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Distribution: weekly

  • Economic Survey & its significance

    With the Indian economy in the doldrums, this year’s Economic Survey will be keenly watched. The Economic Survey for 2019-2020 will be tabled in Parliament today.

    What is the Economic Survey?

    • The Economic Survey is a report the government presents on the state of the economy in the past one year, the key challenges it anticipates, and their possible solutions.
    • One day before the Union budget, the Chief Economic Adviser (CEA) of the country releases the Economic Survey.
    • The document is prepared by the Economic Division of the Department of Economic Affairs (DEA) under the guidance of the CEA.
    • Once prepared, the Survey is approved by the Finance Minister.
    • The first Economic Survey was presented in 1950-51. Until 1964, the document would be presented along with the Budget.
    • For the past few years, the Economic Survey has been presented in two volumes.
    • For example, in 2018-19, while Volume 1 focussed on research and analysis of the challenges facing the Indian economy, Volume 2 gave a more detailed review of the financial year, covering all the major sectors of the economy.

    Why is the Economic Survey significant?

    • The Economic Survey is a crucial document as it provides a detailed, official version of the government’s take on the country’s economic condition.
    • It can also be used to highlight some key concerns or areas of focus — for example, in 2018, the survey presented by the then CEA Arvind Subramanian was pink in colour, to stress on gender equality.

    Is it binding on the government?

    • The government is not constitutionally bound to present the Economic Survey or to follow the recommendations that are made in it.
    • If the government so chooses, it can reject all suggestions laid out in the document.
    • But while the Centre is not obliged to present the Survey at all, it is tabled because of the significance it holds.

    What are the expectations from Economic Survey 2020?

    • At a time when India’s growth has plummeted to a six-year low, the Economic Survey ahead of the Union Budget is expected to offer key insights into the path ahead for the government to revive growth.
    • The conundrum of remaining fixated on deficit targets or making a concerted push towards more expenditure to kickstart growth is one of the key challenges the government is facing.
    • The Survey is expected to shed light on the crucial gaps that the Budget will aim to fill in terms of unemployment, private investment, and a slump in consumption.

  • Public Health Emergency of International Concern (PHEIC)

     

    The World Health Organization (WHO) has declared the novel Coronavirus infection a Public Health Emergency of International Concern (PHEIC). In the past decade, WHO has declared public health emergencies for outbreaks including swine flu, polio and Ebola.

    What is PHEIC?

    Definition: Under the International Health Regulations (IHR), a public health emergency is defined as “an extraordinary event which is determined, as provided in these Regulations: to constitute a public health risk to other States through the international spread of disease; and to potentially require a coordinated international response”.

    What criteria does the WHO follow to declare PHEIC?

    • PHEIC is declared in the event of some “serious public health events” that may endanger international public health.
    • The responsibility of declaring an event as an emergency lies with the Director-General of the WHO and requires the convening of a committee of members.

    Implications of a PHEIC being declared

    • There are some implications of declaring a PHEIC for the host country, which in the case of the coronavirus is China.
    • Declaring a PHEIC may lead to restrictions on travel and trade.
    • However, several countries have already issued advisories to their citizens to avoid travelling to China, while others are airlifting their citizens from it.

  • India’s first ‘fruit train’

     

    A ‘fruit train’, said to be the first of its kind in India, was flagged off from Tadipatri Railway Station in Anantapur district of Andhra.

    About the fruit train

    • This is the first time in India that an entire train is being sent to the gateway port (JNPT) for export.
    • This helps save both time and fuel as 150 trucks would have been required to send a consignment of this size by road to JNPT, which is over 900 km away, before the temperature-controlled containers are loaded on ships.
    • The bananas are being exported under the brand name ‘Happy Bananas’.
    • Farmers from Putlur region in Anantapur and Pulivendula in Kadapa district are exporting ‘Green Cavendish’ bananas to many international markets.

  • [op-ed of the day] Time to prioritise education and health

    Context

    The policy currently being pursued is intended primarily to incentivise potential investors while social objectives and help in indigenisation are being jettisoned.

    Call for more liberalisation and its possible impacts

    • What reforms are asked for?
      • Reforms such as labour market liberalisation and removal of constraints on the acquisition of land for industrial purposes are demanded.
    • What could be their possible impacts?
      • The negative impact such reform measures are likely to have on the incomes, living conditions and the economic security of the workers and the agricultural class.
      • Counterproductive labour policy: The policy of freedom of hiring and firing of labour will be counterproductive as it would squeeze demand further in a situation of huge demand deficit.

    Social sector and demand

    • Neglect of human infrastructure: While talks of economic revival focus on infrastructure there is little talk of investment in human infrastructure, particularly in education and 
      • Conditional expenditure: On the contrary, the expenditure in social sectors is made conditional upon a higher rate of growth. 
      • The flawed premise of long term impact: Most mainstream economists believe that public expenditure in social sectors can only have a long- term impact on growth. Which is not entirely correct.
    • The benefit of investment in human infrastructure:
      • Increases demand in short-run: Investment in social sectors results in creating demand in the short run by way of opening avenues for large-scale employment.
      • Competitiveness and sustainability: It imparts competitiveness and sustainability to the Indian economy in the medium and long run.
    • Example of RTE, teacher employment and demand creation
      • The recruitment of 5.7 million additional teachers over a period of, say, five years, can create huge scale demand.
      • And, this is only one factor essential for universalising quality school education.
      • There is also a large gap between the requirement of infrastructure in the schools and that available and built recently.
      • The gap between requirement and availability: According to government data, only 12.5% of the schools covered by the RTE Act were compliant with RTE norms.
      • Meeting these norms has the potential of creating employment on a large scale.
    • Importance of health and education
      • Education has a crucial role to play for an individual in gaining employment and retaining employability.

    Conclusion

    The gestation period of projects in social sectors is not as long as it is made out to be. It is, therefore, time for reprioritising education and health in the scheme of development strategy and the allocation of budgetary resources.

     

  •  [op-ed snap] Don’t be deterred by the ‘crowding out’ effect of the fisc

    Context

    Market borrowings of the government do not always squeeze credit for the private sector in India.

    What is ‘crowding out’ effect?

    • Increased government spending and borrowing: It refers to how increased government spending, for which it borrows more money, tends to reduce private spending.
      • Why does private spending reduce? This happens because when the government takes up the lion’s share of funds available in the banking system, less of it is left for private borrowers.
      • Relationship with interest rate: Higher borrowing by the government and subsequent crowding out also impacts interest rates in the economy.

    How the Government borrowing works and the role of RBI

    • Local borrowing local spending: Typically, the government funds its fiscal deficit by borrowing from the domestic bond market.
      • Its expenditure is also local in nature.
    • Overdraft from RBI: The Reserve Bank of India (RBI) is the official banker to the government-which spends money by first taking an overdraft from the central bank.
      • This overdraft gets repaid through bond market borrowings.
    • Why overdraft? The understanding is that any such government spending should ideally not affect the availability of funds to other borrowers in the market.
    • Excessive borrowing and effects on the interest rate: Excessive government borrowing from the bond market, many cautions, could lead to a rise in interest rates for the government itself and consequently for everyone else in the economy.

    Analysis of the effects of borrowing on other variables

    • Analysis of the data reveals the following trends.
    • No impact on other variables: Local borrowing and spending by the Indian government does not impact any other macroeconomic variables like-
      • The availability and cost of funds for other participants in the economy.
      • Inflation.
      • Deposit growth, at the current deficit level—that is, with the state and central combined figure above 6% of GDP.
    • What impacts the interest rate the most?
      • The two most important variables that impacted interest rates were inflation and the repo rate. Which tend to move together.
      • What does it indicate? This clearly indicates that RBI is extremely proactive in the way it manages interest rates.
    • Effects of funds on inflation: Such borrowings that are funded by the central bank could lead to inflation, the same is true for large external inflows to domestic money markets.
      • The foreign borrowings finally get reflected in the country’s foreign exchange reserves, which have a very strong relationship with inflation.
      • Effects on interest rates: Technically, any large inflow of a foreign currency sterilized by RBI does have the potential to move the inflation needle up, thus placing upward pressure on interest rates.
    • Relationship between borrowing and growth: It is clear that government borrowing and spending actually drives GDP growth.
      • Government borrowing should not impact bank lending to companies, as the sums borrowed return to the market almost immediately.
    • How RBI controls bond yield?
      • RBI ensures that bond yields don’t shoot up because of the excessive borrowing, by taking bonds onto its books to be released back into the market in good times.

    The uniqueness of the Indian money market

    • Why is it unique? India market is a unique money market, different from the rest of the world, for the following reasons-
      • We have investors who are explicitly required to invest in government debt.
      • Banks, non-banking financial companies, insurers, provident funds, and pension funds are all forced to invest in government debt as a condition for their licence to operate in India.
      • We also find that RBI works towards aiding the government borrowing programme rather effectively, ensuring that interest rates do not change too adversely.

    Conclusion

    The government should not be excessively worried about the government living beyond its means at this juncture. Government spending being the main driver for the country’s GDP growth, it could be a good way to put the economy on a higher growth trajectory. Perhaps it is time to revisit the entire FRBM framework.

     

     

  • [op-ed snap] A road map for robust trade ties

    Context

    The challenge for India and Australia is to transform people-to-people ties into a trade relationship.

    People-to-people the two countries

    • Soft power: Soft power rather than hard economics has traditionally been the driving force behind India-Australia relations.
      • Cricket is a dominant theme that connects the two countries.
      • The Indian diaspora in Australia is a vibrant community that plays a robust role in connecting their country of adoption with their country of origin.

    Trade relationship scenario

    • $31 bn bilateral trade: The trade between the two countries has been at a modest $31 billion, largely composed of resources like coal and other minerals.
    • No progress on FTA: Negotiations on a Free Trade Agreement, which began in 2011, have not moved forward significantly.
    • No progress on coal mining projects in Australia: The problems faced by the Adani Group to begin work on a coal mining project in Queensland did not go down too well with investors from India.
    • India Economic Strategy 2035 by Australia: One of the most widely commended initiatives has been the Australian government’s release of an India Economic Strategy 2035 Report.
      • It observes that no single market over the next 20 years will offer more growth opportunities for Australia than India.
      • It lays down a comprehensive road map for strengthening Australia’s trade engagement with India.

    Development in digital technology and the role of youth

    • Development of new architecture: Meanwhile India-Australia trade has been steadily evolving into a new architecture underpinned by developments in digital technology.
      • There is a rise of a younger generation of entrepreneurs and a noticeable shift in the trade basket from resources to services.
      • Technology and young entrepreneurship make a formidable combination and should set the agenda for the future of bilateral trade relations.
      • About 80% of the Australian small and medium-sized enterprises are managed by young professionals.
      • The young can see issues like immigration and outsourcing with far more equanimity than the older generation.
      • An important role of young Australians: Young Australians are thus emerging as great champions of India-Australia trade relations.

    Scope for engagement in innovation and trade relations

    • Tech. expertise of  Australia: There is also recognition that Australia is a laboratory of ideas, innovation, technology-led growth and university-industry partnerships.
    • Scope for India in innovation and trade: India is a large and demographically young market with a love for innovation and an appetite for new products and services.
      • These synergies should add momentum to a growing engagement in trade relations.

    India’s weakness and Way forward

    • Weakest link and way forward: The weakest link in India’s exports to Australia is in merchandise. India needs to look at three broad areas.
    • First-Focus on Market Research:  Despite globalisation, markets are country-specific and culturally sensitive.
      • Indian companies will need to invest a little more in market research on Australian consumer expectations and lifestyles.
    • Second-Brand creation: Australia is a brand-conscious market while India has not created a single consumer brand of international acceptance.
      • Only when products are visible across the world’s shopping malls and supermarkets displaying their own brands that India will be recognised as a major player in the global markets.
    • Third-Innovation: Innovation is emerging as the single-most-important factor for sustained success in every sphere. Global trade cannot be different.

     

     

  • Karnataka Anti-superstition Law

    A controversial anti-superstition law in Karnataka was formally notified by the current government.

    Provisions of the earlier drafts

    • The law, which was initially drafted as the Karnataka Anti Superstition Bill, 2013, was a pet project of former CM Siddaramaiah.
    • The model Bill held human dignity as its central tenet and sought eradication of irrational practices found in different communities.
    • The first draft made practices like inflicting self-wounds and conversion through bribery illegal.
    • Some of the proposals opposed by religious leaders and political parties in the early draft were the ban on practices such as the carrying of priests in palanquins, worshipping the feet of religious leaders.
    • It sought to ban Made Snana practised in the Dakshina Kannada region where Dalits roll over the remains of food consumed by upper castes.

    The current version

    • A Bill with sizable consensus across the political spectrum finally evolved in 2017. A total of 16 practices have been banned under the law.
    • The practice of Vaastu, astrology, pradakshina or circumabulation of holy places, yatras, parikramas performed at religious places were kept out of the purview of the law.
    • Made Snana was banned under the law with respect to having Dalits roll over leftover food.
    • The practice has now been modified to be voluntary and not involving leftover food.
    • Practices such as barring menstruating women from entering houses of worship and their homes, coercing people to take part in fire-walks, and beating up people by declaring them evil, are among the irrational practices that have been banned under the 2017 law.

    Penalties

    • The law stipulates “imprisonment for a term which shall not be less than one year but which may extend to seven years and with fine which shall not be less than five thousand rupees but which may extend to fifty thousand rupees”, as punishment for violations.
    • The law is to implemented by the state police with the appointment of vigilance officers under the law at police stations.

  • [pib] The Medical Termination of Pregnancy (Amendment) Bill, 2020

    The Union Cabinet has approved the Medical Termination of Pregnancy (Amendment) Bill, 2020 to amend the Medical Termination of Pregnancy Act, 1971.

    About the Bill

    • The Medical Termination of Pregnancy (Amendment) Bill, 2020 is for expanding access of women to safe and legal abortion services on therapeutic, eugenic, humanitarian or social grounds.
    • It aims to increase upper gestation limit for termination of pregnancy under certain conditions and to strengthen access to comprehensive abortion care, under strict conditions, without compromising service and quality of safe abortion.

    Salient features of proposed amendments:

    • Proposing requirement for opinion of one provider for termination of pregnancy, up to 20 weeks of gestation and introducing the requirement of opinion of two providers for termination of pregnancy of 20-24 weeks of gestation.
    • Enhancing the upper gestation limit from 20 to 24 weeks for special categories of women which will be defined in the amendments to the MTP Rules and would include ‘vulnerable women including survivors of rape, victims of incest and other vulnerable women (like differently-abled women, Minors) etc.
    • Upper gestation limit not to apply in cases of substantial foetal abnormalities diagnosed by Medical Board. The composition, functions and other details of Medical Board to be prescribed subsequently in Rules under the Act.
    • Anonymity of the person: Name and other particulars of a woman whose pregnancy has been terminated shall not be revealed except to a person authorised in any law for the time being in force.

    Benefits

    • It is a step towards safety and well-being of the women and many women will be benefitted by this.
    • Recently several petitions were received by the Courts seeking permission for aborting pregnancies at a gestational age beyond the present permissible limit on grounds of foetal abnormalities or pregnancies due to sexual violence faced by women.
    • The proposed increase in gestational age will ensure dignity, autonomy, confidentiality and justice for women who need to terminate pregnancy.

  • [pib] National Commission for Indian System of Medicines

    The Union Cabinet has given its approval for proposal of Official Amendments in the National Commission for Indian System of Medicine Bill, 2019 (NCIM) which is pending in the Rajya Sabha.

    About the Commission

    • The main objective of establishing NCIM is to promote equity by ensuring adequate supply of quality medical professionals and enforce high ethical standards in all aspects of medical services in Indian System of Medicine.
    • The Commission will promote availability of affordable healthcare services in all parts of the country.
    • The Commission has been structured to streamline the functions related to academic standards, evaluation, assessment and accreditation of educational institutions pertaining to Indian System of Medicine.

    Composition

    • The NCISM will consist of 29 members, appointed by the central government.
    • A Search Committee will recommend names to the central government for the post of Chairperson, part time members, and presidents of the four autonomous boards set up under the NCISM.
    • These posts will have a maximum term of four years.
    • The Search Committee will consist of five members including the Cabinet Secretary and three experts nominated by the central government (of which two should have experience in any of the fields of Indian System of Medicine).

    Functions

    Functions of the NCISM include:

    • framing policies for regulating medical institutions and medical professionals of Indian System of Medicine,
    • assessing the requirements of healthcare related human resources and infrastructure,
    • ensuring compliance by the State Medical Councils of Indian System of Medicine of the regulations made under the Bill, and
    • ensuring coordination among the autonomous boards set up under the Bill.

  • [op-ed of the day] The many problems of delayed data

    Context

    Delay in releasing the crime data by NCRB reduces the utility of the data for the policymakers.

    Formidable challenges faced by NCRB

    • The First-Casual approach of the States: The first is the lackadaisical approach of some of the States in providing data.
      • The NCRB merely assembles the figures it receives from the State police forces and does not tinker with them to reach a predetermined conclusion.
      • States’ irregularity: Data collection hits a roadblock when a few States either don’t bother to send the figures or send them much after the volume is published.
    • The second-Utility of the released data: The second problem is that questions are raised over the utility of the data.
      • There was a two-year delay in releasing the crime statistics for 2017.
      • Just two months after it was published, the ‘Crime in India’ (CII) 2018 report was released.
      • Reduced utility from a policy point of view: These numbers are only relevant to researchers, not policymakers as it does not carry us far in understanding what is happening on the ground.
      • A fossilised CII is meaningless.
    • The third- Third problem lies with the police and the public.
      • The Reluctance of the police to register the complaint: The police are notorious the world over for not registering complaints.
      • They do this so that they can present a false picture of a decline in crime.
      • The reluctance of the public: The public is also not very enthusiastic about reporting crimes to the police.
      • Catch-22 situation: Public is fearful of being harassed at the police station or do not believe that the police are capable of solving the crime. This is a Catch-22 situation.

    Crimes difficult to bury

    • The positive role played by the media: However, the problem has declined slightly over the years due to public awareness and intense media scrutiny.
      • There are a few classes of offences which are becoming increasingly difficult to bury. This is attributable to the extraordinary interest evinced by the media in reporting crime.
    • The crimes which are difficult to bury: The following cases of crime are becoming difficult to bury.
      • Homicide: The first category of crimes that is difficult to bury is of homicides.
      • Matter of distress: India reports an average of 30,000 murders every year (29,017 were registered in 2018). Every murder is a matter of distress.
      • Nevertheless, the stabilisation of the figure at 30,000 is a mild assurance.
      • The corresponding figure for the period in the U.S. was around 16,200.
      • Need to study the US decline: Though the U.S. has about one-third of India’s population, the reported decline in murders in many major U.S cities is worth studying.
      • Crime against women: The common man in India does not lag behind others in reacting strongly to attacks on hapless women and men.
      • The growth of the visual media possibly explains this welcome feature in Indian society.
      • The hope of a decrease in crime: The nationwide outrage over the gang-rape in Delhi and the subsequent tightening of laws on sexual crimes generated the hope that attacks against women would decrease.

    The issue of under-reporting

    • Under-reporting of crime in rural areas: In 2018, there were 33,356 rapes, a higher number than the previous year.
      • But these figures do not fully reflect realities on the ground.
      • There is still the unverifiable suspicion that while in urban areas sexual violence cases are reasonably well-reported, the story is different in rural India.
      • The role played by money and caste: Money power and caste oppression are believed to play a significant role in under-reporting.
      • What is more significant is that a substantial number of such crimes are committed by the ‘friends’ and families of victims.

    Conclusion

    • To be fair to the NCRB, we must concede that the organisation has more than justified its existence. The CII is used extensively by researchers.
    • Need for educating the people on realities of crime and its reporting: There is scope for more dynamism on the NCRB’s part, especially in the area of educating the public on the realities of crime and its reporting.
    • Greater pressure on the States to stick to a schedule: The NCRB will also have to be conscious of the expectation that it should bring greater pressure on States to make them stick to schedules and look upon this responsibility as a sacred national duty.