 (Rs 1 lakh per year) happened only in 2004 (Rs 2.50 lakh), 2008 (Rs 4.50 lakh), 2013 (Rs 6 lakh), and 2017 (Rs 8 lakh).

What did the SC rule?

• The Supreme Court held that the government cannot deny reservation to a person belonging to a backward community solely on the ground that he or she is rich.
• The Supreme Court in the 1992 Indra Sawhney judgement had declared that the ‘creamy layer’ in a backward community should be excluded from reservation so as to ensure that the more deserving candidates are able to avail of reservation benefits.
• The Supreme Court had also clearly illustrated that ‘creamy layer’ would include persons who occupied posts in higher government services like IAS, IPS and All India Services and had reached a higher level of social advancement and economic status.

Indra Sawhney Case

Regarding cap on reservation quota

• The Supreme Court in the Indra Sawhney vs Union of India had ruled that the total number of reserved seats/places/positions cannot exceed 50% of what is available, and that under the constitutional scheme of reservation, economic backwardness alone could not be a criterion.
• While 50% shall be the rule, it is necessary not to put out of consideration certain extraordinary situations inherent in the great diversity of this country and the people.
• It might happen that in far-flung and remote areas the population inhabiting those areas might, on account of their being out of the main stream of national life and in view of conditions peculiar to and characteristic to them, need to be treated in a different way, some relaxation in this strict rule may become imperative.
• In doing so, extreme caution is to be exercised and a special case made out.

Regarding Promotions

• On June 17, 1995, Parliament, acting in its constituent capacity, adopted the seventy-seventh amendment by which clause (4A) was inserted into Article 16 to enable reservation to be made in promotion for SCs and STs.
• The validity of the 77th and 85th amendments to the Constitution and of the legislation enacted in pursuance of those amendments was challenged before the Supreme Court in the Nagaraj case.
• In its landmark 1992 decision in Indra Sawhney vs Union of India, the Supreme Court had held that reservations under Article 16(4) could only be provided at the time of entry into government service but not in matters of promotion.
• It added that the principle would operate only prospectively and not affect promotions already made and that reservation already provided in promotions shall continue in operation for a period of five years from the date of the judgment.
• It also ruled that the creamy layer can be and must be excluded.
• Upholding the validity of Article 16 (4A), the court then said that it is an enabling provision. “The State is not bound to make reservation for the SCs and STs in promotions.
• But, if it seeks to do so, it must collect quantifiable data on three facets — the backwardness of the class; the inadequacy of the representation of that class in public employment; and the general efficiency of service as mandated by Article 335 would not be affected”.
• The court ruled that the constitutional amendments do not abrogate the fundamentals of equality.

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UN on delisting of the Taliban’s top leadership from sanctions 

Context:

Officials have said that there are no requests from the UN Security Council Permanent members for the delisting of the Taliban’s top leadership from sanctions thus far.

They also refuted reports that the next meeting of the Taliban Sanctions Committee also known as the resolution 1988 committee, due in September 2021, would lift restrictions on designated terrorists like Sirajuddin Haqqani and Mullah Baradar.

Relevance:

GS-II: International Relations (India and its neighbourhood, Important International Institutions)

Dimensions of the Article:

1. Background: History of the Resolution 1267 (1999)
2. Resolution 1988 Committee Meeting
3. Importance of Sanctions for India

Background: History of the Resolution 1267 (1999)

• In 1999, the UNSC Committee was established pursuant to Resolution 1267 (1999), which imposed a limited air embargo and asset freeze on the Taliban.
• Over time, measures became a targeted asset freeze, travel ban and arms embargo against designated individuals and entities.
• In June 2011, after the adoption of resolution 1988 (2011), the Committee split into two.
• The 1267 Committee was henceforth known as the Al-Qaida Sanctions Committee, mandated to oversee implementation of the measures against individuals and entities associated with Al-Qaida.
• A separate Committee was established pursuant to resolution 1988 (2011) to oversee implementation of the measures against individuals and entities associated with the Taliban.

Resolution 1988 Committee Meeting

• India’s Permanent Representative to the UN (UNPR) is the Chairman of the committee until December 2021, and is key to deciding the date of the meetings, and scrutinising requests to delist the Taliban leaders.
• This is the first time the Committees would meet after the Taliban takeover of Kabul, and after the deadline for the US troops to pull-out.
• A decision is likely to be taken on whether to extend the special travel exemptions given to 14 Taliban members to participate in the “peace and reconciliation efforts”.
• The meeting could also discuss whether to include other Taliban leaders in the exemptions, giving them permission to travel and access some funds, which are frozen at the moment.
• The stand taken by the UNSC members, particularly the P-5 — US, Russia, China, France and UK — would indicate how they intend to approach a future Taliban-led regime in Afghanistan.
• This time around, the UN would have to decide on continuing the accreditation with Ambassador Ghulam Isaczai who was appointed by the ‘Islamic Republic of Afghanistan’, given the Taliban control of Kabul, and its insistence on changing the country’s flag, and name to the ‘Islamic Emirate of Afghanistan’.
• In 1996, the last time the Taliban took power in Kabul, the UN had refused to recognise the regime, and had continued the Ambassador nominated by the previous Rabbani government.

Importance of Sanctions for India

• The reports concerning Sirajuddin Haqqani are significant for India as he and the Haqqani group, founded by his father Jalaluddin Haqqani, are wanted for the Indian Embassy bombings in Kabul in 2008 and 2009.
• In November 2012, India was instrumental, as the then-President of the UN Security Council, in ensuring that the Haqqani group was designated as a terror entity.
• India had worked with several countries to ensure the group was banned, both in the UN’s 1988 sanctions committee list as well as the US, which designated it a Foreign Terrorist Organisation at the same time.
• Sirajuddin Haqqani, deputy to Taliban chief Haibatullah Akhundzada, is now likely to have considerable influence in the next government in Afghanistan.
• His brother Anas Haqqani, who was arrested in 2014 for financing the group’s terror attacks, and was released as part of a hostage swap in 2019 from Bagram prison, is now one of the chief negotiators in government formation talks in Kabul.

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UCBs: RBI panel for four-tier structure

Context:

The Reserve Bank of India’s (RBI’s) expert committee on urban co-operative banks (UCBs) has suggested a four-tiered structure to regulate them, based on size of deposits.

Relevance:

GS-III: Indian Economy (Banking Sector and NBFCs)

Dimensions of the Article:

1. Cooperative Banks
2. Urban Cooperative Banks (UCB)
3. Problems with Cooperative Banking in India
4. Recommendations of the RBI appointed committee on UCBs

Cooperative Banks

• Co-operative banks are financial entities established on a co-operative basis and belonging to their members.This means that the customers of a co-operative bank are also its owners.
• Cooperative Banks continue to be important and the ideal organisations even in the changing economic environment, as participation and inclusion are central to poverty reduction.

More details about Cooperative Banks

• Co-operative banks in India are registered under the State’s Cooperative Societies Act.
• The Co-operative banks are also regulated by the Reserve Bank of India (RBI) and governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1955.
• The Registrar of Cooperative Societies (RCS) is in control of management elections and many administrative issues as well as auditing, and the RBI brought them under the Banking Regulation Act as applicable to cooperative societies.
• Urban cooperative banks have been under the radar of the RBI, but because of dual regulation either of them did not have as much control over these banks in terms of supersession of boards or removal of directors.

Structure of co-operative banks in India:

Broadly, co-operative banks in India are divided into two categories – urban and rural.

• Rural cooperative credit institutions could either be short-term or long-term in nature.
• Short-term cooperative credit institutions are further sub-divided into State Co-operative Banks, District Central Co-operative Banks, Primary Agricultural Credit Societies.
• Long-term institutions are either State Cooperative Agriculture and Rural Development Banks (SCARDBs) or Primary Cooperative Agriculture and Rural Development Banks (PCARDBs).

Urban Co-operative Banks (UCBs)

• The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas.
• These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today.
• These banks were traditionally centred around communities, localities work place groups.
• They essentially lent to small borrowers and businesses. Today, their scope of operations has widened considerably.
• About 79 percent of these are located in five states, – Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu.
• Recently the problems faced by a few large UCBs have highlighted some of the difficulties these banks face and policy endeavours are geared to consolidating and strengthening this sector and improving governance.

Difference between UCBs and Commercial Banks

• Unlike commercial banks, UCBs are only partly regulated by the RBI. Their banking operations are regulated by the RBI, which lays down their capital adequacy, risk control and lending norms. However, their management and resolution in the case of distress is regulated by the Registrar of Co-operative Societies either under the State or Central government.
• In general for a commercial bank, there is a clear distinction between its shareholders and its borrowers whereas in a UCB, borrowers can even double up as shareholders.

Problems with Cooperative Banking in India

1. Politicians in local as well as in state use them to increase their vote bank and usually get their representatives elected over the board of director in order to gain undue advantages.
2. The cooperatives in northeast states and in states like West Bengal, Bihar, Odisha are not as well developed as the ones in Maharashtra and Gujarat. There is a lot of friction due to competition between different states, this friction affects the working of cooperatives.
3. A serious problem of the cooperative credit is the overdue loans of the cooperative banks which have been continuously increasing over the years.
4. Large amounts of overdues restrict the recycling of the funds and adversely affect the lending and borrowing capacity of the cooperative.
5. The cooperatives have resource constraints as their owned funds hardly make a sizeable portfolio of the working capital.
6. Raising working capital has been a major hurdle in their effective functioning.

Recommendations of the RBI appointed committee on UCBs

• Based on the cooperativeness’ of the banks, availability of capital and other factors, UCBs may be categorised into four tiers for regulatory purposes: 
  1. Tier 1 with all unit UCBs and salary earner’s UCBs (irrespective of deposit size) and all other UCBs having deposits up to Rs 100 crore.
  2. Tier 2 with UCBs of deposits between Rs 100 crore and Rs 1,000 crore.
  3. Tier 3 with UCBs of deposits between Rs 1,000 crore and Rs 10,000 crore.
  4. Tier 4 with UCBs of deposits more than Rs 10,000 crore.
• The minimum Capital to Risk-Weighted Assets Ratio (CRAR) for them could vary from 9% to 15% and for Tier-4 UCBs the Basel III prescribed norms.
• The committee has proposed setting up an Umbrella Organisation (UO) to oversee co-operative banks and suggested that they should be allowed to open more branches if they meet all regulatory requirements.
• Under the Banking Regulation (BR) Act, 1949 the RBI can prepare a scheme of compulsory amalgamation or reconstruction of UCBs, like banking companies.
• Supervisory Action Framework (SAF) should follow a twin-indicator approach – it should consider only asset quality and capital measured through Net Non-Performing Assets and CRAR – instead of triple indicators at present The objective of the SAF should be to find a time-bound remedy to the financial stress of a bank. 
• Owing to lack of the desired level of regulatory comfort on account of the structural issues including ‘capital’ and the gaps in the statutory framework, the regulatory policies for co-operative banks have been restrictive with regard to their business operations, which, to some extent, has been one of the reasons affecting their growth.
• Given the importance of the sector in furthering financial inclusion and considering the large number of its customer base, it is imperative that the strategies adopted for the regulation of the sector are comprehensively reviewed so as to enhance its resilience and provide an enabling environment for its sustainable and stable growth in the medium term.

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Delhi’s new smog tower

Context:

Recently, Delhi got a ‘smog tower’, a technological aid to help combat air pollution.

Relevance:

GS-III: Environment and Ecology (Environmental Pollution, Environmental Conservation)

Dimensions of the Article:

1. What are ‘Smog Towers’?
2. Why did Delhi need a ‘Smog Tower’?
3. Limitations of the Smog Tower in Delhi

What are ‘Smog Towers’?

• Smog towers are structures designed to work as large-scale air purifiers and they are usually fitted with multiple layers of air filters, which clean the air of pollutants as it passes through them.
• It uses a ‘downdraft air cleaning system’ where polluted air is sucked in at a height of 24 m, and filtered air is released at the bottom of the tower, at a height of about 10 m from the ground.
• It is different from the system used in China, where a 60-metre smog tower uses an ‘updraft’ system — air is sucked in from near the ground, and is propelled upwards by heating and convection. Filtered air is released at the top of the tower
• China has the world’s largest smog tower.

Why did Delhi need a ‘Smog Tower’?

• According to a report by CPCB, an increase of 258% to 335% has been observed in the concentration of PM10 in Delhi since 2009.
• Delhi was the most polluted capital city in the world in 2020 for the third consecutive year, according to a report by a Swiss group (released in March 2021) that ranked cities based on their air quality measured in terms of the levels of ultrafine particulate matter (PM 2.5).
• In 2019, the Supreme Court directed the Central Pollution Control Board (CPCB) and the Delhi government to come up with a plan to install smog towers to combat air pollution and in 2020, the Supreme Court directed that two towers should be installed by April as a pilot project.
• The smog tower at Connaught Place (CP) is the first of these towers. The second tower, being constructed at Anand Vihar in east Delhi with CPCB as the nodal agency, is nearing completion.

Limitations of the Smog Tower in Delhi

• It may provide immediate relief from air pollution in a small area but they are a costly quick-fix measure with no scientific evidence to back their efficacy in the long term.
• The tower could have an impact on the air quality up to 1 km from the tower.
• However, the actual impact will be assessed by IIT-Bombay and IIT-Delhi in a two-year pilot study that will also determine how the tower functions under different weather conditions, and how levels of PM2.5 vary with the flow of air.
• Since there is no scientific evidence that proves its efficiency, governments should instead address root causes and promote renewable energy to tackle air pollution and reduce emissions. It will be really unfortunate if other cities decide to follow suit and set up these expensive, ineffective towers.