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  • Is printing money an option to tide over the crises

    India has been dealing with unprecedented crises-with China on border and with economy and pandemic within. Fighting these crises require resources. So, this article examines the options to raise revenue and the consequences that come with them.

    Increase in financial burden to counter China

    •  The Chinese military threat calls for immediate and strategic action by our defence and foreign affairs establishments.
    • India’s war against Pakistan in Kargil in May 1999 provides hints of the financial burden of a military threat.
    • India’s defence expenditure in the war year shot up by nearly 20% from the previous year.
    •  India’s defence budget for the next financial year was 2.7% of nominal GDP, the highest in decades.
    • China is a far mightier power than Pakistan.
    • India’s defence budget has been whittled down to just 2% of GDP for the financial year 2021.
    • China’s defence budget is nearly four times larger.
    • In all likelihood, the Chinese conflict will stretch central government finances by an additional one to two percentage points of GDP.

    Economics of healthcare

    •  The combined public health expenditure of States and the central government in India is a mere 1.5% of GDP.
    • While China’s is at 3% and America’s at 9%.
    • The COVID-19 epidemic is expected to linger on for another two years.
    • There is no option other than to significantly ramp up India’s health expenditure.
    • So, government will need additional funds of the equivalent of at least one percentage point of GDP to continue the fight against COVID-19.

    But economy is in bad shape

    • India’s economy has four major drivers: 1) Spending on consumption. 2) Government spending. 3) Investment. 4) external trade.
    • Spending by people is the largest contributor to India’s economic growth every year.
    • For every ₹100 in incremental GDP, ₹60 to ₹70 comes from people’s consumption spending.
    • The lockdown shut off people from spending for two full months.
    • India’s economy will contract for the first time in nearly five decades.
    • With the global economy in tatters, trade is not a viable alternative to offset the loss from consumption.
    • Investment is also not a viable option at this stage since the demand for goods and services has fallen dramatically.

    So, what we want is new “New Deal”

    • There are only two options to come out of this situation.
    • 1) Either put money in the hands of the needy to stimulate immediate consumption.
    • 2) Or, the government has to embark on a massive spending spree, akin to the “New Deal”.
    • New Deal was a series of programmes and projects instituted in the U.S. during the Great Depression of the 1930s.
    • Government will need to inject incremental funds of five percentage points of GDP to absorb the economic shock and kick start the spending cycle again.

    Findind resources while aoiding “junk rating”

    • Additional expenditure on health, defence and stimulus package plus making up for a shortfall in revenue will lead to a fiscal deficit of 10% of GDP.
    • The only option for the government to finance its needs is to borrow copiously.
    • Borrowing will obviously push up debt to ominous levels.
    • When government debt rises dramatically, it gives rise to a “junk” crisis.
    • With rising debt levels, international rating agencies will likely downgrade India’s investment rating to “junk”.
    • Junk rating will then trigger panic among foreign investors.
    • India thus faces a tough dilemma — save the country’s borders, citizens and economy or prevent a “junk” rating.

    Is printing money an option?

    • Economic theory states that if money is printed at will, it can lead to a massive spike in prices and inflation.
    • This theory has fallen flat in the past decade in developed nations such as America.
    • The U.S dollar, by virtue of being the world’s reserve currency, has in-built protection against a currency crisis that can be triggered by at-will printing of money.
    • India don’t have that protection.
    • Hence, the Reserve Bank of India can just create money at will and transfer them to government coffers electronically, some argue.
    • Whether money is printed or borrowed from others, it will still be counted as government debt.
    • And so, cannot escape a potential downgrade to a “junk” rating.

    Consider the question “As the government has been dealing with the unprecedented crises, it has to explore the option of monetisation of its debt. Examine the issues with such a move.”

    Conclusion

    How India emerges from this crisis will shape not just India’s destiny but the world’s. The best course of action is to borrow unabashedly to pull India out of the crisis and deal with the consequences of a potential “junk” nation label.

  • Online education in India

    What are the benefits of Online Learning in distress situations?

    • In pandemic situation like today’s, where due to nationwide lockdown, all schools, colleges, universities were shut down, online learning comes as a savior to students and provided them with an opportunity to continue learning even while at home.
    • There was anxiety, particularly about the graduating batches of students, lest the ongoing session should be declared a ‘zero semester’. There were attempts from individual teachers to keep their students engaged. A few universities made arrangements for teachers to hold their classes virtually through video conferencing services such as Zoom. These are well-meaning attempts to keep the core educational processes going through this period.
    • Many private and government colleges in the country had been conducting online classes. Very small aperture terminals (VSATs) are still used by top Business schools in the country to create a closed user group (CUGs), which offers online classes globally. However, COVID-19 has hastened
    • Online education, a result of the digital world has brought a lot to the learning table at all levels of education, beginning from preschool up to higher level institutions. The move to remote learning has been enabled by several online tech stacks such as Google Classroom, Blackboard, Big Blue Button, Zoom and Microsoft Teams, all of which play an important role in this transformation.
    • With the development of ICT in education, online video-based micro-courses, e-books, simulations, models, graphics, animations, quizzes, games, and e-notes are making learning more accessible, engaging, and contextualized.
    • To ensure that learning never stops, the online education sector, and mobile networks have become the preferred platform. Teachers are preparing lessons using distance learning tools, and parents are learning new teaching techniques at home. Providing aid are the entrepreneurs offering online learning apps like BYJU’s, Adda24x7, Duolingo, Khan Academy, Witkali and several others.
    • Universities like World University of Design, Jawahar Lal Nehru University, Jamia Millia Islamia, Amity, IP University, Lovely Professional University and Mumbai University are offering online classes across different subjects.
    • Schools in 165 countries around the world have closed due to the Corona virus outbreak, according to UNESCO. And, according to the International Telecommunication Union(ITU), more than 1.5 billion school children around the world are using online education, following the global lockdown.
    • Online learning is not for everyone. Schools located in remote areas of the country with limited availability of electricity and internet is making restricted use of WhatsApp to stay connected with their classrooms.

      3.) Less intimidating

      Many students in classroom environments aren’t comfortable speaking in public. In an online environment, it can be much easier to share thoughts with others

      5.) Focus on ideas

      With an estimated 93 percent of communication being non-verbal, online students don’t have to worry about body language interfering with their message. While body language can be effective sometimes, academics are more about ideas, and online education eliminates physical judgments that can cloud rational discussion.

      5.) Focus on ideas

      With an estimated 93 percent of communication being non-verbal, online students don’t have to worry about body language interfering with their message. While body language can be effective sometimes, academics are more about ideas, and online education eliminates physical judgments that can cloud rational discussion.

      8.) Cost

      Although the cost of an online course can be as much or more than a traditional course, students can save money by avoiding many fees typical of campus-based education, including lab fees, commuting costs, parking, hostels, etc. Imagine living in Dhule but going to college in Mumbai.

  • Global Education Monitoring (GEM) Report 2020

    The COVID-19 pandemic has exacerbated inequalities in education systems across the world a/c to the latest GEM report.

    Practice question for mains:

    Q.Discuss the impact of COVID-19 induced lockdown on India’s education sector.

    About the report

    • Originally the EFA Global Monitoring Report, it has been renamed as the Global Education Monitoring Report.
    • It is developed by an independent team and published by UNESCO aimed to sustain commitment towards Education for All.
    • The ‘UNESCO Institute for Statistics (UIS), based in Montreal provides data for the report on students, teachers, school performance, adult literacy and education expenditure.

    Highlights of the 2020 report

    • The report noted that efforts to maintain learning continuity during the pandemic may have actually worsened exclusion trends.
    • During the height of school closures in April 2020, almost 91% of students around the world were out of school.
    • About 40% of low- and lower-middle-income countries have not supported learners at risk of exclusion during this crisis, such as the poor, linguistic minorities and learners with disabilities.

    1. Risks of school closure

    • School closures also interrupted support mechanisms from which many disadvantaged learners benefit.
    • For poor students who depend on school for free meals or even free sanitary napkins, closures has been a major blow.
    • Cancellation of examinations in many countries, including India, may result in scoring dependence on teachers’ judgements of students, which could be affected by stereotypes of certain types of students.

    2. Substitutes were imperfect

    • Education systems responded with distance learning solutions, all of which offered less or more imperfect substitutes for classroom instruction said the report.
    • Many poorer countries opted for radio and television lessons, while some upper-middle-income countries adopted for online learning platforms for primary and secondary education.
    • India has used a mix of all three systems for educational continuity.

    3. The digital divide has resurfaced yet again

    • Even as governments increasingly rely on technology, the digital divide lays bare the limitations of this approach.
    • Not all students and teachers have access to an adequate internet connection, equipment, skills and working conditions to take advantage of available platforms.

  • International Comparison Programme (ICP) by World Bank

    The World Bank has released its ICP report for the reference year 2017. India has retained its position as the third-largest economy in the world in terms of purchasing power parity (PPP), behind the US and China.

    Try this MCQ:

    Q. The International Comparison Programme (ICP) Report recently seen in news is released by:  IMF/World Bank/OECD/None.

    The International Comparison Programme (ICP)

    • ICP is one of the largest statistical initiatives in the world.
    • It is managed by the World Bank under the auspices of the United Nations Statistical Commission.
    • Globally 176 economies participated in the 2017 cycle of ICP. The next ICP comparison will be conducted for the reference year 2021.

    The main objectives of the ICP are:

    (i) To produce purchasing power parities (PPPs) and comparable price level indexes (PLIs) for participating economies;

    (ii) To convert volume and per capita measures of gross domestic product (GDP) and its expenditure components into a common currency using PPPs.

    Highlights of the report

    • India accounts for 6.7% or $8,051 billion, out of the world’s total of $119,547 billion of global GDP in terms of PPP compared to 16.4 % in case of China and 16.3 % for the US.
    • India is also the third-largest economy in terms of its PPP-based share in global Actual Individual Consumption and Global Gross Capital Formation.
    • In the Asia-Pacific Region, in 2017, India retained its regional position, as the second-largest economy, accounting for 20.83 % in terms of PPPs.
    • China was first at 50.76% and Indonesia at 7.49% was third.
    • India is also the second-largest economy in terms of its PPP-based share in regional Actual Individual Consumption and regional Gross Capital Formation.

    Trends in INR

    • The PPPs of Indian Rupee per US$ at the GDP level is now 20.65 in 2017 from 15.55 in 2011.
    • The Exchange Rate of US Dollar to Indian Rupee is now 65.12 from 46.67 during the same period.

    Significance of PPP

    • Purchasing Power Parities are vital for converting measures of economic activities to be comparable across economies.
    • It is calculated based on the price of a common basket of goods and services in each participating economy and is a measure of what an economy’s local currency can buy in another economy.
    • Market exchange rate-based conversions reflect both price and volume differences in expenditures and are thus inappropriate for volume comparisons.
    • PPP-based conversions of expenditures eliminate the effect of price level differences between economies and reflect only differences in the volume of economies.

  • IN-SPACe: Future forerunner for India’s space economy

    • The government approved the creation of Indian National Space Promotion and Authorisation Centre (IN-SPACe) to ensure greater private participation in India’s space activities.
    • This decision is described as historic being part of an important set of reforms to open up the space sector and make space-based applications and services more widely accessible to everyone.

    Practice question for mains:

    Q. What is IN-SPACe? Discuss how it would benefit ISRO and contribute to India’s space economy.

    What is IN-SPACe?

    • IN-SPACe is supposed to be a facilitator, and also a regulator.
    • It will act as an interface between ISRO and private parties and assess how best to utilise India’s space resources and increase space-based activities.
    • IN-SPACe is the second space organisation created by the government in the last two years.
    • In the 2019 Budget, the government had announced the setting up of a New Space India Limited (NSIL), a public sector company that would serve as a marketing arm of ISRO.

    Confusion over NSIL and ANTRIX

    • NSIL’s main purpose is to market the technologies developed by ISRO and bring it more clients that need space-based services.
    • That role, incidentally, was already being performed by Antrix Corporation, another PSU working under the Department of Space, and which still exists.
    • It is still not very clear why there was a need for another organisation with overlapping function.
    • The government now had clarified the role of NSIL that it would have a demand-driven approach rather than the current supply-driven strategy.
    • Essentially, what that means is that instead of just marketing what ISRO has to offer, NSIL would listen to the needs of the clients and ask ISRO to fulfil those.

    Then, why was IN-SPACe needed?

    (1) ISRO and its limited resources

    • It is not that there is no private industry involvement in India’s space sector.
    • In fact, a large part of the manufacturing and fabrication of rockets and satellites now happens in the private sector. There is increasing participation of research institutions as well.
    • Indian industry, however, is unable to compete, because till now its role has been mainly that of suppliers of components and sub-systems.
    • Indian industries do not have the resources or the technology to undertake independent space projects of the kind that US companies such as SpaceX have been doing or provide space-based services.

    (2) India and the global space economy

    • Indian industry had a barely three per cent share in a rapidly growing global space economy which was already worth at least $360 billion.
    • Only two per cent of this market was for rocket and satellite launch services, which require fairly large infrastructure and heavy investment.
    • The remaining 95 per cent related to satellite-based services, and ground-based systems.

    (3) Catering to domestic demands

    • The demand for space-based applications and services is growing even within India, and ISRO is unable to cater to this.
    • The need for satellite data, imageries and space technology now cuts across sectors, from weather to agriculture to transport to urban development and more.
    • If ISRO is to provide everything, it would have to be expanded 10 times the current level to meet all the demand that is arising.

    (4) Promoting other private players

    • Right now, all launches from India happen on ISRO rockets, the different versions of PSLV and GSLV.
    • There were a few companies that were in the process of developing their own launch vehicles, the rockets like ISRO’s PSLV that carry the satellites and other payloads into space.
    • Now ISRO could provide all its facilities to private players whose projects had been approved by IN-SPACe.

    How ISRO gains from all these?

    • There are two main reasons why enhanced private involvement in the space sector seems important.
    • One is commercial, and the other strategic. And ISRO seems unable to satisfy this need on its own.
    • Of course, there is a need for greater dissemination of space technologies, better utilization of space resources, and increased requirement of space-based services.
    • The private industry will also free up ISRO to concentrate on science, research and development, interplanetary exploration and strategic launches.
    • Right now too much of ISRO’s resources are consumed by routine activities that delay its more strategic objectives.

    A win-win situation for all

    • ISRO, like NASA, is essentially a scientific organisation whose main objective is the exploration of space and carrying out scientific missions.
    • There are a number of ambitious space missions lined up in the coming years, including a mission to observe the Sun, a mission to the Moon, a human spaceflight, and then, possibly, a human landing on the Moon.
    • And it is not that private players will wean away from the revenues that ISRO gets through commercial launches.
    • The space-based economy is expected to “explode” in the next few years, even in India, and there would be more than enough for all.
    • In addition, ISRO can earn some money by making its facilities and data available to private players.

  • Urban, multi-State cooperative banks to come under RBI supervision

    To ensure that depositors are protected, the Centre has decided to bring all urban and multi-State cooperative banks under the direct supervision of the Reserve Bank of India (RBI).

    Practice question for mains:

    Q. What are Cooperative Banks? How are they regulated? Discuss their role in extending credit facilities in rural India.

    What are Cooperative Banks?

    • A Co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank.
    • They are registered under the States Cooperative Societies Act.
    • They 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.

    What is the present decision?

    • The urban cooperatives and multi-State cooperative banks have been brought under RBI supervision process, which is applicable to scheduled banks.
    • Currently, these banks come under dual regulation of the RBI and the Registrar of Co-operative Societies.

    Why such a move?

    • The move to bring these urban and multi-State coop banks under the supervision of the RBI comes after several instances of fraud and serious financial irregularities.
    • The most recent was the major scam at the Punjab and Maharashtra Co-operative (PMC) Bank last year.
    • The RBI was forced to supersede the PMC Bank’s board and impose strict restrictions.

  • Learning Platform “Skills Build Reignite”

    MSDE-IBM Partnership has unveiled Free Digital Learning Platform “Skills Build Reignite” to reach more job seekers & provide new resources to business owners in India.

    There are various web/portals/apps with Hindi acronyms such as YUKTI, DISHA, SWAYAM etc. Their core purpose is similar with slight differences. Pen them down on a separate sheet under the title various digital HRD initiatives.

    Skills Build Reignite

    • The SkillsBuild Reignite tends to provide job seekers and entrepreneurs, with access to free online coursework and mentoring support designed to help them reinvent their careers and businesses.
    • It is a long term institutional training to the nation’s youth through its network of training institutes and infrastructure.
    • IBM will provide multifaceted digital skill training in the area of Cloud Computing and Artificial Intelligence (AI) to students & trainers across the nation in the National Skill Training Institutes (NSTIs) and ITIs.
    • Directorate General of Training (DGT) under the aegis of the Ministry of Skill Development & Entrepreneurship (MSDE) is responsible for implementing the program.
    • Job seekers, individual business owners, entrepreneurs and any individual with learning aspirations can now tap into host of industry-relevant content on topics including AI, Cloud, Data analytics etc.

    Features

    • Its special feature is the personalized coaching for entrepreneurs, seeking advice to help establish or restart their small businesses as they begin to focus on recovery to emerge out of the COVID 19 pandemic.
    • Courses for small business owners include, for example, financial management, business strategy, digital strategy, legal support and more.
    • Plus, IBM volunteers will serve as mentors to some of the 30,000 SkillsBuild users in 100 communities in at least five major regions worldwide to help reinvigorate local communities.

  • Universalising the PDS

    • The Public distribution system (PDS) is an Indian food Security Systemestablished under the Ministry of Consumer Affairs, Food, and Public Distribution.
    • PDS evolved as a system of management of scarcity through distribution of food grains at affordable prices.
    • PDS is operated under the joint responsibility of the Central and the State Governments.
      • The Central Government, through Food Corporation of India (FCI), has assumed the responsibility for procurement, storage, transportation and bulk allocation of food grains to the State Governments.
      • The operational responsibilities including allocation within the State, identification of eligible families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs) etc., rest with the State Governments.
    • Under the PDS, presently the commodities namely wheat, rice, sugar and keroseneare being allocated to the States/UTs for distribution. Some States/UTs also distribute additional items of mass consumption through the PDS outlets such as pulses, edible oils, iodized salt, spices, etc.

  • The spirit of ‘Lal-Bal-Pal’ in Indian History

    To commemorate the death centenary of Tilak, a Pune based NGO is set to revive the Independence-era spirit of the ‘Lal-Bal-Pal’, named after nationalists Lala Lajpat Rai, ‘Lokmanya’ Bal Gangadhar Tilak and Bipin Chandra Pal.

    Try this PYQ from CSP 2010:

    Q. What was the immediate cause for the launch of the Swadeshi movement?

    (a) The partition of Bengal done by Lord Curzon.

    (b) A sentence of 18 months of rigorous imprisonment imposed on Lokmanya Tilak.

    (c) The arrest and deportation of Lala Lajpat Rai and Ajit Singh; and passing of the Punjab ColonizationBill.

    (d) Death sentence pronounced on the Chapekarbrothers.

    About Lal-Bal-Pal

    • Lal Bal Pal was a triumvirate of assertive nationalists in British-ruled India in the early 20th century, from 1906 to 1918.
    • They advocated the Swadeshi movement involving the boycott of all imported items and the use of Indian-made goods in 1907 during the anti-Partition agitation in Bengal which began in 1905.
    • The final years of the nineteenth century saw a radical sensibility emerge among some Indian intellectuals.
    • This position burst onto the national all-India scene in 1905 with the Swadeshi movement – the term is usually rendered as “self-reliance” or “self-sufficiency”.

    Their Legacy

    • Lal-Bal-Pal mobilized Indians across the country against the Bengal partition, and the demonstrations, strikes and boycotts of British goods that began in Bengal soon spread to other regions in a broader protest against the Raj.
    • The nationalist movement gradually faded with the arrest of its main leader Bal Gangadhar Tilak and retirement of Bipin Chandra Pal and Aurobindo Ghosh from active politics.
    • While Lala Lajpat Rai suffered from injuries, due to British police superintendent, James A. Scott, ordered the British Indian police to lathi charge and personally assaulted Rai; he died on 17 November 1928.

    Back2Basics:

    Lala Lajpat Rai

    • Born in undivided Punjab on 28 January 1865, Lala Lajpat Rai grew up in a family that allowed the freedom of faith.
    • Even before he focused his efforts towards a self-sufficient India, Rai believed in the principle.
    • In 1895, he started the Punjab National Bank—the first Indian bank to begin solely with Indian capital, and that continues to function till date.
    • Rai had travelled to America in 1907 and immediately caught up similarities between the ‘colour-caste’ practised there and the caste system prevalent in India.
    • In 1917, he even founded the Indian Home Rule League of America there.
    • His proactive, brave participation in the protest earned him the title of the Lion of Punjab or Punjab Kesari.

    Bal Gangadhar Tilak

    • Bal Gangadhar Tilak (23 July 1856 – 1 August 1920) was an Indian nationalist, teacher, and an independence activist
    • In 1884, he founded the Deccan Education Society in Pune, and under the banner, opened the New English School for primary studies and Fergusson College for higher education.
    • His involvement in the educational institutions was to emphasise on the cultural revival of young Indian minds.
    • For the British, Tilak was the “Father of the Indian Unrest.”
    • When the Indian National Congress was divided among moderates and extremes—the stand that each member took against the British government—there was no doubt which side Tilak supported.
    • Literary works: Kesari and Maratha newspapers

    Bipin Chandra Pal

    • The father of revolutionary thoughts, Bipin Chandra Pal, was born to a wealthy family in Sylhet, Bengal Presidency (now in Bangladesh).
    • Pal was a journalist by profession and often contributed to several newspapers.
    • He used his literary expertise to write against the use of British goods, advocating Indians to start using Swadeshi goods instead.
    • He was of a strong opinion that a mass reliance on Swadeshi goods would help people get rid of their poverty.

  • Commission for Sub-Categorization of OBCs

    The Union Cabinet has approved the extension of the term of the Commission to examine the issue of Sub-categorization of Other Backward Classes, by 6 months i.e. upto 31.1.2021.

    Practice question for mains:

    Q.The quota policy for OBCs needs a revisit. Comment.

    About the commission

    • The Commission was constituted under Article 340 of the Constitution in 2017 under the chairmanship of Justice (Retd.) Smt. G. Rohini.
    • The Commission has since interacted with all the States/UTs which have subcategorized OBCs, and the State Backward Classes Commissions.
    • The expenditure related to the establishment and administration costs of the Commission is borne by the Department of Social Justice and Empowerment.

    Background

    • The Supreme Court in Indra Sawhney and others vs. Union of India case (1992) had observed that there is no constitutional or legal bar on states for categorizing OBCs as backward or more backward.
    • It had also observed that it is not impermissible in law if a state chooses to do sub-categorization.
    • So far, 9 states/UTs viz. Karnataka, Haryana, Andhra Pradesh, Jharkhand, Puducherry, Telangana, West Bengal, Bihar, Maharashtra and Tamil Nadu have carried out sub-categorization of OBCs.
    • However, there was no subcategorization in the central list of OBCs so far.

    Why need a sub-categorization?

    • Presently, half of these 1,900-odd castes have availed less than three per cent of reservation in jobs and education, and the rest availed zero benefits during the last five years.
    • Five-year data on OBC quota implementation in central jobs and higher educational institutions showed that a very small section has cornered the lion’s share.
    • A/c to the Commission, the classification is based on relative benefits availed and not relative social backwardness, which involves parameters such as social status, traditional occupations, religion, etc.