Daily Current Affairs 18.11.2022 (Rhino horns trafficked with impunity: report, FM asks NIIF to guide private capital into infrastructure, Opaque political financing could cost democracy dear Weighing in on PMGKAY the free grains scheme, Trade tumult, Isn’t reservation for the poor a good thing?)

Daily Current Affairs 18.11.2022 (Rhino horns trafficked with impunity: report, FM asks NIIF to guide private capital into infrastructure, Opaque political financing could cost democracy dear Weighing in on PMGKAY the free grains scheme, Trade tumult, Isn’t reservation for the poor a good thing?)


1. Rhino horns trafficked with impunity: report

In terms of weight, there has been an increase in the seizure of rhino horns after 2017, despite an overall reduction in poaching, says a global threat assessment report presented at a convention of wildlife conservation agencies in Panama City.

The report says that “prolific” Vietnamese and Chinese criminal networks drive the trafficking of the horns throughout the illegal supply chain globally.

But what has alarmed the wildlife crime fighters is the audacity with which the smugglers transport the rhino horns unconcealed, indicating that “corrupt elements” help the traffickers move the horn shipments without bothering to disguise the products.

A comprehensive analysis titled “Executive summary of the rhino horn trafficking as a form of transnational organised crime (2012-2021): 2022 global threat assessment” was presented at the meeting of the Conference of Parties organised by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

Supported by the World Wide Fund for Nature, the Wildlife Justice Commission (WJC) prepared the document on the rhino horn trafficking during the decade from January 1, 2012, to December 31, 2021.

“More than 7.5 tonnes of rhino horns were seized globally during the decade. The average shipment weight increased markedly after 2017, despite a reduction in rhino poaching across Africa and the COVID-19 pandemic. This could indicate a greater involvement of organised crime groups as larger volumes of product are moved to increase profit margins per shipment,” the report said.

The threat assessment was compiled from the analysis of 674 rhino horn seizure incidents that had occurred globally during this decade, in addition to seven years of criminal intelligence and findings from the WJC investigations into the rhino horn trafficking, conducted since 2015.

The report said six countries and territories have dominated the rhino horn trafficking routes from the source to the destination locations, though more than 50 countries and territories were implicated in the transnational crime. These countries were South Africa, Mozambique, Malaysia, Hong Kong Special Administrative Region, Vietnam, and China.

“Prolific Vietnamese and Chinese criminal networks are driving the trafficking throughout the supply chain. Although Vietnam is known to be the primary destination for rhino horn, investigations indicate a substantial proportion of the horn entering Vietnam is sold to Chinese buyers and smuggled overland into China,” the report said.

The analysis indicated that at least 974 kg and potentially up to one-third of all the seized rhino horns, globally originated from the theft or illegal sale of both privately owned and government owned legally held stockpiles.

“Rhino horns are most frequently smuggled on commercial airlines. However, the modus operandi is shifting from small shipments in passenger luggage to larger shipments by air cargo,” the report said.

“Rhino horn shipments are most often smuggled with no concealment at all, which is a notable difference from the other wildlife products and illicit commodities generally. It could suggest traffickers are more reliant on corrupt elements to move rhino horn shipments through the supply chain, making it unnecessary to disguise the products,” it added.

Convention on International Trade in Endangered Species of Wild Flora & Fauna (CITES)

CITES was conceptualised in 1963 at a meeting of the (IUCN) International Union for Conservation of Nature.

  • It came into force in 1975 and consists of 183 member-countries till date that abide by CITES regulations by implementing legislation within their own borders to enforce those regulations.
  • Located in Geneva, Switzerland, the CITES is administered by the United Nations under its UNEP (United Nations Environment Programme) Wing.
  • The Convention of Parties to CITES is the supreme decision-making body of the Convention and comprises all its Parties.
  • The last CoP (17th) was held at Johannesburg (South Africa), in 2016. India hosted CoP (3rd) in 1981.
  • Although CITES is legally binding on the Parties, it does not take the place of national laws.
  • Rather, it provides a framework to be respected by each Party, which has to adopt its own domestic legislation to ensure that CITES is implemented at the national level.

CITES needed:

  • Widespread information about the endangered status of many prominent species, such as the tiger and elephants, might make the need for such a convention seem obvious.
  • Annually, international wildlife trade is estimated to be worth billions of dollars and to include hundreds of millions of plant and animal specimens.
  • The trade is diverse, ranging from live animals and plants to a vast array of wildlife products derived from them, including food products, exotic leather goods, wooden musical instruments, timber, tourist curios and medicines.
  • Levels of exploitation of some animal and plant species are high and the trade in them, together with other factors, such as habitat loss, is capable of heavily depleting their populations and even bringing some species close to extinction.
  • Many wildlife species in trade are not endangered, but the existence of an agreement to ensure the sustainability of the trade is important in order to safeguard these resources for the future.
  • Because the trade in wild animals and plants crosses borders between countries, the effort to regulate it requires international cooperation to safeguard certain species from over-exploitation.

CITES Classification or CITES Appendix

CITES classifies plants and animals into three categories, based on how threatened they are.

  • Roughly 5,600 species of animals and 30,000 species of plants are protected by CITES against over-exploitation through international trade.

They are listed under the three CITES Appendices that are mentioned below:

AppendixDescription Examples of Species
CITES Appendix-ISpecies that are in danger of extinction Commercial trade is prohibited. Permits are required for import and export. Trade permitted just for research only if the origin country ensures the trade won’t harm the species’ chance of survival. Asiatic lions and tigers (tiger skin trade). Sea turtles, gorillas, lady slippers orchids (most species), etc. Total 931 species on the list.
CITES Appendix-IISpecies that aren’t facing imminent extinction but need monitoring so that any trade doesn’t become a threat. Trade permits obtained legally and only if the origin country ensures that its harvesting and trade won’t harm the species’ chance of survival. American Alligators (Alligator skin trade) Paddlefish, Mahogany, corals, etc. Total 34,419 species on the list.
CITES Appendix-IIISpecies that are protected in at least one country. Regulations for these species vary, but typically the country that requested the listing can issue export permits, and export from other countries requires a certificate of origin.Honeybadger (medicinal or bushmeat purpose) Walruses, Map turtles, certain beetles, etc. Total 147  species on the list.
  • Species may be added to or removed from Appendix I and II, or moved between them, only by the Conference of the Parties.
  • However, species may be added to or removed from Appendix III at any time and by any Party unilaterally.

Structure of CITES

The following image from the CITES official website ( gives the structure:


The Conference of the Parties (COP) meet every two to three years. The latest COP was CITES COP18 that took place in August 2019 in Geneva, Switzerland. CITES COP3 took place in India in 1981 in New Delhi.


  • India is a CITES Party since 1976.
  • Due to its extreme diversity, India is recognized all over the world for harbouring up to 7-8% of all the species recorded by CITES.
  • Out of 34 global biodiversity hotspots in the world, India has 4 of them: Western Ghats, Sundaland, Himalayas and Indo-Burma region.
  • As an active CITES Party, India prohibits the international trade of endangered wild species. 
  • India has placed several measures to control the threats from invasive alien species.
  • This is done by regulating the trade by export certificates and import permits. 

India at COP18/2019

India proposed to boost the protection of the following animal species:

  • Smooth-coated otter & small-clawed otter
  • Indian star tortoise
  • Tokay gecko
  • Wedgefish
  • Indian rosewood

India wants to re-list two otter species, star tortoise in CITES Appendix I, and Tokay gecko and Wedgefish in CITES Appendix II.

2. FM asks NIIF to guide private capital into infrastructure

The National Investment and Infrastructure Fund proposes its first bilateral fund with Japan, banking on government funding; Sitharaman urges the fund to expand its lending operations

Finance Minister Nirmala Sitharaman has urged the National Investment and Infrastructure Fund (NIIF) to expand its operations and explore ways to crowd in private capital for projects under the National Infrastructure Pipeline, PM Gati Shakti and National Infrastructure Corridor.

The loan book of two major infrastructure focused non-banking finance companies, where the government-funded NIIF has a majority stake, has grown from₹4,200 crore to₹26,000 crore in three years with no loans turning into NPAs till date, the NIIF informed its governing council chaired by Ms. Sitharaman.

The NIIF has proposed setting up its first bilateral fund, an ‘India Japan Fund’ with contributions from the government, and signed an MoU on November 9 with the Japan Bank for International Development, it told the council.

‘Tap fundamentals’

“The Finance Minister asked the NIIF team to build on the work done so far and leverage India’s attractive investment fundamentals to expand its operations,” the Finance Ministry said in a statement. The Minister also encouraged NIIF ‘to continue discussions with investors from countries that are keen to invest in India’.

National Investment and Infrastructure Fund (NIIF)

National Investment and Infrastructure Fund was established by the Government of India and is the first sovereign wealth fund of India.

It was founded to provide infrastructure investment for maximizing the economic impact of the commercially available projects (Greenfield Projects and Brownfield Projects). The idea to set up NIIF was addressed in the Union Budget 2015-2016 by the former Finance Minister of India, Arun Jaitley. Department of Economic Affairs approved the National Investment and Infrastructure Fund (NIIF) in August 2015.

Objectives of NIIF

National Investment and Infrastructure Fund (NIIF) was set up as a sovereign wealth fund and is registered with the Securities and Exchange Board of India (SEBI) under SEBI Regulations, 2012 as a Category II Alternate Investment Fund (AIF). It provides long-term capital for infra-related projects.

Some of the major objectives of NIIF are as follows:

  1. To raise funds through suitable instruments which also included the off-shore credit enhanced bonds.
  2. To attract the anchor investors for their participation as partners in NIIF.
  3. Servicing of the investors of the fund.
  4. To consider and approve the candidate companies, institutions, and projects for investments.
  5. To invest in the corpus created by the Asset Management Companies (AMCs) to invest in private equity.
  6. To provide advisory service and prepare a shelf of infrastructure projects.

Types of NIIF Funds

The National Investment and Infrastructure Fund (NIIF) is currently managing three funds namely: Master Fund, Fund of Funds, and Strategic Fund. These three funds under the NIIF were found for primarily investing in the infra-related projects of the country through the formation of capital from both domestic and international investors.

Master Fund: The Master Fund was founded primarily by investing in well-established enterprises having a long-term agreement and which are operating in a regulated environment with a good history. This fund also invests in infra-related projects and follows the strategy of establishing sector-specific companies in association with prominent companies.

Fund of Funds: It aims at investing in funds that are managed by the renowned fund managers with an excellent track record. It also invests as anchor investors, thus, allowing the fund managers to accumulate more funds from the institutional investors. Fund of funds may also enter into joint ventures with the fund managers.

Strategic Fund: This fund invests primarily in equity and equity-linked instruments and is registered as an Alternative Fund II under the Securities and Exchange Board of India (SEBI).

National Investment and Infrastructure Fund (NIIF) – Investors

The first investment deal worth USD 1 billion was signed by NIIF in October 2017 with the Abu Dhabi Investment Authority (ADIA). ADIA was the first international investor in the NIIF’s master fund. 49% share is held in the National Investment and Infrastructure Fund by the Indian Government. Some of the domestic investors of NIIF are HDFC Bank, Axis Bank, ICICI Bank, and Kotak Mahindra Life. In June 2018, the Asian Infrastructure Investment Bank announced to invest an amount of USD 200 million in the NIIF.  They invested USD 100 million in June 2018 and said they would invest another USD 100 million on a later date.

National Investment and Infrastructure Fund (NIIF) – New Developments

  1. At the end of March 2020, the Asian Development Bank (ADB) invested $100 million into the National Investment and Infrastructure Fund (NIIF). There are 3 types of Funds in the National Investment and Infrastructure Fund (NIIF). The investment of the Asian Development Bank (ADB) was in the Fund of Funds (FoF) type.
  2. On November 22, 2020, the Union Cabinet had approved Rs. 6000 crore investment as a part of Atma Nirbar Bharat Abhiyan.
  3. In December 2019, the Canada Pension Plan Investment Board (CPPIB) had agreed to invest $ 600 million in the National Investment and Infrastructure Fund (NIIF). Canada Pension Plan Investment Board (CPPIB) is the largest pension fund in Canada.
  4. With the addition of the Asian Development Bank (ADB) investment in the National Investment and Infrastructure Fund (NIIF),  the Fund of Fund (FoF) type has secured $ 700 million in commitments.
  5. National Investment Infrastructure Fund (NIIF) manages over $ 4 billion of capital commitments across 3 types of funds.
  6. The National Investment and Infrastructure Fund (NIIF), Fund of Fund (FoF) was created in 2018. The three funds are focused on climate, green energy, entrepreneur-driven mid-market growth companies, affordable and middle-income housing. Fund of Funds invests in a variety of sectors. 
  7. In April, the National Investment and Infrastructure Fund (NIIF) had launched a platform that will invest in road projects in India.
  8. National Investment and Infrastructure Fund (NIIF) will buy assets of Essel infrastructure projects in Telangana and Karnataka.

3. Editorial-1: Opaque political financing could cost democracy dear

The discourse around political finance in India usually revolves around the issue of corruption. We see this in the political contestation over the introduction of electoral bonds. It is either presented as a pious instrument for ‘cleansing’ politics, by routing funding through legal channels, or as a murky mechanism for legitimating ‘institutionalised corruption’.

Thus, the corruption frame locks the issue of political funding into a superficial binary of ‘clean’ versus ‘dirty’, expressed in moral or legal terms. This framing precludes any focus on the structural relationship between the nature of political funding and the shape of our political system — conveniently so, for the relationship implicates almost every political party, whether it is ruling or in the Opposition. Corruption is merely one symptom of this structural relationship, rather than being a driving factor.

How it plays a pivotal role

In any country, the nature of political finance is an important determinant of the structure of political competition. The structure of political competition can be studied around three axes: institutional (the regulation of competition between ruling and Opposition parties); organisational (the regulation of competition within a party); and ideological (the role of ideas in determining competition between parties).

All the three axes of political competition are substantially influenced by the nature of political finance. One, the degree of transparency of political funding informs the efficacy of institutional safeguards. For example, the inherent opacity of electoral bonds renders the power of the Election Commission of India (ECI) irrelevant in terms of ensuring a level-playing field. Meanwhile, the information asymmetry between the ruling and the Opposition parties gnaws at the fairness of electoral processes.

Second, the extent to which political funding is centralised within a party determines whether power in the party is drawn from organisational structures or exercised in a personalistic manner. For example, membership-funded parties such as the Dravida Munnetra Kazhagam and the Bahujan Samaj Party of an earlier era were highly organised parties where leaders wielded power in a responsive, programmatic manner. Similarly, we can chart the transformation of the Labour Party in the United Kingdom over the course of the 20th century, from an organisationally-driven mass party to a centralised elite party, as (among other factors) the balance of party funding shifted from Labour unions to corporate houses.

Third, the political financing regime also shapes the role of ideas in grounding political competition. Admittedly, this relationship can proceed in varied ways according to the contingencies of different political contexts. But, as a general matter, when political finance is anchored to a narrow concentration of economic capital, the ideological basis of political competition tends to become severely corroded.

Bonds as advantage to ruling party

Having constructed this framework of analysis, let us come back to the issue of electoral bonds. How do we expect the rise of electoral bonds, as a major source of political finance, to affect the prevailing patterns of political competition? At the outset, one must note the remarkable speed with which electoral bonds have colonised at least the declared sphere of political funding. Within two years of its introduction, electoral bonds were said to cover 52% of the total income of national parties and 53% of the total income of regional parties, according to an analysis by the Association for Democratic Reforms (ADR).

There are two salient features of electoral bonds we must consider to gauge its impact on political competition.

One, the design of electoral bonds, perhaps more than any other instrument of political finance, leans to the advantage of the ruling party. It is not surprising that the ruling Bharatiya Janata Party (BJP) in 2019-20 got over 75% of the total electoral bonds sold, as opposed to the meagre 9% share of the Congress, according to ECI data. As the political scientist, Milan Vaishnav, has written, electoral bonds invert the concept of transparency and openness in political funding, whereby only the government, and presumably the ruling party, have access to the transaction trails. The information asymmetry and barriers to institutional scrutiny thus created considerably skews the channel of electoral bonds towards the ruling party. Second, electoral bonds centralise political funding towards the national units of political parties, further entrenching the leverage of national leadership over the State and local units. As a reply to a Right To Information (RTI) query revealed, out of the ₹5,851 crore of electoral bonds sold in 2018-19, 80% of the bonds were redeemed in Delhi. Electoral bonds were introduced alongside significant legal amendments, such as the removal of erstwhile limits (7.5% of net profit) on corporate donations. These changes in the legal architecture of political finance enable the prospects of an alliance of national political elite and big business conglomerates squeezing the space for both local elites and regional capital.

These two features of electoral bonds signal an important break, harking back to another turning point in the history of political finance brought under the Indira Gandhi regime. As Mr. Vaishnav and Devesh Kapur have written in their book, Costs of Democracy: Political Finance in India, Indira Gandhi banned corporate donations in 1969 in order to limit the growth of the Swatantra Party and the Jana Sangh, who she feared were increasingly attracting corporate backers. These changes in political funding melded well with her wider strategy of tightening the grip of the state (and hence the ruling party) over big business through the project of dialling up licence/controls and nationalisation of key industries. At the same time, the Indira Gandhi regime also cultivated personalistic relationships with big business elites in order to marginalise the regional strongmen which had till then controlled the organisational structure of the Congress party.

Centralisation of power

Yet, the centralisation of political power seems even more commanding in the present time. Even as Indira Gandhi completely subordinated the Congress elite in the Hindi-speaking States, she allowed a measure of autonomy to leaders such as Yashwantrao B. Chavan in Maharashtra and D. Devaraj Urs in Karnataka, who were backed by important sources of regional capital. Similarly, while Rajiv Gandhi changed Chief Ministers in Uttar Pradesh on a whim, he coaxed a rebellious Sharad Pawar back into the party fold. Today, Prime Minister Narendra Modi commands unquestionable authority even in these States, sidelining B.S. Yediyurappa from the Karnataka unit and coercing Devendra Fadnavis into accepting a secondary role in the Maharashtra government, without provoking a squeak of protest. Meanwhile, the Bharatiya Janata Party now possesses the autonomy to bring in measures such as demonetisation and Goods and Services Tax (GST) that hurt its traditional backers (small businessmen and trading castes), because they now contribute an insignificant speck to its political treasury.

To be sure, the new political financing regime only builds on the political pathologies already prevalent in our system (crumbling organisations; political centralisation; a business-politics compact fuelled by rent seeking and cronyism) rather than creating them from scratch. Even so, it is important that independent institutions (such as the ECI and the Supreme Court of India) step in to layer the seeming black hole of electoral bonds with a minimum level of institutional safeguards, lest this “reform” of political finance goes down in history as a significant marker in our story of democratic decline.

4. Editorial-2: Weighing in on PMGKAY, the free grains scheme

The extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), a scheme to distribute free foodgrains to the poor, for another three months, comes as a surprise for many reasons.

First, in the months prior to the latest extension made in late September 2022, there was much debate on the relevance of freebies. Second, there were reports in June that the Expenditure Department at the Centre did not favour it, citing a funds crunch. It also held the view that such a scheme was no longer needed “in non-pandemic times”. This has to be viewed in the context of the Russia-Ukraine conflict, raging since February 2022, and its adverse impact on the world’s food and energy sectors.

‘To support the vulnerable’

Even more surprising is the Government’s reason: that it wanted to support the poor and the vulnerable, estimated to be 80 crore, during the festival season between October and December. No such consideration was shown when the scheme was discontinued between December 2020 and April 2021, another important time for festivities. The country had still to recover from the effects of the first COVID-19 wave, which was the trigger for the launch of the scheme in April 2020.

Critics of the ruling Bharatiya Janata Party point out that the scheme’s extension is with an eye on the Assembly elections in Himachal Pradesh and Gujarat, respectively. Also, the first extension fell in the period when the Bihar Assembly poll was held and the BJP shared power with the Janata Dal (United) in the State. The scheme is also regarded as one of the factors responsible for the BJP’s victory in the 2022 Uttar Pradesh Assembly elections.

In contrast, the PMGKAY was not in force during December 2020-April 2021 when five States including West Bengal, Kerala and Tamil Nadu, went to the polls. It was re-introduced in May 2021 when there were indications of a second pandemic wave, and has been running since without interruption.

Aimed at providing an additional allocation of foodgrains (rice or wheat) from the central pool at five kilograms per person per month free of cost, the PMGKAY benefits cardholders of the Antyodaya Anna Yojana (AAY) and Priority Households (PHH) categories, both falling under the National Food Security Act (NFSA). This is over and above the regular monthly quota under the NFSA, i.e., 35 kg per month per family for AAY and 5 kg per month a person for PHH. The PMGKAY covers even Direct Benefit Transfer (DBT) beneficiaries. After taking into account the estimated outgo of foodgrains — about 122 lakh tonnes during the current phase of extension, the aggregate allocation will be around 1,121 lakh tonnes. With the expenditure of ₹44,762 crore for the existing phase, the overall expenditure of the PMGKAY will be approximately ₹3.91 lakh crore.

Policymakers and experts concede that the scheme made a difference to food security and public health during the pandemic. Be it the Parliamentary Standing Committee on Food and Public Distribution or the authors of an IMF-published working paper, “Pandemic, Poverty, and Inequality: Evidence from India” (April 2022), the scheme has received commendation. The working paper concluded that “the social safety net provided by the expansion of India’s food subsidy program absorbed a major part of the pandemic shock.” However, it would have been far better had the Government taken the decision to extend the scheme based on findings of an objective study regarding the impact of the PMGKAY, as suggested by the Standing Committee in its March 2022 report.

Why a transparent study is needed

At least now, the central authorities should commission a study and make its findings public. Just as it did in the initial months of the pandemic, the Centre should consider providing 1 kg pulses free to States on a regular basis, or at least at highly subsidised rates.

To keep the budgetary allocation under control, rules on quota for rice or wheat can be changed suitably. While it is all right to provide foodgrains free during the pandemic, the central and State authorities need to ponder over the scheme’s continuance, given the chronic problem of diversion from the Public Distribution System (PDS). In the non-pandemic period, the problem of diversion assumes a bigger dimension when a family of five, covered under PHH and living in a congested city, encounters practical difficulties in storing 50 kg rice or wheat a month, of which 25 kg is free. In many States, including West Bengal, Kerala and Karnataka, the 50 kg is free. In Tamil Nadu, for over 10 years, rice-drawing card holders, be they PHH or non-PHH, have been getting rice free.

In fact, the proposed study should be the basis for updating the database of foodgrain-drawing card holders, scrutinising the data critically and zeroing in on the needy. The task should not be onerous, given the widespread application of technological tools in the PDS such as Aadhaar, automation of fair price shops and capturing of the biometric data of beneficiaries. Using this database, the Centre and States can decide whether the size of the PHHs — nearly 71 crore — can be pruned or not.

In addition, if they feel the need to go beyond the mandate of the NFSA, as is being done under the PMGKAY, they can supply the foodgrains at a reasonable price. The culture of providing essential commodities free of cost at the drop of a hat has to go.

The elimination of the problem of diversion of foodgrains has to be taken up with renewed vigour as, after all, farmers toil hard in the fields to produce the grains and many deserving persons remain outside the food security net.

5. Editorial-3: Trade tumult

Shrinking exports with high deficits call for a policy reboot

A ship stacked with shipping containers is unloaded on a pier at Port Newark, New Jersey, U.S., November 19, 2021. REUTERS/Mike Segar

For the first time since February 2021, India’s goods exports shrank this October, dropping 16.7% from last year (and 16% from September 2022) to slip below $30 billion after a 20-month-streak above that mark. Most sectors were hit hard: engineering goods, pharmaceuticals and chemicals and employment-intensive gems and jewellery, textiles and handlooms. Just six sectors recorded an uptick, with electronics goods being the only manufacturing segment. Imports grew 5.7% year-on-year, expanding the country’s trade deficit over 50% to $26.9 billion. This is the fourth straight month of a $25 billion-plus goods trade deficit that hit a record $30 billion in July. To be sure, imports have now been moderating sequentially for four straight months and dropped 7.3% from September to an eight-month low of $56.7 billion. But a marginal dip in petroleum imports, along with a 10.3% shrinking of non-oil, non-gold imports from September, can also be construed as a sign of slackening domestic demand. India’s trade deficit so far this year is now over $175 billion, from $94.2 billion a year ago. With high energy prices likely to escalate with winter’s onset, a significant easing in deficit levels is not on the horizon yet.

While the Government acknowledged forecasts of a slump in global shipments growth to just 1% in 2023, it attributed the October trade blip to a seasonal Deepavali effect — production dips as workers go on leave and imports rise with festive demand. Though the pre-Deepavali and Deepavali month exports did have a $5 billion gap in 2021, this was not the case in pre-COVID 2019. Officials conveyed there is no need to be ‘overly depressed’ as India has a very low share of global trade which can only grow. But that growth will not accrue automatically — in a shrinking buyer’s market, rivals such as Vietnam cannot be expected to simply wait out the slump. In contrast, a new Foreign Trade Policy to replace the current policy from 2015, was recently deferred yet again till April 2023 for reasons that included waiting out the current global turmoil. If anything, the tumult in trade flows will be much worse by then. Policymakers must stop dithering and be more pro-active in recalibrating their stance — for instance, the steel export duty amid lower global prices has triggered higher imports, while exports, including those of engineering goods, have collapsed. The Finance Ministry recently identified external pressures as a key challenge — with a depreciating rupee making imports pricier and slowing global demand hurting exports. More actions are needed to match these concerns; waiting and watching is not an option.

6. Editorial-4: Isn’t reservation for the poor a good thing?

On November 7, the Supreme Court upheld the validity of the 103rd Constitution Amendment which provides 10% reservation to the economically weaker sections (EWS), but excludes from this quota the ‘poorest of poor’ among the Scheduled Castes (SCs), Scheduled Tribes (STs), Socially and Educationally Backward Classes and Other Backward Classes (OBCs). In a conversation moderated by Abhinay Lakshman, Satish Deshpande and Arghya Sengupta discuss whether reservation should be used as a means to alleviate economic backwardness. Edited excerpts:

Should reservation be a means to address poverty?

Satish Deshpande: No. Reservations result in quotas, which means you set aside a certain number of seats or opportunities for a particular group and make them unavailable to everyone else, no matter what their situation. This kind of a conscious setting aside of the principle of equality requires a strong justification. And that justification is provided by various forms of social discrimination, which are permanent because they are tied to indelible social identities. And if those forms of discrimination are allowed to continue unchecked, we will never have equality. That is why reservation should be saved for the most intractable forms of discrimination and not for more transient, more easily treatable problems like those originating from economic reasons.

Arghya Sengupta: Reservation is a tool available to the government to alleviate different kinds of backwardness or discrimination that have been faced by certain individuals or groups. Is it a legitimate tool to use? Certainly. Is it a legitimate tool to use in cases of economic backwardness? To answer this, first we have to understand that reservation is not an exception to the rule of equality, but required by the principle of substantive equality. You’re setting aside a certain number of seats, which are now not for open competition, [as] this is required by the principle of equality to try and ensure a level playing field. But a level playing field for whom? This is for elected governments to decide. At the time of the [drafting of the] Constitution, it was felt that reservations were needed in a particular context, which is social and educational backwardness. Now we see reservations of different kinds. It is open to a democratically elected government to introduce a principle of reservation on grounds other than caste as well.

Reservation has historically been used as a means to ensure equal representation for those who have been under-represented, based on social and educational backwardness. What does the EWS judgment mean for what justifies reservation?

SD: The government’s decision is easy to understand. There is a constituency — the Hindu upper castes — which feels that it should be getting its share of reservation. This is the electorally relevant prize that is being fought for. The intention to do this extends across ideologies and governments. The Congress government also wanted to introduce this earlier. The question is, how does this square with constitutional principles? We are finding circuitous ways of explaining the logic of what is happening because we cannot name caste openly. The Court has argued that reservations are required for equality rather than being exceptions to equality. However, the common sense understanding has always been that these are exceptions, that caste is recognised only as an exception, and the implicit norm has been one of castelessness. This decision forces us to rethink whether that is true now as there is reservation for the upper castes.

Can reservation be provided to a group/class of individuals without proof of inadequate representation? Reservations for SCs, STs, and OBCs were introduced with proof that these communities were not adequately represented, but this is not the case with the EWS quota.

AS: First, I agree with Professor Deshpande — there is a clear political play in this. But there are three facts that I’d like to place on record. One, reservation on economic criteria has been made available to anybody who meets those criteria as long as they don’t have reservation on the basis of social and educational backwardness. Now, because of the politics of it, this [EWS quota] is being seen as forward caste reservation. But this reservation, strictly speaking, is also available to poor Muslims, poor Christians, and poor religious minorities. Two, we must realise that there has been a Constitution Amendment here. It [EWS quota] has not been brought under Article 16(4) of the Constitution, which requires proof of inadequacy of representation in government services. If it was brought under that Article, it would have failed the test of constitutional scrutiny. So, do you have to show inadequacy of representation here? No. And three, all the judges have said that bringing in economic criteria in the Constitution does not violate the basic structure of the Constitution. The previous judgments of the Supreme Court were in the context of social and educational backwardness. It was held that economic criteria alone could not be used, because that was not the original understanding of the Constitution. But now the Constitution has changed. And the interpretation [based] on which all the judges have said the same thing is that it is open for the Constitution to be amended so that reservations are provided on the grounds of economic criteria alone, without having to prove inadequacy of representation or any other form of social and educational backwardness, and without having to comply with the 50% quota.

SD: This judgment opens the door for purely economic criteria and therefore takes away the need to provide any other criteria. It also sets aside the 50% limit, so it opens the door for other communities to ask for more. Finally, it makes it clear that reservation is no longer a special tool meant to address discrimination and can be used to address all forms of backwardness and disadvantage.

The Court said the 50% cap is not inflexible. Jharkhand recently passed a Bill raising quotas to 77%. Many States are trying to do this. Does the judgment allow the 50% cap to be breached for the SC, ST, OBC quota?

AS: There was only the majority judge, Justice Dinesh Maheshwari, who said that the 50% rule is in the context of social and educational backwardness [and does not] apply to reservation based on economic criteria. The Jharkhand case will be tested, but my sense is that for social and educational backwardness, there will be a case that the 50% rule still applies. But as Professor Deshpande said, there will be more demands for reservation from different kinds of communities which feel disadvantaged. Now, whether that is permissible or not we will have to see.

Certain groups are being excluded from the quota, solely based on their caste identity, despite qualifying under the criteria for the quota. What does this judgment mean in terms of upholding that exclusion?

SD: It de-links reservation from the question of social justice, because now everybody has reservation; there is nothing differential being done for those groups that were discriminated against. This is going to be a major issue, because the very problem of discrimination is that the language of backwardness has dominated the reservation discourse. Discrimination involves a situation where there is a discriminator and a person/group discriminated against, whereas in the language of backwardness, there are victims without perpetrators. Therefore, there is no need to have any differential policies. In a sense, our development programmes, since Independence, were supposed to be on economic grounds. And look at what has happened — they deepened caste inequalities. We needed programmes that try to redress the effects of discrimination, not treat victims and perpetrators even-handedly, at least under the rubric of the anti-discrimination programmes. Now, we don’t have anything for anti-discrimination. The last vestiges of that are the laws against caste atrocities. Perhaps those too are going to be on the firing line now.

To what extent does this exclusion affect the equality code of the Constitution?

AS: There are two ways to answer this question. First, does the quota impinge upon equality? It does. But is that impingement a basic structure violation? No. Because, as a matter of law, the quota is not available to forward castes alone. And second, if EWS operated like a creamy layer exclusion or as a horizontal category, there could have been a claim that this is impinging on someone else’s rights. But it is an additional track that has opened up. The Constitution provisions authorise the state to make any positive discriminatory provision. So, it does not violate the equality code. There is a clear signal that the pie is now being expanded. This is a consequentialist moment in our social justice discourse, because it is changing the nature of reservations in the country.

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