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  • Changing labour laws not a solution

    Recently several State governments made changes in their labour laws and removed or expanded limits on working hours and changed several other provisions. The article argues that the move may not be as beneficial as it is thought to be. So, how come the changes turned out to be detrimental to the interests of the workers? and what are the other issues involved? Read to know more…

    What changed laws mean?

    •  Uttar Pradesh introduced an ordinance that has scrapped most labour law for three years.
    • This was done ostensibly for two reasons- 1) creating jobs and 2)for attracting factories exiting China.
    • These laws deal with -the occupational safety, health and working conditions of workers, regulation of hours of work, wages and settlement of industrial disputes.
    • They apply mostly to the economy’s organised (formal) sector, that is, registered factories and companies, and large establishments in general.
    • Madhya Pradesh and Gujarat have quickly followed suit.
    • Reportedly, Punjab has already allowed 12-hour shifts per day.

    Why it is not a good move?

    •  Significantly, migrant labour will be critical to restoring production once the lockdown is lifted.
    • In fact, factories and shops are already staring at worker shortages.
    • Instead of encouraging workers to stay back or return to cities by ensuring livelihood support and safety nets, State governments have sought to strip workers of their fundamental rights.
    • The abrogation of labour laws raises many constitutional and political questions.
    • Scrapping labour laws to save on labour costs will not help start the economy but will do exactly the opposite.
    • It will reduce wages, lower earnings (particularly of low wage workers) and reduce consumer demand.
    • Further, it will lead to an increase of low paid work that offers no security of tenure or income stability.
    • It will increase informal employment in the formal sector instead of encouraging the growth of formal work.

    Demand is a reason for the slowdown

    •  There are no inherent shortages at the moment as the inflation rate remains moderate.
    • Before the lockdown, the annual GDP growth rate had plummeted to 4.7% during October-December quarter of 2019-20, from 8.3% in the full year of 2016-17.
    • The slowdown is due to lack of demand, not of supply, as widely suggested.
    • With massive job and income losses after the lockdown, aggregate demand has totally slumped, with practically no growth.
    • Therefore, the way to restart the economy is to provide income support and restore jobs.
    • This will not only address the humanitarian crisis but also help revive consumer demand by augmenting incomes.

    2 concerns over the rationale of scrapping laws

    • The rationale for scrapping labour laws to attract investment and boost manufacturing growth poses two additional questions.
    • One, if the laws were in fact so strongly pro-worker, they would have raised wages and reduced business profitability.
    • But the real wage growth (net of inflation) of directly employed workers in the factory sector has been flat (2000-01 to 2015-16).
    • This is because firms have increasingly resorted to casualisation and informalisation of the workforce to suppress workers’ bargaining power.
    • Two, it is not right to blame the disappointing industrial performance mainly on labour market regulations.
    • Industrial performance is not just a function of the labour laws.
    • The industrial performance also depend on the size of the market, fixed investment growth, credit availability, infrastructure, and government policies.
    • In fact, there is little evidence to suggest that amendment of key labour laws by Rajasthan and Madhya Pradesh in 2014 took them any closer to their goal of creating more jobs or industrial growth.
    • The role of labour market regulations may be more modest than the strong views expressed against them in the popular debates.

    Time to rationalise the labour laws

    • India’s complex web of labour laws, with around 47 central laws and 200 State laws, need rationalisation.
    • However, now more than ever before, reforms need to maintain a delicate balance between the need for firms to adapt to ever-changing market conditions and workers’ employment security.
    • Depriving workers of fundamental rights such as freedom of association and the right to collective bargaining, and a set of primary working conditions such as adequate living wages, limits on hours of work and safe and healthy workplaces, will create a fertile ground for the exploitation of the working class.
    • Presently, over 90% of India’s workforce is in informal jobs.
    • These informal jobs have no regulations for decent conditions of work, no provision for social security and no protection against any contingencies and arbitrary actions of employers.

    Consider the question “There is a rising demand for reforms in the labours laws in India. Examine the issues with the current labour laws in India. Suggest the areas which require improvements “

    Conclusion

    The changes made by the State governments should not end up doing more harm than good. To ensure that there must be a careful calibration of the move and its consequences.

  • A plan to revive the broken economy

    The article suggests ways to revive the economy while keeping in mind the livelihood issues of the vulnerable section of society. Urgent concern should be addressed by the food and cash transfer, after that for livelihood in the rural area MGNREGA can be of great help. In the urban area, a  scheme based on the lines of MGNREGA is suggested. In the end, some ways to increase revenue are suggested.

    Food and cash transfers

    • Providing every household with ₹7,000 per month for a period of three months and every individual with 10 kg of free foodgrains per month for a period of six months is likely to cost around 3% of our GDP (assuming 20% voluntary dropout).
    • This could be financed immediately through larger borrowing by the Centre from the Reserve Bank of India.
    • The Centre should also clear outstanding Goods and Services Tax compensation.
    • Food and cash transfer are doable for the following reasons.
    • First, foodgrains are plentiful, as the Food Corporation of India had 77 million tonnes, and rabi procurement could add 40 million tonnes.
    • Second, because of the lockdown restrictions multiplier effect would be less. (so, fewer concerns about inflation)
    • Third, cash transfers in many spheres will only enable current demand to continue (such as payment of house rent to continue occupancy) and not create any fresh demand.
    • Fourth, when greater normalcy finally allows demand held back during lockdown to the surface, output could also expand because of resumed economic activity.
    • Finally, putting money in the hands of the poor is the best stimulus to an economic revival, as it creates effective demand and in local markets.
    • Hence, an immediate programme of food and cash transfers must command the highest priority.

    Need for changes in MGNREGA

    • Millions of migrant workers have gone back home, and are unlikely to return to towns in the foreseeable future.
    • Employment has to be provided to them where they are, for which the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) must be expanded greatly and revamped with wage arrears paid immediately.
    • The 100-day limit per household has to go.
    • Work has to be provided on demand without any limit to all adults.
    • And permissible work must include not just agricultural and construction work, but work in rural enterprises and in care activities too.
    • The revamped MGNREGS could cover wage bills of rural enterprises started by panchayats, along with those of existing rural enterprises, until they can stand on their own feet.
    • This can be an alternative strategy of development, recalling the successful experience of China’s Township and Village Enterprises (TVEs).
    • Public banks could provide credit to such panchayat-owned enterprises and also assume a nurturing role vis-à-vis them.
    • Pandemic highlighted unsustainability of the earlier globalisation.
    • Which means that growth in India in the coming days will have to be sustained by the home market.
    • Since the most important determinant of growth of the home market is agricultural growth, this must be urgently boosted.
    • The MGNREGS can be used for this, paying wages for land development and farm work for small and medium farmers.
    • Also the government support through remunerative procurement prices, subsidised institutional credit, other input subsidies, and redistribution of unused land with plantations is possible.
    • Agricultural growth in turn can promote rural enterprises, both by creating a demand for their products and by providing inputs for them to process.
    • Both these activities would generate substantial rural employment.

    Focus on urban area

    • In urban areas, it is absolutely essential to revive the Micro, Small and Medium Enterprises (MSMEs).
    • Simultaneously, the vast numbers of workers who have stayed on in towns have to be provided with employment and income after our proposed cash transfers run out.
    • The best way to overcome both problems would be to introduce an Urban Employment Guarantee Programme, to serve diverse groups of the urban unemployed, including the educated unemployed.
    • Urban local bodies must take charge of this programme and would need to be revamped for this purpose.
    • “Permissible” work under this programme should include, for the present, work in the MSMEs.
    • This would ensure labour supply for the MSMEs and also cover their wage bills at the central government’s expense until they re-acquire robustness.
    • It should imaginatively also include care work, including of old, disabled and ailing persons, educational activities, and ensuring public services in slums.

    The CARE economy: Public health, education, employment

    • The pandemic has underscored the extreme importance of a public health-care system, and the folly of privatisation of essential services.
    • The post-pandemic period must see significant increases in public expenditure on education and health, especially primary and secondary health including for the urban and rural poor.
    • The “care economy” provides immense scope for increasing employment.
    • Vacancies in public employment, especially in such activities, must be immediately filled.
    • Anganwadi and Accredited Social Health Activists/workers who provide essential services to the population, including during this pandemic, are paid a pittance and treated with extreme unfairness.
    • We must improve their status, treat them as regular government employees and give them proper remuneration and associated benefits, and greatly expand their coverage in settlements of the urban poor.
    • These could easily come within the total package announced by the Prime Minister, which could be financed by printing money.
    • But in the medium term, public revenues must be increased.
    • This is not because there is a shortage of real resources which, therefore, has to be taken from other existing uses through taxation.
    • Rather, since much-unutilised capacity exists in the economy, the shortage is not of real resources; the government has to just get command over them.

    Suggestions to increase public revenue

    • A combination of wealth and inheritance taxation and getting multinational companies to pay the same effective rate as local companies through a system of unitary taxation will garner substantial public revenue.
    • They will also reduce wealth and income inequalities which have become horrendous.
    • A 2% wealth tax on the top 1% of the population, together with a 33% inheritance tax on the wealth they bequeath every year to their progeny, could finance an increase in government expenditure to the tune of 10% of GDP.
    • It would be argued that this might cause large financial outflows, which the country can ill-afford.
    • Contrarily, even foreign capital is more likely to be attracted to a growing economy than one in sharp decline because of a lack of stimulus.
    • Also, a fresh issue of special drawing rights by the International Monetary Fund which India has surprisingly opposed along with the United States would provide additional external resources.
    • These additional resources, would suffice to finance the institution of five universal, justiciable, fundamental economic rights:1) the right to food, 2)the right to employment, 3)the right to free public health care, 4)the right to free public education and 5)the right to a living old-age pension and disability benefits.

    Consider the question, “The economic disruption caused by the pandemic threatens the progress made on the front of inclusive growth. Suggest the measures to ensure the livelihood of the economically vulnerable section of the society in the aftermath of the pandemic in rural and urban areas.”

    Conclusion

    The broken economy must be rebuilt in ways to ensure a life of dignity to the most disadvantaged citizen. The ways suggested here shows how to achieve that.

  • Credit guarantees to MSMEs: What are they and how will they help?

    Finance Minister has announced some details of the Atmanirbhar Bharat Abhiyan economic package. The main thrust of the announcements was a relief to Medium, Small and Micro Enterprises (MSMEs) in the form of a massive increase in credit guarantees to them.

    Practice questions:

    Q. Discuss the efficacy of various tranches of credit facilities to MSMSEs provided under Atmanirbhar Bharat Abhiyan.

    Q. Discuss how the nationwide lockdown to control the coronavirus outbreak has led to the resurfacing of inherent bottlenecks in India’s MSME Sector.

    What is the package about?

    • Instead of directly infusing money into the economy or giving it directly to MSMEs in terms of a bailout package, the government has resorted to taking over the credit risk of MSMEs.
    • These credit guarantees should help the formal banking system meet the credit demand of the MSME sector (see Chart 2).

    What is the credit guarantee scheme for MSMEs?

    • Loans to MSMEs are mostly given against property (as collateral) because often there isn’t a robust cash flow analysis available.
    • But in times of crisis, like the one currently playing out, property prices fall and this inhibits the ability of MSMEs to seek loans. It also means that banks are less willing to extend loans.
    • A credit guarantee by the government helps as it assures the bank that its loan will be repaid by the government in case the MSME falters.

    How does it work?

    • For instance, if the government provides say a 100% credit guarantee up to an amount of Rs 1 crore to a firm, it means that a bank can lend Rs 1 crore to that firm; in case the firm fails to pay back, the government will make good all of Rs 1 crore.
    • If this guarantee was for the first 20% of the loan, then the government would guarantee to pay back only Rs 20 lakh.

    Why need credit guarantees?

    • Even before the Covid-19 crisis, Indian government finances were in poor health. This pandemic has meant that government revenues will come under further pressure.
    • For instance, experts are already talking about a GDP contraction of 5% to 10% in the current financial year. It will result in a revenue loss of anywhere between Rs 5 to 7 lakh crore.
    • And yet, this is also the year when employees and firms want the government to help them out financially.
    • Banks, quite justifiably, suspect that any new loans will only add to their growing mountain of non-performing assets (NPAs).
    • So the government was facing an odd problem: Banks had the money but were not willing to lend to the credit-starved sections of the economy, while the government itself did not have enough money to directly help the economy.

    • The solution — credit guarantees — finally chosen by the government is not a new one, because this fiscal conundrum is not a new one either (Chart 3).

    Quantum of credit guarantee facilitated by FM

    • There are three proposals but the main one is for standard MSMEs — that is, those MSMEs which were running fine until the COVID-19-induced lockdown disrupted their work.
    • For these, the government has provided a credit guarantee of Rs 3 lakh crore.
    • This is like an emergency credit line, said the Finance Minister, and it is for MSMEs that have an already outstanding loan of Rs 25 crore or those with a turnover less than Rs 100 crore.
    • The loans will have a tenure of 4 years and they will have a moratorium of 12 months (that is, the payback starts only after 12 months).

    Why Rs 3 lakh crore?

    • The total outstanding loan to MSMEs by the banking and NBFC sector is around Rs 16 to 18 lakh crore.
    • Assuming that 80% of these loans are working capital loans where there would be a 20% incremental funding needs, that gives an amount of approximately Rs 3 lakh crore.
    • So the government is hoping that this credit guarantee will help those MSMEs take out another loan and recover.
    • The hope is that since these MSMEs were able to pay back before the crisis, there is no reason why they cannot after the crisis, provided they are given some extra money to survive this period.

    What were the other measures?

    • There is a subordinate debt scheme, worth Rs 20,000 crore, which will allow loans to MSMEs that were already categorised as “stressed”, or struggling to pay back.
    • In this case, the government’s guarantee is not full, but partial.
    • The third measure is the creation of a fund with a corpus of Rs 50,000 crore to infuse equity into “viable” MSMEs, thus helping them to expand and grow.
    • The government intends to put in Rs 10,000 crore and get others, possibly institutions like LIC and SBI, to fund the remaining amount.
    • Then there is a change in the definition of an MSME that was pending for long. Now MSMEs are judged on turnover and there will be no difference between a manufacturing MSME and services MSME.

    How far will these measures help?

    • The Rs 3 lakh crore credit guarantees are the most substantive announcement as it will most likely have a significant impact.
    • It will help MSMEs pay salaries and keep their heads above the water even as the economy slows down.
    • This measure is expected to help as many as 45 lakh MSMEs.

  • Global Nutrition Report, 2020

    The Global Nutrition Report 2020 has stated that India is among 88 countries that are likely to miss global nutrition targets by 2025.

    UPSC may puzzle you by asking a prelim question like-

    With reference to the Global Nutrition Report, which of the following is/are a Global Nutrition Targets?

    Visit this link for more graphics related to India: https://globalnutritionreport.org/resources/nutrition-profiles/asia/southern-asia/india/

    About the Global Nutrition Report

    • The GNR is a report card on the world’s nutrition—globally, regionally, and country by country—and on efforts to improve it.
    • It is an independently produced annual stock-take of the state of the world’s nutrition. It is a multi-stakeholder initiative, consisting of a Stakeholder Group, Independent Expert Group and Report Secretariat.
    • It was conceived following the first Nutrition for Growth Initiative Summit (N4G) in 2013 and was first published in 2014.
    • The report tracks global nutrition targets on maternal, infant and young child nutrition and on diet-related Non-Communicable Diseases adopted by member states of the WHO as well as governments’ delivery against their commitments.

    India would miss the targets

    • According to the Global Nutrition Report 2020, India will miss targets for all four nutritional indicators for which there is data available, i.e.

    1) Stunting among under-5 children,

    2) Anaemia among women of reproductive age,

    3) Childhood overweight and

    4) Exclusive breastfeeding

    What are Global nutrition targets?

    • In 2012, the World Health Assembly identified six nutrition targets for maternal, infant and young child nutrition to be met by 2025. They are:

    1) Reducing stunting by 40% in children under 5 years age

    2) Reducing anaemia by 50% among women in the age group of 19-49 years

    3) Ensuring a 30% reduction in low-birth-weight

    4) Ensuring no increase in childhood overweight,

    5) Increasing the rate of exclusive breastfeeding in the first six months up to at least 50% and

    6) Reducing and maintaining childhood wasting to less than 5%.

    Data on Underweight children

    • Between 2000 and 2016, rates of underweight have decreased from 66.0% to 58.1% for boys and 54.2% to 50.1% in girls.
    • However, this is still high compared to the average of 35.6% for boys and 31.8% for girls in Asia.
    • In addition, 37.9% of children fewer than 5 years are stunted and 20.8% are wasted, compared to the Asia average of 22.7% and 9.4% respectively.
    • One in two women of reproductive age is anaemic, while at the same time the rate of overweight and obesity continues to rise, affecting almost a fifth of the adults, at 21.6% of women and 17.8% of men.

    Data about India

    • Stunting and wasting among children

      • Data: 37.9% of children under 5 years are stunted and 20.8% are wasted, compared to the Asia average of 22.7% and 9.4% respectively. 
    •  Inequity:
        • India is identified as among the three worst countries, along with Nigeria and Indonesia, for steep within-country disparities in stunting, where the levels varied four-fold across communities.
        • For example, Stunting level in Uttar Pradesh is over 40% and their rate among individuals in the lowest income group is more than double those in the highest income group at 22.0% and 50.7%, respectively.
        • In addition, stunting prevalence is 10.1% higher in rural areas compared to urban areas.
    • Overweight and Obesity
      • Data: Rate of overweight and obesity continues to rise, affecting almost a fifth of the adults, at 21.6% of women and 17.8% of men.
      • Inequity: There are nearly double as many obese adult females than there are males (5.1% compared to 2.7%).
    • Anaemia
      • One in two women of reproductive age is anaemic.

    Inequities in Malnutrition

    • The report emphasises on the link between malnutrition and different forms of inequity, such as those based on geographic location, age, gender, ethnicity, education and wealth malnutrition in all its forms.
    • Inequity is a cause of malnutrition — both under-nutrition and overweight, obesity and other diet-related chronic diseases.
    • Inequities in food and health systems exacerbate inequalities in nutrition outcomes that in turn can lead to more inequity, perpetuating a vicious cycle, says the report.

  • What are Integrated Battle Groups (IBG)?

    The Army’s new concept of agile Integrated Battle Groups (IBG) as part of the overall force transformation will be operationalised very soon, confirmed Army Chief.

    Practice question for mains:

    The deployment of Integrated Battle Groups (IBG) is necessary for counter-insurgency operations across the terror hit borders of India. Discuss.

    What are IBGs?

    • IBGs are brigade-sized, agile, self-sufficient combat formations, which can swiftly launch strikes against an adversary in case of hostilities.
    • Each IBG would be tailor-made based on Threat, Terrain and Task and resources will be allotted based on the three Ts.
    • They need to be light so they will be low on logistics and they will be able to mobilise within 12-48 hrs based on the location.
    • An IBG operating in a desert needs to be constituted differently from an IBG operating in the mountains.
    • The key corps of the Army is likely to be reorganized into 1-3 IBGs.

    Objective of IBG

    • Holistic integration to enhance the operational and functional efficiency, optimize budget expenditure, facilitate force modernization and address aspirations

    Structure

    • While a command is the largest static formation of the Army spread across defined geography, a corps is the largest mobile formation.
    • Typically each corps has about three brigades.
    • The idea is to reorganise them into IBGs which are brigade-sized units but have all the essential elements like infantry, armoured, artillery and air defence embedded together based on the three Ts.
    • The IBGs will also be defensive and offensive. While the offensive IBGs would quickly mobilise and make a thrust into enemy territory for strikes, defensive IBGs would hold ground at vulnerable points or where enemy action is expected.

    Why need IBGs?

    • After the terrorist attack on the Parliament, the Indian military undertook massive mobilization but the Army’s formations which deep inside took weeks to mobilise losing the element of surprise.
    • Following this, the Army formulated a proactive doctrine known as ‘Cold Start’ to launch swift offensive but its existence was consistently denied in the past.
    • Its existence was acknowledged for the first time by Gen Rawat in January 2017.

  • JDY or NREGA card: What is better option for cash transfers?

    JAM Trinity is one of the flagship policy of the government. In times of COVID crisis, this article highlights some limits of JAM trinity. Issues of inclusion error, exclusion error and even problem of transparency with JAM accounts are discussed. The NREGA cards instead of Jan Dhan account is suggested as the better option. Why is it so? Read to know more…

    High hopes from JAM

    • The original formulation, in 2015, mentioned two possible forms of the JAM trinity: mobile banking and post office payments.
    • The second option never made much progress.
    • So, Aadhaar-enabled mobile banking became the supreme goal.
    • In January 2017, NITI Aayog CEO Amitabh Kant predicted the imminent demise of all cash-transfer paraphernalia other than mobiles.
    • These hopes reached new heights as the JAM project latched on to another flourishing narrative, universal basic income (UBI).
    • If you want to make cash transfers to everyone, what better platform can you have than Aadhaar, India’s unique biometric ID, doubling up as a permanent financial address?

    Corona crisis belied the hopes from JAM

    • In the early days of the crisis, JAM was often invoked sometimes along with UBI as a possible tool of emergency relief.
    • But when the time actually came to make cash transfers to the poor, JAM turned out to be of little use.
    • The JAM had not gone beyond some fancy digital-payment systems for the privileged.
    • Poor people were still running from pillar to post to collect their meagre benefits from old-fashioned bank accounts.
    • Some also use the services of “business correspondents”, but those have little to do with JAM.
    • Sure enough, long bank queues and related hardships started to emerge, especially in rural areas where the density of banks is relatively low.
    • In a Dalberg survey conducted last month in 10 states, only 25% of poor households reported that it was “easy” to access cash benefits.

    NREGA job Cards: A better option than Jan Dhan Account

    • The lead cash-relief measure in the national relief package consists of monthly transfers of ₹500 to women’s JDY accounts.
    • But is that a good idea?
    • Let’s compare women’s JDY accounts with another possible basis for cash transfers, at least in rural areas: the list of households that have a National Rural Employment Guarantee Act (NREGA) job card.
    • The numbers of accounts are roughly comparable: about 14 crore for NREGA job cards, and 12 crore or so for women’s JDY accounts in rural and semi-urban.

    JDY approach fares poorly on the following 3 counts

    1. Lack of transparency and clarity

    • JDY accounts are a mighty mess – the NREGA job-cards list is far more transparent and well-organised. 
    • During the frantic initial JDY wave, in 2014-15, banks opened JDY accounts en masse to meet the targets. Banking norms were not followed always.
    • Later on, a large proportion of JDY accounts – 40% in March 2017, down to 19% in January 2020– went “dormant” as customers were unable or unwilling to use them.

    2. Large exclusion error

    • The cash transfers to women’s JDY accounts are likely to involve large exclusion errors.
    • According to a recent Yale study, less than half of poor adult women have a JDY account, an even lower proportion, 21%, know that they have a JDY account.
    • The NREGA job-card list is likely to have much better coverage of poor households.
    • The natural complementarity between NREGA and social security pensions covering more than four crore persons under the National Social Assistance Programme alone would further help to reduce exclusion errors.

    3. Large inclusion error

    • Inclusion errors are also likely to be larger in the JDY approach.
    • Job cards are meant for rural workers, JDY accounts are for everyone.
    • National Election Studies 2019 data show that JDY beneficiaries tend to be better-off than NREGA beneficiaries. ( and still, they would get benefits i.e. inclusion error)
    • Earlier survey data suggest that the probability of having a JDY account is more or less the same for poor and non-poor households.

    Comparison on reliability basis

    • There have been significant issues e.g. delayed, rejected, blocked or diverted payments with NREGA payments, often related to Aadhaar.
    • But then, numerous “direct benefit transfer” schemes –social security pensions, scholarships, maternity benefits, among others have faced similar problems, also reflected in official transaction data.
    • Both the Aadhaar Payment Bridge System(APBS) and the Aadhaar-enabled Payment System (AePS) are shot through with technical glitches.
    • Transfers to women’s JDY accounts are unlikely to be more reliable than transfers to job-card holders.

    Cash in hand option

    • As far as effective payment is concerned, there is a further argument in favour of the NREGA job-cards list.
    • Unlike JDY accounts, it lends itself to the “cash-in-hand” method on-the-spot payment in cash, instead of bank payments as a possible fallback.
    • The reason is that the job-cards list is a transparent, recursive household list with village and gram panchayat identifiers, while the list of JDY accounts is an opaque list of individual bank accounts.
    • Cash-in-hand may seem like the antithesis of JAM, but this option may become important in the near future if the banking system comes under further stress.
    • There are precedents of effective use of the cash-in-hand method, notably in Odisha for pension payments, and in various states for NREGA wage payments.
    • Several states including Andhra Pradesh, Odisha and Tamil Nadu have already resorted to cash-in-hand for relief payments during the lockdown.

    Consider the question, ” The need for financial inclusion is far more in times of corona crisis. Discuss opportunities and challenges with respect to policies like JAM trinity during corona pandemic. Suggest other alternatives for such transfers.”

    Conclusion

    There is nothing compelling about the use of women’s JDY accounts for cash relief. In fact, it is a bit of a shot in the dark. The government do well to consider other options for further relief majors, including a switch to the NREGA job-cards list in rural areas.

  • India-Nepal dispute over Kalapani Region

    Nepal has protested against India’s inauguration of a Himalayan link road built in a disputed territory which falls at a strategic three-way junction with Tibet and China. Kathmandu claims the highly strategic areas of Limpiyadhura and Kalapani, although Indian troops have been deployed there since the 1962 war.

    Practice question for mains:

    Q. The India-Nepal bilateral relations these days are increasingly seen through the lens of China factor. Examine.

    Kalapani Region

    • Mapped within Uttarakhand is a 372-sq km area called Kalapani, bordering far-west Nepal and Tibet.
    • A treaty signed between Nepal and British India in 1816 determined the Makhali river, that runs through Kalapani, as the boundary between the two neighbours.
    • The Treaty of Sugauli concluded between British India and the Kingdom of Nepal in the year 1816, maps the Makhali river as the western boundary with India but different British maps showed the source of the tributary at different places which was mainly due to underdeveloped and less-defined surveying techniques used at that time.
    • However, the river has many tributaries that meet at Kalapani. For this reason, India claims that the river begins at Kalapani but Nepal says that it begins from Lipu Lekh pass, which is the source of most of its tributaries.
    • While the Nepal government and political parties have protested, India has said the new map does not revise the existing boundary with Nepal.
    • India claims that the river begins at Kalapani but Nepal says that it begins from Lipu Lekh pass, which is the source of most of its tributaries.

    Legal Dimension of Issue

    According to International Laws, the principles of avulsion and accretion are applicable in determining the borders when a boundary river changes course.

    • Avulsion: It is the pushing back of the shoreline by sudden, violent action of the elements, perceptible while in progress. Also it can be defined as the sudden and perceptible change in the land brought about by water, which may result in the addition or removal of land from a bank or shoreline.
    • Accretion: It is the process of growth or enlargement by a gradual buildup. It is the natural, slow and gradual deposit of soil by the water.

    If the change of the river course is rapid – by avulsion – the boundary does not change. But if the river changes course gradually – that is, by accretion – the boundary changes accordingly.

    Since, the Gandak change of course has been gradual, India claimed Susta as part of their territory as per international laws.

    • On several occasions, India has tried to resolve the issue through friendly and peaceful negotiations, but the Nepali leadership has always shown hesitation in resolving the issue.
    • In Nepal, the issue has become a tool for arousing strong public sentiment against India. Therefore, resolving the issue may not be in the best interest of Nepal’s domestic politics.

    Significance for India

    • The Lipu Lekh pass serves strategic importance for India as a key point to monitor Chinese troop movement.
    • The link road via Lipulekh Himalayan Pass is also considered one of the shortest and most feasible trade routes between India and China.
    • The Nepalese reaction would probably have triggered in response to Chinese assertion.

    An undefined boundary claimed by Nepal

    • Nepal’s western boundary with India was marked out in the Treaty of Sugauli between the East India Company and Nepal in 1816.
    • Nepali authorities claim that people living in the low-density area were included in the Census of Nepal until 58 years ago.
    • Five years ago, Nepali Foreign Minister Mahendra Bahadur Pande claimed that the late King Mahendra had “handed over the territory to India”.
    • By some accounts in Nepal, this allegedly took place in the wake of India-China War of 1962.

    Treaty of Saguali

  • GI tag for Sohrai Khovar painting, Telia Rumal

    Jharkhand’s Sohrai Khovar painting and Telangana’s Telia Rumal were given the Geographical Indication (GI) tag by the Geographical Indications Registry.

    This year, many GI tags have been allocated. A few of them to count are- Kashmir saffron, Manipur black rice, Gorakhpur terracotta, Kovilpatti kadalai mittai etc.  Check here for more.

    Sohrai Khovar painting

    • The Sohrai Khovar painting is a traditional and ritualistic mural art being practised by local tribal women in the area of Hazaribagh district of Jharkhand.
    • The painting is primarily being practised only in the district of Hazaribagh. However, in recent years, for promotional purposes, it has been seen in other parts of Jharkhand.
    • It is prepared during local harvest and marriage seasons using local, naturally available soils of different colours in the area.
    • Traditionally painted on the walls of mud houses, they are now seen on other surfaces, too.
    • The style features a profusion of lines, dots, animal figures and plants, often representing religious iconography.
    • In recent years, the walls of important public places in Jharkhand, such as the Birsa Munda Airport in Ranchi, and the Hazaribagh and Tatanagar Railway Stations, among others, have been decorated with these paintings.

    Telia Rumal

    • Telia Rumal cloth involves intricate handmade work with cotton loom displaying a variety of designs and motifs in three particular colours — red, black and white.
    • The Rumal can only be created using the traditional handloom process and not by any other mechanical means as otherwise, the very quality of the Rumal would be lost.
    • During the Nizam’s dynasty, Puttapaka, a small, backward village of the Telangana region of Andhra Pradesh had about 20 families engaged in handloom weaving, who were patronized by rich families and the Nizam rulers.
    • The officers working in the court of the Nizam would wear the Chituki Telia Rumal as a symbolic representation of status.
    • Telia Rumals were worn as a veil by princesses at the erstwhile court of the Nizam of Hyderabad, and as a turban cloth by Arabs in the Middle East.

    Back2Basics: Geographical Indications in India

    • A Geographical Indication is used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Such a name conveys an assurance of quality and distinctiveness which is essentially attributable to its origin in that defined geographical locality.
    • This tag is valid for a period of 10 years following which it can be renewed.
    • Recently the Union Minister of Commerce and Industry has launched the logo and tagline for the Geographical Indications (GI) of India.
    • The first product to get a GI tag in India was the Darjeeling tea in 2004.
    • The Geographical Indications of Goods (Registration and Protection) Act, 1999 (GI Act) is a sui generis Act for protection of GI in India.
    • India, as a member of the WTO enacted the Act to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights
    • Geographical Indications protection is granted through the TRIPS Agreement.

  • [pib] Atmanirbhar Bharat Abhiyan (Self-reliant India Mission)

    The PM has announced the Atma-nirbhar Bharat Abhiyan (or Self-reliant India Mission) and said that in the days to come the government would unveil the details of an economic package — worth Rs 20 lakh crore or 10% of India’s GDP in 2019-20 — aimed towards achieving this mission.

    Try a question:

    ‘Doubling Farmer’s Income’ and ‘USD 5 trillion economy’  seems more like slogans today in wake of COVID pandemic. Comment on the statement with keeping in view the Atmanirbhar Bharat Abhiyan of the government.

    Atmanirbhar Bharat: With a special package

    • PM has announced a special economic package and gave a clarion call for Self-reliant India.
    • The package will provide a much-needed boost towards achieving self-reliance.
    • This package, taken together with earlier announcements by the government during COVID crisis and decisions taken by RBI, is to the tune of Rs 20 lakh crore, which is equivalent to almost 10% of India’s GDP.
    • The package will also focus on land, labour, liquidity and laws. It will cater to various sections including cottage industry, MSMEs, labourers, middle class, and industries, among others.

    Five pillars of a self-reliant India

    PM iterated that a self-reliant India will stand on five pillars viz.

    1) Economy, which brings in quantum jump and not incremental change

    2) Infrastructure, which should become the identity of India

    3) System, based on 21st-century technology-driven arrangements

    4) Vibrant Demography, which is our source of energy for a self-reliant India and

    5) Demand, whereby the strength of our demand and supply chain should be utilized to full capacity

    Is this a new package?

    • The PM did not give the details, but he specified that this calculation of Rs 20 lakh crore includes what the government has already announced and the steps taken by the RBI.
    • This means the total amount of additional money — that is over and above what the government would have spent even in the absence of a Covid crisis — will not be Rs 20 lakh crore.
    • It would be substantially less.

    Why?

    • That’s because the PM has included the actions of RBI, India’s central bank, as part of the government’s “fiscal” package, even though only the government controls the fiscal policy and not the RBI (which controls the ‘monetary’ policy).
    • Government expenditure and RBI’s actions are neither the same nor can they be added in this manner.

    What did the RBI provide earlier?

    • A rough estimate suggests that the RBI’s decisions have provided additional liquidity of Rs 5-6 lakh crore since the start of the Covid-19 crisis.
    • Add this to the Rs 1.7 lakh crore of the first fiscal relief package announced by the Centre on March 26. Together, the two already account for 40 per cent of the Rs 20-lakh crore package.
    • That leaves an effective amount of Rs 12 lakh crore.
    • However, if the government is including RBI’s liquidity decisions in the calculation, then the actual fresh spending by the government could be considerably lower than Rs 12 lakh crore.
    • That’s because RBI has been coming out with long term bond-buying operations (long term repo operation or LTRO, to infuse liquidity into the banking system) worth Rs 1 lakh crore at a time.
    • If for argument’s sake, RBI comes out with another LTRO of Rs 1 lakh crore, then the overall fiscal help falls by the same amount.

    Why shouldn’t RBI’s package be included in the overall package?

    • That is because direct expenditure by a government — either by way of wage subsidy or direct benefit transfer or any, immediately and necessarily stimulates the economy.
    • In other words, that money necessarily reaches the people — either as someone’s salary or someone’s purchase.
    • But credit easing by the RBI — that is, making more money available to the banks so that they can lend to the broader economy — is not like government expenditure.
    • That’s because, especially in times of crisis, banks may take that money from RBI and elsewhere and, instead of lending it, park it back with the RBI.

    Back2Basics: Long Term Repo Operations (LTRO)

    • The LTRO is a tool under which the RBI provides 1-3 year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral.
    • Funds through LTRO are provided at the repo rate.
    • But usually, loans with higher maturity period (here like 1 year and 3 years) will have a higher interest rate compared to short term (repo) loans.
    • According to the RBI, the LTRO scheme will be in addition to the existing Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF) operations.
    • The LAF and MSF are the two sets of liquidity operations by the RBI with the LAF having a number of tools like repo, reverse repo, term repo etc.

    What are Repo and Reverse Repo rates?

    • The repo rate is the rate at which the RBI lends money to the banking system (or banks) for short durations.
    • The reverse repo rate is the rate at which banks can park their money with the RBI.
    • With both kinds of the repo, which is short for repurchase agreement, transactions happen via bonds — one party sells bonds to the other with the promise to buy them back (or repurchase them) at a later specified date.
    • In a growing economy, commercial banks need funds to lend to businesses.
    • One source of funds for such lending is the money they receive from common people who maintain savings deposits with the banks. Repo is another option.

  • [pib] CHAMPIONS Portal for Indian MSMEs

    In a major initiative, Union Ministry of MSME has launched CHAMPIONS portal for assisting Indian MSMEs march into the big league as National and Global Champions.

    MSME sector has been hit badly by COVID. Initiatives like CHAMPIONS portal are crucial for this sector.

    CHAMPIONS Portal

    • ‘CHAMPIONS’ is a technology-driven Control Room-Cum-Management Information System.
    • The CHAMPIONS is an acronym for Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength
    • As the name suggests, the portal is basically for making the smaller units big by solving their grievances, encouraging, supporting, helping and handholding.
    • It is a technology-packed control room-cum-management information system.

    Three basic objectives of the CHAMPIONS

    1) How to help the MSMEs in this difficult situation in terms of finance, raw materials, labour, permissions, etc.

    2) How to help them capture new opportunities like manufacturing of medical accessories and products like PPEs, masks, etc.

    3) How to identify the sparks, i.e., the bright MSMEs who can not only withstand but can also become national and international champions.

    Technology imbibed in the portal

    • In addition to ICT tools including telephone, internet and video conference, the system is enabled by Artificial Intelligence, Data Analytics and Machine Learning.
    • It is also fully integrated on a real-time basis with GOI’s main grievances portal CPGRAMS and MSME Ministry’s own other web-based mechanisms.
    • The entire ICT architecture is created in house with the help of NIC in no cost. Similarly, the physical infrastructure is created in one of the ministry’s dumping rooms in record time.

     A hub and spoke model of network

    • As part of the system, a network of control rooms is created in a Hub & Spoke Model.
    • The Hub is situated in New Delhi in the Secretary MSME’s office.
    • The spokes will be in the States in various offices and institutions of Ministry.
    • As of now, 66 state-level control rooms are created as part of the system.