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Editorial Today (English)

in this section, we are presenting our readers/aspirants compilation of selected editorials of national daily viz. The Hindu, The live mint,The Times of India, Hindustan Times, The Economic Times, PIB etc. This section caters the requirement of Civil Services Mains (GS + Essay) , PCS, HAS Mains (GS + Essay) & others essay writing competition

1.Diversify, EPFO, don’t burden govt

The Employees’ Provident Fund Organisation (EPFO) should waste no time in changing the way it deploys employees’ savings. The 8.5% rate of return it has recommended for 2020-21, the same as in 2019-20, is above the interest rate on bank deposits and small savings schemes, but lower than that generated by the National Pension System. EPFO invests 85% of its corpus in debt, mostly public, its exposure to equity being capped at 15% of the corpus. That it is able to pay 8.5% rate of interest shows that the government is paying too high a rate of interest on its borrowing from the EPFO. Instead, it should mandate EPF to invest in a wider array of asset classes to diversify risk and maximise returns.

The yield on the 10-year g-secs is about 6.23-6.25%, around 200-225 basis points lower than the return on EPF. And there is no long-dated paper that yields higher returns. The wrong-headed, ultra-conservative investment rule is the main reason for the EPFO’s failure to maximise returns. That must change. Instead of the government subsidising the return for over six crore contributing subscribers, the EPFO must provide greater flexibility in the allocation of funds across asset classes. The EPF corpus — of about ?15 lakh crore — is sizeable enough to expand across asset classes and get the right trade off between risk and return.

The one-year return of the NPS even for government employees, who have the option now to invest up to 50% in equities, is about 400-440 basis points above the EPF’s. The exchange-traded funds purchased in the first two quarters of 2017 have been lucrative, according to the EPFO. Rather than bonds varnished with equity, the EPFO must invest in private equity, venture capital, even set up special situation funds that invest in distressed assets to establish claims on broader segments of the economy’s productive capacity while diversifying risk. A separate fund under the EPFO for contributions from individuals who voluntarily join the scheme would be to duplicate the NPS model, without its flexibility.

2. Welcome thoughts on independent directors

It is welcome that capital markets regulator Sebi is seeking to revise and update the norms for appointment and compensation of independent directors (IDs) on company boards, and has put out a consultation paper for the purpose. Notably, the norms seek to boost transparency in the assignment of IDs and to modernise the rules for their compensation.

The whole edifice of good corporate governance rests on the efficacy and effectiveness of IDs. Independent oversight is crucial to ensure that boards fulfil their role and obligations objectively, and hold managements to account. Sebi has proposed, rightly, that IDs be subject to ‘dual approval’ by shareholders, and a majority of minority shareholders. The latter consist of stakeholders other than the promoter and promoter group. Also, a longer cooling-off period of three years, from the extant two years, is stipulated for appointment of key managerial personnel (KMP) of promoter group companies as IDs, to harmonise the rules. However, in the ecosystem of startups and rapid innovation, an across-the-board longer cooling-off period seems quite unwarranted.

As per the Companies Act, and also listing and disclosure norms, IDs cannot receive stock options. Instead, IDs are permitted sitting fees (max ?1 lakh) and profit-linked commission within an overall limit. Sebi has now called for grant of Esops to IDs, preferably with a long vesting period of five years. While a large remuneration can compromise the independence of IDs, lesser compensation may not attract competent talent, it is duly noted. What should be the maximum limit of remuneration of IDs via Esops, asks the consultation paper. It surely ought to be decided by shareholders, including minority shareholders, and global best practice.

3.A crisis for the British monarchy | HT Editorial

The British monarchy has gone through its share of crises — from more personal controversies around Prince Charles and Princess Diana’s marriage to political challenges, including a republican strain which sees the institution as antiquated and out of line with the democratic spirit of modern times. But few episodes will do as much damage to the credibility of the monarchy as an institution as the interview of the Duke and Duchess of Sussex, Harry and Megan Markle, who have walked away from the royal family to begin life anew in the United States (US).

In an interview with Oprah Winfrey, the couple made a series of charges against the royal family — the most damaging of which was Ms Markle’s disclosure that when they were about to have a child, members of the royal family had conversations about “how dark the skin might be when he is born”. Harry confirmed the conversation, expressing his shock — but made it clear subsequently that it was neither Queen Elizabeth nor Prince Philip who made the remark. Ms Markle also spoke about how there were times when she did not want to live anymore, and painted a picture of an apathetic and insensitive royal establishment.

While the entire episode may be seen as yet another internal dispute of the elite, it has created a crisis of credibility for the royal family — for charges of racism from within are hard to counter. It has led to a divide between allies on either side of the Atlantic, with the popular mood in the US firmly with the young couple while the mood in the United Kingdom remains more ambivalent. But at the core, the issue is about how the monarchy as an institution is increasingly losing its traditional, political, and now popular legitimacy.

4. Uttarakhand: Will Trivendra Rawat’s sacking do the trick for BJP in 2022?

Learning from its Jharkhand experience, BJP has effected a change of leadership in Uttarakhand. In Jharkhand, it had ignored the unpopularity of chief minister Raghubar Das and the dissidence of senior leader Saryu Roy and paid a heavy price. The resignation of Trivendra Singh Rawat as Uttarakhand chief minister a year before assembly polls shows BJP as a party that doesn’t make the same electoral mistake twice.

MLAs opposed to Rawat complain that his insular style of functioning has robbed them of political clout. Dissidence has also been stalking the BJP chief ministers of Karnataka and Tripura. It is also interesting to see how the BJP is mirroring many of the same Congress factional tendencies. With Uttarakhand’s history of booting out incumbents every five years, the incoming CM will have a tough task regaining lost ground in the next ten months.

5. No to Ghettos: For India’s sake enforce the 50% cap on quotas, don’t dilute it

Supreme Court’s move to examine whether to review the 1992 Indra Sawhney verdict capping reservations at 50% calls for caution. Far from correcting historical injustices, reservations have become a competitive subdivision of shrinking opportunities. While merit doesn’t factor in socio-economic inequalities that prevent many people from attaining their potential, no society can progress if merit gets the short shrift. In that respect, Indra Sawhney attempted to balance the right to equality and state’s prerogative for socio-economic justice with the 50% cap.

Already, Centre and many state governments have breached this cap and aren’t being held to account. The SC proceedings are also witnessing a challenge on grounds of federalism against Article 342A introduced by the 102nd Constitution Amendment Act (2018), which requires presidential (Centre’s) assent for states notifying changes to OBC categories. But the legal hair splitting must also take note of new realities. Slowing economic growth and success of various groups in enlisting under OBC/ SC/ ST categories and easing creamy layer ceilings have created social divides that can’t be solved – but may be worsened – by more reservations.

The yardsticks shifting to absolute, rather than relative, measures of backwardness is allowing dominant communities like Marathas to join the quota mela. In an underdeveloped country like India, pretty much every community can be shown to be backward in some absolute sense. However, quota gains for it can only be at the expense of some other community, perhaps even more backward. This fundamental reality is papered over when Centre and states pander to quota demands. From inclusionary ideals, reserving the majority of opportunities for special groups has morphed into a means of exclusion. 75% reservation of entry level private sector jobs for locals by Haryana government threatens to shrink the job pie and hurt local aspirants by making it difficult to do business in Haryana.

Proponents of nativism and caste identities would do better for their people by working to improve education outcomes in local schools, a major determinant of a person’s worldly prospects. While reforms like GST visualise India as a unified market, burgeoning reservations proceed in the opposite direction by fragmenting the labour market – even as constitutional rights such as right to equality and right to migrate to other states in search of livelihood are denied. The Indra Sawhney judgment cap of 50% on reservations is already very high. It behoves SC to crack the whip in this regard, and bring errant governments in line.


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