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Policy&Politics

My Understanding of the Cabinet Secretariat (1)

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Before I joined the Cabinet Secretariat in 2013 as Additional Secretary, I was in awe of it. There were not many occasions that I had visited this part of the Rashtrapati Bhavan. However, whenever I did, it was with much trepidation. However, both before 2013 and even after that, I never understood the following:

1. 2. Why was such an august body still housed in one corner of Rashtrapati Bhavan with officials working in pigeonholes for want of space and when it had almost nothing to do with the President?

3. Why was there a fixed tenure of Cabinet Secretary for only two years when almost every incumbent in the recent past had served for four years?

4. Why did Cabinet Secretaries want to serve for four years when the office was reduced to a post office with shots being called by the Prime Minister’s Office irrespective of the nature of the government?

I never got the answers and, perhaps, never will.

In 2006, I had sent my name for central deputation, and it was retained. On a visit to Delhi, I wanted to ascertain whether I had been picked up for any post by the Central Government. One of my batchmates, an outstanding and genial officer, was posted in the Cabinet Secretariat. So, I thought I would find out the status from him. On reaching his room in the Cabinet Secretariat, he served me a hot cup of tea, leaving all his work to attend to me, but when I asked him about the status of my posting, he smiled (which he usually did) but did not reveal anything. As soon as I came out of the room, I got a call from another colleague posted in Delhi in one of the Ministries. He revealed that I had been posted as Director General, Labour Welfare, in the Ministry of Labour and Employment. So much for secrecy.

As mentioned earlier, I worked as Additional Secretary in the Cabinet Secretariat during 2013-14. My batch was being considered for empanelment as Secretary around that time. In a discussion within the batch, one got to know that a couple of batchmates had been empaneled. I congratulated them but wondered about the status of my empanelment. On reaching the office, I rang up my boss, the Cabinet Secretary. I asked him about the status of my empanelment. His response was cryptic, “You will get to know soon”. This meant nothing to me but increased the suspense even more. What baffled me was that the list of empaneled officers was known to some. And in any case, a decision had already been taken. Only orders had to be issued. Why keep it a secret?

‘We make toilets; we also produce coal.’

This was the tagline that I proposed for Coal India Limited (CIL), the principal coal producer of the country, before the commencement of a formal discussion on toilets to be set up by Coal India Limited in government schools. The discussions were being held at the Cabinet Secretariat in 2016, and I was present in my capacity as Secretary, Coal. Swachh Bharat was indeed an extremely laudable programme and deserved every possible support, but forcing the managers of Coal India to scout for locations and supervise the building of toilets went much beyond what these officers could expect. On the other hand, the country was reeling due to a coal shortage, and CIL could not supply around 800 million tonnes of coal per annum to power plants. The deficit had also led to scams as everyone who required coal was desperate to lay hand on any coal block by whatever means. Ironically, the country was sitting on 300 billion tonnes of coal reserves!

When I took over as Secretary, Ministry of Coal, Government of India, the crisis was at its peak. Alleged scams had been unearthed. Supreme Court had cancelled all the 204 coal blocks allocated since the 90s, going much beyond even the rampaging CAG had recommended. Some of these coal blocks were producing coal. Consequent to these cancellations, most of them stopped production since the 1st of April 2014. This meant an estimated reduction of around 90 million tonnes of coal production. More than 20 power plants were critical for want of coal. There was panic in the States on account of poor supply.

After identifying the causes of lower coal production, a detailed action plan was worked out. The focus was on land acquisition. Intensive engagements with the States helped as the positive value proposition of the exercise was conveyed to them. Meetings were then held at the State level and with the Collectors/Deputy Commissioners to expedite processes. This yielded the desired results as Coal India acquired more than 5000 hectares of land in 2014-15. A similar effort was made to facilitate environment and forest clearances as most coal-bearing areas lay under forest cover. This also worked out as clearances were obtained for more than 3000 hectares during the year. Coordination with the Railways helped in increasing evacuation of coal.

As Coal India was preparing itself to enhance excavation of coal to reach record highs during the next financial year, came this much-needed focus on ‘Swachh Bharat’. However, whether the officers of the PSU should have been driven to treat this as a priority instead of focusing on coal production was the point of contention.

I made my reservations known during the meeting at the Cabinet Secretariat, but I was over-ruled. In any case, the Cabinet Secretariat had no mind of its own. This was being done at the behest of the Prime Minister’s office. No one in the Cabinet Secretariat had the courage or the willingness to present the likely fallout of what was proposed. I was all for the ‘Swachh Bharat’ movement and monetary contribution from Coal India, but I had serious reservations about the engagement of coal mine managers to go around locating schools and supervising building of toilets in them. This was neither their job, nor their area of expertise. All these forced activities impacted coal production subsequently. I got to know of it later when I had left the Ministry to take over as Secretary, School Education and Literacy. The coal production did not keep pace with the demand, and the crisis re-surfaced.

Many reasons contributed to the recurrence of the crisis. However, the shift of focus from coal production to constructing toilets by the managers who should have been engaged in supervising digging coal instead of supervising the digging of soak-pits was undoubtedly one of the significant contributors. For almost a year, the absence of a regular Chairman, Coal India, and the shuffling of Coal Secretaries did not help matters either.

Civil Services Board was an institution that worked seamlessly over the years. This was primarily for proposing Joint Secretary level officers’ posting at the Centre. Cabinet Secretary chairs the Board and Secretary, Department of Personnel and Training is the Convenor. The Secretary of the concerned Department where the vacancy existed is also a member. As Secretary to the Government of India for almost four years, I had the occasion to attend many such meetings. Soon I discovered the futility of such meetings.

In many cases, the names of the officers were pre-decided at a different level, some coming from the PMO. Our job was primarily to endorse those names. There were indeed a few cases where there was no interest of those that mattered, and we could propose the name of an officer we thought was fit.

Anil Swarup has served as the head of the Project Monitoring Group, which is currently under the Prime Minister’s Offic. He has also served as Secretary, Ministry of Coal and Secretary, Ministry of School Education.

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Policy&Politics

India, Brazil, South Africa to press for labour & social issues, sustainability

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The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment.

India, on Thursday, joined the G20’s two-day 2nd Employment Working Group (EWG) meeting under the Brazilian Presidency which is all set to address labour, employment and social issues for strong, sustainable, balanced and job-rich growth for all. India is co-chairing the 2nd EWG meeting, along with Brazil and South Africa, and is represented by Sumita Dawra, Secretary, Labour & Employment.

The Indian delegation also comprises Rupesh Kumar Thakur, Joint Secretary, and Rakesh Gaur, Deputy Director from the Ministry of Labour & Employment. India has pointed out that the priority areas of the 2nd EWG at Brasilia align with the priority areas and outcomes of previous G20 presidencies including Indian presidency, and commended the continuity in the multi-year agenda to create lasting positive change in the world of work. This not only sustains but also elevates the work initiated by the EWG during the Indian Presidency.

The focus areas for the 2nd EWG meeting are — creating quality employment and promoting decent labour, addressing a just transition amidst digital and energy transformations, leveraging technologies to enhance the quality of life for al and the emphasis on gender equity and promoting diversity in the world of employment for inclusivity, driving innovation and growth. On the first day of the meeting, deliberations were held on the over-arching theme of promotion of gender equality and promoting diversity in the workplace.

The Indian delegation emphasized the need for creating inclusive environments by ensuring equal representation and empowerment for all, irrespective of race, gender, ethnicity, or socio-economic background. To increase female labour force participation, India has enacted occupational safety health and working conditions code, 2020 which entitles women to be employed in all establishments for all types of work with their consent at night time. This provision has already been implemented in underground mines.

In 2017, the Government amended the Maternity Benefit Act of 1961, which increased the ‘maternity leave with pay protection’ from 12 weeks to 26 weeks for all women working in establishments employing 10 or more workers. This is expected to reduce the motherhood pay gap among the working mothers. To aid migrant workers, India’s innovative policy ‘One Nation, One Ration Card’ allows migrants to access their entitled food grains from anywhere in the Public Distribution System network in the country.

A landmark step in fostering inclusion in the workforce is the e-Shram portal, launched to create a national database of unorganized workers, especially migrant and construction workers. This initiative, providing the e-Shram card, enables access to benefits under various social security schemes.

The portal allows an unorganized worker to register himself or herself on the portal on self-declaration basis, under 400 occupations in 30 broad occupation sectors. More than 290 million unorganized workers have been registered on this portal so far.

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Policy&Politics

India to spend USD 3.7 billion to fence Myanmar border

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India plans to spend nearly $3.7 billion to fence its 1,610-km (1,000-mile) porous border with Myanmar within about a decade, said a source with direct knowledge of the matter, to prevent smuggling and other illegal activities. New Delhi said earlier this year it would fence the border and end a decades-old visa-free movement policy with coup-hit Myanmar for border citizens for reasons of national security and to maintain the demographic structure of its northeastern region.

A government committee earlier this month approved the cost for the fencing, which needs to be approved by Prime Minister Narendra Modi’s cabinet, said the source who declined to be named as they were not authorised to talk to the media. The prime minister’s office and the ministries of home, finance, foreign affairs and information and broadcasting did not immediately respond to an email seeking comment.

Myanmar has so far not commented on India’s fencing plans. Since a military coup in Myanmar in 2021, thousands of civilians and hundreds of troops have fled from there to Indian states where people on both sides share ethnic and familial ties. This has worried New Delhi because of risk of communal tensions spreading to India. Some members of the Indian government have also blamed the porous border for abetting the tense situation in the restive north-eastern Indian state of Manipur, abutting Myanmar.

For nearly a year, Manipur has been engulfed by a civil war-like situation between two ethnic groups, one of which shares lineage with Myanmar’s Chin tribe. The committee of senior Indian officials also agreed to build parallel roads along the fence and 1,700 km (1,050 miles) of feeder roads connecting military bases to the border, the source said.

The fence and the adjoining road will cost nearly 125 million rupees per km, more than double that of the 55 million per km cost for the border fence with Bangladesh built in 2020, the source said, because of the difficult hilly terrain and the use of technology to prevent intrusion and corrosion.

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Policy&Politics

ONLY 2-3% RECOVERED FROM $2-3 TN ANNUAL ILLEGAL TRADE THROUGH BANKING: INTERPOL

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However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity.

In a press briefing held on Wednesday, Interpol Secretary General Jurgen Stock unveiled alarming statistics regarding the extent of undetected money laundering and illegal trade transactions plaguing the global banking network. Stock revealed that over 96% of the money transacted through this network remains undetected, with only 2-3% of the estimated USD 2-3 trillion from illegal trade being tracked and returned to victims.

Interpol, working in conjunction with law enforcement agencies and private financial sectors across its 196 member countries, is committed to combating the rising tide of fraud perpetrated by illicit traders. These criminal activities encompass a wide spectrum, including drug trafficking, human trafficking, arms dealing, and the illicit movement of financial assets.

Stock emphasized the urgent need to establish mechanisms for monitoring transactions within the global banking network. Currently, efforts are underway to engage banking associations worldwide in setting up such a framework. However, Stock highlighted the enormity of the challenge, noting that between 40% and 70% of criminal profits are reinvested, perpetuating the cycle of illicit financial activity. The lack of real-time information sharing poses a significant obstacle to law enforcement agencies in their efforts to combat money laundering and illegal trade.

Stock underscored the role of Artificial Intelligence (AI) in exacerbating this problem, citing its use in voice cloning and other fraudulent activities. Criminal organizations are leveraging AI technologies to expand their operations and evade detection on a global scale. Stock emphasized the importance of enhanced cooperation between law enforcement agencies and private sector banking groups. Realtime information sharing is crucial in the fight against illegal wealth accumulation.

Drawing inspiration from initiatives such as the “Singapore Anti-Scam Centre,” Stock called for the adoption of similar models in other countries to strengthen the collective response to financial crimes. In conclusion, Stock’s revelations underscore the pressing need for concerted action to combat global financial crimes. Enhanced cooperation between public and private sectors, coupled with innovative strategies for monitoring and combating illicit transactions, is essential to safeguarding the integrity of the global financial system.

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Policy&Politics

FM defends Atal Pension Scheme, highlights guaranteed returns

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Finance Minister Nirmala Sitharaman defended the Atal Pension Yojana (APY) against Congress criticism, asserting its design based on choice architecture and a guaranteed minimum 8% return. She emphasized the scheme’s opt-out feature, facilitating automatic premium continuation unless subscribers choose otherwise, promoting retirement savings. Sitharaman countered Congress allegations of coercion, stating the APY’s guaranteed returns irrespective of market conditions, supplemented by government subsidies.

Responding to Congress’s claim of scheme misuse, Sitharaman highlighted its intended beneficiaries – the lower-income groups. She criticized Congress for its alleged elitist mindset and emphasized the scheme’s success in targeting the needy. Sitharaman accused Congress of exploiting vote bank politics and coercive tactics, contrasting it with the APY’s transparent framework. The exchange underscores the political debate surrounding social welfare schemes, with the government defending its approach while opposition parties raise concerns about implementation and efficacy.

Finance Minister Nirmala Sitharaman’s robust defense of the Atal Pension Yojana (APY) against Congress criticism highlights the ongoing debate over social welfare schemes in India. Sitharaman’s assertion of the APY’s design principles, including its opt-out feature and guaranteed minimum return, underscores the government’s commitment to promoting retirement savings among lower-income groups. The Atal Pension Yojana, named after former Prime Minister Atal Bihari Vajpayee, was launched in 2015 to provide pension benefits to workers in the unorganized sector. It aims to address the significant gap in pension coverage among India’s workforce, particularly those employed in informal and low-income sectors. The scheme offers subscribers fixed pension amounts ranging from Rs. 1,000 to Rs. 5,000 per month, depending on their contribution and age at entry, after attaining the age of 60. Sitharaman’s response comes after Congress criticism alleging the APY’s inefficacy and coercive tactics in enrolment.

Congress General Secretary Jairam Ramesh described the scheme as poorly designed, citing instances of subscribers dropping out due to unauthorized account openings. However, Sitharaman refuted these claims, emphasizing the APY’s transparent and beneficiary-oriented approach. The finance minister’s defense focuses on three key aspects of the APY: Choice Architecture: Sitharaman highlights the opt-out feature of the APY, which automatically continues premium payments unless subscribers choose to discontinue.

This design element aims to encourage long-term participation and ensure consistent retirement savings among subscribers. By simplifying the decision-making process, the scheme seeks to overcome inertia and promote financial discipline among participants. Guaranteed Minimum Return: Sitharaman underscores the APY’s guarantee of a minimum 8% return, irrespective of prevailing interest rates. This assurance provides subscribers with confidence in the scheme’s financial viability and incentivizes long-term savings.

The government’s commitment to subsidizing any shortfall in actual returns further strengthens the attractiveness of the APY as a retirement planning tool. Targeting the Needy: Sitharaman defends the predominance of pension accounts in lower income slabs, arguing that it reflects the scheme’s successful targeting of its intended beneficiaries – the poor and lower-middle class. She criticizes Congress for its alleged elitist mindset and suggests that the party’s opposition to welfare schemes like the APY stems from a disconnect with the needs of marginalized communities. Sitharaman’s rebuttal also addresses broader political narratives surrounding social welfare policies in India.

She accuses Congress of exploiting vote bank politics and coercive tactics, contrasting it with the transparent and inclusive framework of the APY. The exchange underscores the ideological differences between the ruling Bharatiya Janata Party (BJP) and the opposition Congress, with each side advocating for their vision of social welfare and economic development. In addition to defending the APY, Sitharaman’s remarks shed light on the broader challenges and opportunities facing India’s pension sector.

Despite significant progress in expanding pension coverage through schemes like the APY, the country still grapples with issues such as financial literacy, informal employment, and pension portability. Addressing these challenges requires a multifaceted approach involving government intervention, private sector participation, and civil society engagement.

As India strives to achieve its vision of inclusive and sustainable development, initiatives like the APY play a crucial role in promoting economic security and social equity. Sitharaman’s defense of the scheme underscores the government’s commitment to addressing the needs of vulnerable populations and ensuring their financial well-being in the long run.

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Economic

Regulatory steps will make financial sector strong, but raise cost of capital

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India’s financial system regulator, the Reserve Bank of India (RBI), is demonstrating a serious commitment to improving governance and transparency at finance companies and banks, with the RBI’s recent measures aimed at curtailing lenders’ overexuberance, enhancing compliance culture and safeguarding customers.

While the global ratings firm has appreciated the RBI’s “diminishing tolerance for non-compliance, customer complaints, data privacy, governance, know-your-customer (KYC), and anti-money laundering issues”, it has cautioned that increased regulatory risk could impede growth and raise the cost of capital for financial institutions. “Governance and transparency are key weaknesses for the Indian financial sector and weigh on our analysis. The RBI’s new measures are creating a more robust and transparent financial system,” says S&P Global Credit Analyst, Geeta Chugh. “India’s regulator has underscored its commitment to strengthening the financial sector. The drawback will be higher capital costs for institutions,” Chugh cautions.

The RBI measures include restraining IIFL Finance and JM Financial Products from disbursing gold loan and loans against shares respectively and asking Paytm Payments Bank (PPBL) to stop onboarding of new customers. Earlier in December 2020, the RBI suspended HDFC Bank from sourcing new credit card customers after repeated technological outages. These actions are a departure from the historically nominal financial penalties imposed for breaches, S&P Global notes.

Besides, as the global agency points out, the RBI has decided to publicly disclose the key issues that lead to suspensions or other strict actions against concerned entities and become more vocal in calling out conduct that it deems detrimental to the interests of customers and investors. “We believe that increased transparency will create additional pressure on the entire financial sector to enhance compliance and governance practices,” adds Chugh. The global agency has also lauded the RBI’s recent actions demonstrating scant tolerance for any potential window-dressing of accounts.

These actions include the provisioning requirement on alternative investment funds that lend to the same borrower as the bank finance company. Amidst the possibility of some retail loans, such as personal loans, loans against property, and gold loans getting diverted to invest in stock markets and difficulty of ascertaining the end-use of money in these products, S&P Global underlines the faith of market participants that the RBI and market regulator, the Securities and Exchange Board of India, want to protect small investors by scrutinizing these activities more cautiously.

On the flip side, at a time of tight liquidity, the RBI’s new measures are likely to limit credit growth in fiscal 2025 (year ending March 2025). “We expect loan growth to decline to 14 per cent in fiscal 2025 from 16 per cent in fiscal 2024, reflecting the cumulative impact of all these actions,” says Chugh. The other side of the story is that stricter rules may disrupt affected entities and increase caution among fintechs and other regulated entities and the RBI’s decision to raise risk weights on unsecured personal loans and credit cards may constrain growth. Household debt to GDP in India (excluding agriculture and small and midsize enterprises) increased to an estimated 24 per cent in March 2024 from 19 per cent in March 2019. Growth in unsecured loans has also been excessive and now forms close to 10 per cent of total banking sector loans.

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Policy&Politics

Penalty provisions for dissemination of deepfakes can create deterrent effect: CUTS

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A senior official from the global think tank CUTS International has emphasized the significance of penalty provisions in deterring the creation and spread of deepfakes and misinformation. Amol Kulkarni, Director of Research at CUTS International, highlighted the need for technological interventions to curb the misuse of AI-generated content.

CUTS International, Director, Research, Amol Kulkarni told the media that internet users would require adequate opportunities to verify the genuineness of content and it becomes important during the election season while the role of credible fact-checkers and trusted flaggers becomes crucial. He said that while the government advisory on March 15 removes permission requirements, it continues to rely on information disclosures to users for making the right choices on the Internet.

“Though transparency is good, information overload and ‘popups’ across user journeys may reduce their quality of experience. There is a need to balance the information requirements, with other implementable technological and accountability solutions which can address the problem of deepfakes and misinformation,” Kulkarni said. After a controversy over a response of Google’s AI platform to queries related to Prime Minister Narendra Modi, the government on 1 March issued an advisory for social media and other platforms to label undertrial AI models and prevent hosting unlawful content. The Ministry of Electronics and Information Technology in the advisory issued to intermediaries and platforms warned of criminal action in case of non-compliance. The previous advisory has asked the entities to seek approval from the government for deploying under trial or unreliable artificial intelligence (AI) models and deploy them only after labelling them of “possible and inherent fallibility or unreliability of the output generated”.

The Ministry of Electronics and IT on March 15 issued a revised advisory on the use and rollout of AI-generated content. The IT ministry removed the need for government approval for untested and under-development AI models but emphasised the need for labelling AI-generated content and information to users about the possible inherent fallibility and unreliability of the output generated.

Kulkarni said that addressing the issue of deepfakes and misinformation will require clarifying the responsibility of all stakeholders in the internet ecosystem: developers, uploaders, disseminators, platforms and consumers of content. “Penalty provisions for the development and dissemination of harmful deepfakes and misinformation could also create a deterrent effect. Technological solutions to tag potentially harmful content and shifting the burden on developers and disseminators to justify the use of such content could also be designed,” he said.

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