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GS Paper: GS3-02.Inclusive growth and issues therein

  • Startup20 Engagement Group On India’s Proposal

    Engagement

    “A small group of determined and like-minded people can change the course of history.”-M.K. Gandhi

    Central Idea

    • By agreeing to India’s proposal to create the Startup20 Engagement Group, the only new group by which G20 has turned itself into an ambidextrous institution, one where both large corporations and startups have an equal voice in taking the economies forward. In the new architecture, while the existing B20 Engagement Group continues its focus on corporations, the Startup20 takes on the policy issues concerning the global startup ecosystem, with the necessary linkages between the two groups.

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    What is meant by ambidexterity?

    • Ambidexterity is the ability to use both hands with equal skill and ease.
    • In the context of organizations, it is the ability to simultaneously pursue both exploratory and exploitative strategies. This means being able to balance the need for innovation and new opportunities with the need for efficiency and optimization of current operations.
    • For example, Indian IT services companies like TCS and Infosys are investing in areas like artificial intelligence, blockchain, and the IoT, even as they continue to deliver traditional IT services to their clients.

    What is B20 Engagement Group?

    • Official G20 dialogue forum representing the global business community: The B20 (Business 20) Engagement Group is a forum for international business leaders from the G20 countries.
    • Established in 2010: It is among the most prominent Engagement Groups in G20, with companies and business organizations as participants.
    • A single voice for the entire G20 business community: The B20 leads the process of galvanizing global business leaders for their views on issues of global economic and trade governance and speaks in a single voice for the entire G20 business community.
    • Aim is to provide recommendations: The group’s aim is to provide recommendations to the G20 on issues such as economic growth, trade, investment, digitalization, sustainability, and job creation.
    • Platform for different stakeholders: The B20 is one of several engagement groups, which also include groups representing civil society, labor, think tanks, and youth, that provide a platform for different stakeholders to share their views and insights with the G20.
    • B20 Secretariat: Confederation of Indian Industry (CII) has been designated as the Business 20 (B20) Secretariat for the India’s G20 Presidency.

    What is Startup20?

    • Initiated under India’s G20 Presidency: The Startup20 Engagement Group has been initiated under India’s G20 Presidency in 2023.
    • Aims to support Startups: The group aims to create a global narrative for supporting startups and enabling synergies between startups, corporates, investors, innovation agencies and other key ecosystem stakeholders.
    • Three taskforces: The engagement group comprises of three taskforces, namely Foundation & Alliance, Finance, and Inclusion & Sustainability, where delegates will come together to discuss efficient policy frameworks to promote scaling up of startups in the G20 nations.

    How these taskforces will work?

    1. Foundation and Alliances Taskforce:
    • Promotes consensus-based ecosystem: The Foundation and Alliances Taskforce will work to harmonize the global Startup ecosystem through consensus-based definitions and promote a global community of knowledge sharing among the Startup ecosystems to explore opportunities.
    • Help to bridge the knowledge gaps: It will also bridge the knowledge gap between the Startup ecosystems of G20 member countries and emerging economies through partnerships to enable more industry players across G20 nations to work with Startups and concrete solutions.
    • To create supportive policies and point of contact: It will aim to create supportive policies for industry players and government organizations to work with Startups and provide points of contact for the participating G20 countries sustained collaboration.
    1. The Finance Taskforce:
    • To provide financing and investment platforms: The finance taskforce will aim to increase access to capital for Startups by providing financing and investment platforms specifically for early-stage Startups to broaden the array of financial instruments available to Startups.
    • Networking opportunities: It will also create pitching and networking opportunities for Startups with the global investor community.
    • Best practices for funding ecosystem: It will work to provide a framework built upon best practices for global investors to fund Startups across G20 member nations, helping build suggestive frameworks that could be implemented in emerging ecosystems for building investment capabilities.
    1. Taskforce for Inclusion and Sustainability
    • Women led startups and community inclusive: For Inclusion and Sustainability, the roadmap involves increasing support for women led Startups and organizations; promotion of Startups working on making communities more inclusive and to promote Startups working on SDGs in areas of global interest.
    • Encouraging investors to invest in startups built upon sustainable practices: This Task Force aims to enable more investors to invest responsibly in Startups built upon sustainable practices and to encourage mentorship support to the Startup ecosystems of the G20 member countries and emerging economies.

    Conclusion

    • Some of the most pressing challenges facing the world today require innovative solutions at scale. The need for solutions to global problems such as climate change, food security, and energy security is urgent. However, by leveraging global ambidexterity and taking advantage of the G20’s new architecture of B20 and Startup20, we can be optimistic about our ability to systematically solve these problems. With deliberate efforts and focused action, we can create a more sustainable and prosperous future for all.

    Mains question

    Q. What is Startup20 engagement group initiated under India’s G20 presidency? How this framework will work to boost startup ecosystem globally?

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  • Divyang friendly digital infrastructure in India

    digital

    Central Idea

    • The estimation in Census 2011, that 2.21% of India’s population is disabled is a gross underestimation. According to the World Health Organization, about 16% of the global population is disabled. While technology has enormous potential to level the playing field for the disabled, it can, at the same time, reinforce the barriers that the disabled otherwise face if it is not designed with their needs in mind.

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    Smartphone users with disabilities in India

    • It is difficult to determine the exact number of smartphone users with disabilities in India, as there is no specific data available on this.
    • However, according to the 2011 Census of India, there are approximately 2.68 crore (26.8 million) people with disabilities in the country.
    • India, it is reported, had 750 million Internet/smartphone users in 2020.
    • Applying the 16% figure here, this works out to be roughly 120 million (12 crore) Internet/smartphone users with disabilities.

    A Report on Accessibility of Apps

    • Evaluation of the most widely used apps: A report that evaluates the accessibility of 10 of the most widely used apps in India, across five sectors. The apps were Zomato, Swiggy, PayTM, PhonePe, Amazon, Flipkart, Uber, Ola, WhatsApp and Telegram.
    • Goal for launching this report is to start discussion on digital accessibility: 1. Objective assessment of the digital accessibility of the apps. 2. To work with these service providers and help them design practices and processes that will not only improve app accessibility but also educate their stakeholders about accessibility and people with disabilities.
    • Findings of the report: Based on the number of violations, categories developed on the level of accessibility of the apps as high, medium and low. Report found that four out of the 10 apps ranked low, while five were in the medium category.

    digital

    key efforts for Divyanga friendly digital infrastructure

    • Guidelines for Indian Government Websites: The Department of Administrative Reforms and Public Grievances (DARPG) has developed guidelines for making government websites accessible to people with disabilities. The guidelines cover various aspects of website design and development, such as colour contrast, keyboard accessibility, and assistive technology compatibility.
    • Accessible India Campaign/ Sugamya Bharat Abhiyan: The Campaign was launched by the government in 2015 to make public spaces, including government buildings, transportation, and information and communication technologies (ICT), more accessible to people with disabilities.
    • Bharat Interconnectivity Limited (BIL): BIL is a subsidiary of Bharat Sanchar Nigam Limited (BSNL) that provides accessible internet and telecom services to people with disabilities. It offers services such as audiobooks, sign language interpretation, and accessible websites and mobile applications.
    • National Institute of Speech and Hearing (NISH): NISH is an autonomous institute under the Department of Empowerment of Persons with Disabilities, Ministry of Social Justice and Empowerment. It provides training and research in the field of speech and hearing disabilities and also offers services like audiobooks and accessible software.
    • Making assistive technology more affordable and accessible: The government has also taken steps to make assistive technology more affordable and accessible to people with disabilities.
    • For example: The Department of Empowerment of Persons with Disabilities provides financial assistance to purchase assistive devices and the Assistive Technology Industry Association (ATIA) has been established to promote research and development of assistive technology.

    digital

    Measures to improve the accessibility of digital services

    • Promoting education and awareness: Steps must be taken to raise awareness about the needs and capabilities of people with disabilities. This could include providing training to developers and designers on how to create accessible digital products and services.
    • Enforcing web accessibility standards: The government should ensure that all websites and mobile applications comply with web accessibility standards such as the Web Content Accessibility Guidelines (WCAG). This will make it easier for people with disabilities to access digital services.
    • Encouraging inclusive design: Designing products and services that are accessible to all users, including those with disabilities, should be an essential part of the design process. Companies and developers should be encouraged to incorporate inclusive design principles into their products from the beginning.
    • Conducting regular accessibility audits: Regular accessibility audits should be conducted to ensure that digital products and services are accessible to people with disabilities. This can help identify barriers and areas of improvement.

    Conclusion

    • Core to the project of securing a more disabled friendly digital ecosystem must be the conviction that, everything digital must be accessible to everyone. This starts with incorporating the principles of accessibility and inclusive design into every digital offering, right from inception. India needs to be truly accessible for all people with disabilities. Organisations, companies, civil society, the government and the courts must make this happen.

    Mains question

    Q. Discuss the efforts of the Indian government towards creating a Divyanga-friendly digital infrastructure and suggest measures to improve the accessibility of digital services.

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  • ‘BIMARU’ Tag: What does this term mean?

    Central idea: While addressing a summit in UP, PM recalled the tag of ‘BIMARU’, once used to describe the state.

    What are BIMARU states?

    • The term “BIMARU” is an acronym formed from the first letters of five states – Bihar, MP, Rajasthan, and UP – that were believed to be economically and socially backward in the 1980s and 1990s.
    • The term was popularized by economist Ashish Bose in the 1980s to describe the poor economic and social indicators of these states.
    • He coined this term in a paper presented to then-PM Rajiv Gandhi.
    • These states were characterized by low literacy rates, poor infrastructure, high poverty rates, and low levels of industrialization.
    • The term “BIMARU” itself is an amalgamation of the Hindi words “bimar” (sick) and “ru” (a suffix meaning “land of”).

    Behind the slang name ‘BIMAR’

    The BIMARU states of Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh are characterized by several economic and social features that distinguish them from other states in India. Some of these features include:

    • Low per capita income: These have traditionally had low per capita income levels compared to other states in India, with Bihar having the lowest per capita income among Indian states.
    • High poverty rates: They have a high percentage of people living in poverty, with Bihar and Uttar Pradesh having some of the highest poverty rates in the country.
    • Low literacy rates: They have lower literacy rates than the national average, with Bihar having the lowest literacy rate among Indian states.
    • Poor healthcare indicators: They have traditionally had poor healthcare indicators, with high infant and maternal mortality rates.
    • Agriculture-based economy: These states are primarily agricultural states, with a significant percentage of the population engaged in agriculture and related activities.
    • Significant population: They are among the most populous states in India, with Uttar Pradesh being the most populous state in the country.

    Overall, the BIMARU states have traditionally lagged behind other states in India in terms of economic and social development, although in recent years, there has been progress in improving development indicators.

    Persisting challenges

    These states still face significant challenges, including high levels of poverty and unemployment.

    • Still a national laggard: There is still a significant development gap between these states and the more developed regions of the country. For example, in 2019-20, per capita income in Bihar was only about a third of the national average, and in UP, only about half of the population has access to basic sanitation facilities.
    • High Population: The share of BIMARU states in the absolute increase in India’s population during 2001-26 will be of the order of 50.4 per cent while the share of the south will be only 12.6 per cent.

    How are these states faring now?

    • In recent years, some of these states, such as Rajasthan and Madhya Pradesh, have shown significant improvement.
    • In terms of economic growth, several of these states have experienced high growth rates in recent years, with Madhya Pradesh and Bihar recording growth rates of over 10% in 2019-20.
    • Uttar Pradesh and Rajasthan have also recorded growth rates of over 7% in recent years.
    • There has also been progress in improving social indicators such as literacy rates and healthcare infrastructure.
    • For example, Bihar has seen a significant increase in literacy rates, with the state’s literacy rate increasing from 47% in 2001 to 63% in 2011.

    Alternatives to ‘BIMARU’ terms

    • PM has urged to refrain the use of such terms as they only serves to reinforce negative stereotypes and inhibit progress towards more equitable development across the country.
    • He coined the term such as ‘Aspirational Districts/Blocks’ as alternative to such negative word.

    Way forward

    This involves several key strategies to address the economic and social challenges that these states face. Some of these strategies include:

    • Enhancing economic growth: The BIMARU states need to focus on enhancing economic growth through policies that encourage investment, job creation, and entrepreneurship. This can include measures such as improving the ease of doing business, providing infrastructure, and investing in sectors with high growth potential.
    • Improving social indicators: They need to focus on improving social indicators such as literacy rates, healthcare, and sanitation. This can involve investing in education and healthcare infrastructure, and implementing programs that target poverty reduction and social inclusion.
    • Enhancing agricultural productivity: Given that agriculture is a major contributor to the economy of BIMARU states, efforts should be made to enhance agricultural productivity and efficiency. This can include investments in irrigation and modern agricultural techniques, and support for small and marginal farmers.
    • Encouraging inclusive development: In order to reduce disparities and ensure inclusive development, policies and programs should be targeted towards the most vulnerable and marginalized sections of society. This can include measures to promote gender equality, social inclusion, and address issues such as caste-based discrimination.
    • Leveraging technology: The BIMARU states can leverage technology to enhance economic and social development. This can involve the use of digital technologies to improve access to education and healthcare and promote entrepreneurship and innovation.

    Conclusion

    • Overall, while the BIMARU states have made progress in recent years, there is still a long way to go in terms of achieving more equitable development across the country.

     

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  • What are Primary Agricultural Credit Societies (PACS)?

    pacs

    The Union Budget has announced Rs 2,516 crore for computerization of 63,000 Primary Agricultural Credit Societies (PACS) over the next five years.

    Primary Agricultural Credit Societies (PACS)

    • PACS are village level cooperative credit societies that serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level.
    • Credit from the SCBs is transferred to the district central cooperative banks, or DCCBs, that operate at the district level.
    • The DCCBs work with PACS, which deal directly with farmers.
    • Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them.
    • A village can have multiple PACS.

    What is its lending mechanism?

    • PACS are involved in short term lending — or what is known as crop loan.
    • At the start of the cropping cycle, farmers avail credit to finance their requirement of seeds, fertilisers etc.
    • Banks extend this credit at 7 per cent interest, of which 3 per cent is subsidised by the Centre, and 2 per cent by the state government.
    • Effectively, farmers avail the crop loans at 2 per cent interest only.

    NPAs with PACS

    • NABARD’s annual report of 2021-22 shows that 59.6 per cent of the loans were extended to the small and marginal farmers.
    • A report published by the Reserve Bank of India on December 27, 2022 put the number of PACS at 1.02 lakh.
    • At the end of March 2021, only 47,297 of them were in profit.
    • The same report said PACS had reported lending worth Rs 1,43,044 crore and NPAs of Rs 72,550 crore. Maharashtra has 20,897 PACS of which 11,326 are in losses.

    Why are PACS attractive?

    • The attraction of the PACS lies in the last mile connectivity they offer.
    • For farmers, timely access to capital is necessary at the start of their agricultural activities.
    • PACS have the capacity to extend credit with minimal paperwork within a short time.

     

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  • Indian women’s labor force participation is declining

    participation

    Context

    • According to the World Bank report released in June 2022, Indian women’s labour force participation proportion of the population over the age of 15 that is economically active has been steadily declining since 2005 and is at a low of 19 percent in 2021.

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    How the experts are analysing the falling participation of women?

    • Patriarchy in continuity: According to some experts there is continuities of patriarchal oppression and structural barriers to women’s economic participation in India.
    • Informal economy not accounted: Other group of experts says these claims fail to acknowledge that this measure does not capture women’s participation in the informal economy.
    • Preference for home-based work: In developing economies such as India, women are concentrated in the informal sector and demonstrate a preference for home-based work opportunities that allow them to balance their domestic duties with income-generating activities.
    • Social consideration: It is simplistic and instrumental link between women’s labour force participation and measures of societal development.
    • Reductionist approach: It is important to move beyond reductionist explanations and probe how women’s employment operates in specific contexts. This calls for a more comprehensive understanding of women’s decision-making and navigation around employment.

    participation

    Economy theory about women participation in labour force

    • Standard economic theory: Standard economic theory predicts that as household income increases, women withdraw from devalued labour because their income is no longer required to run the household.
    • Income employment: As household income rises and educational attainment improves, women re-enter the workforce.
    • Mismatch of skills: But for moderately educated women from upwardly mobile families, there is often a mismatch between available jobs and their skills and ambitions.
    • Aversion towards low-paid jobs: As their families are in the process of claiming middle-class status, young women are often averse to taking up low-paid jobs in the formal economy.
    • Class and social mobility: If they are unable to secure high-status white-collar jobs, they prefer home-based work such as tailoring or running tuitions for young children. Thus, women’s employment preferences are often intertwined with family-centred projects of class and social mobility.

    participation

    Study of ground reality about women employment

    • Facilitated study group: In a recent study, facilitated study group (FSG) interviewed 6,600 women of working age from low-income communities across 16 cities in India.
    • Small job and business: It found that women’s ability to work outside the home is defined by the views of their family members who prefer women working from home or engaging in a small business to allocate more time to household responsibilities. But 59 percent of women prefer jobs in the formal sector over entrepreneurship.
    • Less use of child care: Less than 1 percent of working mothers with children under 12 years old have used paid childcare services. 89 percent are unwilling to use paid childcare services.
    • Preference to family care: Affordability isn’t a key factor in not considering paid day-care. It’s because mothers do not trust day-care services as they do not provide ‘family-like’ care.
    • Balancing the familial expectations: These findings suggest that Indian women’s employment-related decisions are shaped by considerations of providing caregiving to their children and balancing their preferences with familial expectations.

    What should be the right approach about women participation?

    • Family responsibility and career: women, especially in low-income communities in India, have a composite view of their lives (jobs, enterprises, care work, upholding traditions, and community connections) and navigate through these with their household and extended family.
    • Comprehensive view of life: The non-compartmentalisation emerges from a culturally embedded and empirically grounded perspective that does not view culture as a limitation, but as a resource and enabler that provides a comprehensive valuation for all kinds of work that women do (informal and formal).
    • Understanding the cultural context: This translates into everyday negotiations that have less to do with upturning the current social structure and more with negotiating for increased autonomy within the cultural context.
    • Flexible working Hours: Policy solutions must derive from the negotiations women are interested in undertaking with their employers around home-based work or flexible working hours. It is important to perceive women’s employment goals as reflective of preferences defined not only by their gender but also by their social and cultural context.

    participation

    Conclusion

    • The breakdown of the family structure and caregiving systems in developed economies offers an important lesson. If Indian women want to participate in the formal labour force while retaining their family structure, this preference should be accommodated in institutional and interpersonal responses.

    Mains Question

    Q. In the context of world bank report analyse the declining participation of women in labour force. What should be the right approach to increase the participation of women in labour force?

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  • New India: The world’s next engine of growth

    growth

    “The mantle of the G20 presidency has come at the right time, allowing India to influence the global agenda based on its own priority of accelerated, inclusive and resilient growth”

     Context

    • The pandemic has proven to be the breakout moment in India’s long overdue emergence as the world’s next engine of growth. New India is bearing fruit at a time when one-third of the world’s economy is facing a slowdown. Speaking at FICCI’s 95th annual general meeting, Finance Minister said that the upcoming budget will set the template for the next 25 years, which is India’s Amrit Kaal.

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    A gloomy global outlook

    • Prospectus of global growth: According to the International Monetary Fund (IMF), global growth will nearly halve to 3.2 per cent in 2022 and fall further to 2.7 per cent in 2023, reflecting stalling growth in the US, China and the Euro Zone.
    • Global inflation: Higher food and energy prices have led to global inflation peaking at 8.8 per cent in 2022 which is, however, expected to decline to 6.5 per cent in 2023 and 4.1 per cent in 2024.
    • Developed nations are struggling to tame inflation: Developed nations have adopted excessive stimulus measures. According to a report by the McKinsey Global Institute, in 2020 and 2021, households globally added $100 trillion to global wealth on paper as asset prices soared and $39 trillion in new currency and deposits were minted and debt and equity liabilities increased by about $50 trillion and $75 trillion, respectively, as governments and central banks stimulated economies.
    • Russia- Ukraine conflict inflicting fiscal pain: Meanwhile, the continuing Russia-Ukraine conflict is inflicting fiscal pain beyond the immediate region
    • Disrupted supply chain by China’s covid policy: While China’s Covid policy has disrupted supply chains, which are now once again threatened by a potential fallout of an abrupt reversal.
    • India’s inflation is largely imported: India’s own fight against inflation, which is largely imported, has been aided by fiscal and monetary policy working in tandem with a little help from easing commodity prices.

    growth

    India stands at a bright spot amidst significant challenges

    • Fastest-growing large economy in the world: However, India stands out as a rare bright spot with the economy estimated to grow around 7 per cent in FY23 and a growth forecast of 6.1-6.5 per cent in FY24, thus retaining the tag of the fastest-growing large economy in the world.
    • Inflation coming down within RBI’s tolerance level: In an encouraging sign, retail inflation eased to 5.88 per cent in November, thus coming within the RBI’s tolerance band after 11 months. While it is too early to declare victory in terms of taming inflation, policymakers must now chart out a path that prioritises growth
    • India likely to overtake Japan and Germany to become 3rd largest economy: Having recently surpassed the UK to become the world’s fifth-largest economy, India is likely to overtake Japan and Germany before the end of the decade to become the third-largest economy in the world.
    • What made this possible: Reforms aimed at enhancing ease of doing business and reducing the cost of doing business in a large, unified domestic market along with a focus on boosting the manufacturing sector through the Production Linked Incentive (PLI) schemes, which are helping attract large investments including in critical areas like semiconductors.

    growth

    What India has to share with the world?

    • G20 leadership to bring about structural transformation: Its priority as G20 president is to focus on areas, which have the potential to bring about structural transformation leading to accelerated, inclusive and resilient growth.
    • Concept of LiFE for a sustainable lifestyle: Similarly, the concept of LiFE (Lifestyle for the Environment) draws upon ancient sustainable traditions to reinforce modern-day environmentally conscious practices.
    • Knowledge sharing: Finally, knowledge sharing in areas like digital public infrastructure and financial inclusion will enable the wider adoption of disruptive technologies.

    growth

    Conclusion

    • Investors both domestic and global must now come forward and participate in the India growth story which, in turn, will give a much-needed boost to global growth going ahead. Speaking at the World Economic Forum last year, PM Modi said “Make in India, Make for the World”. There has never been a better time to invest in India and reap the benefits of what it has to offer.

    Mains question

    Q. At a time when one-third of the world’s economy is facing a slowdown India stands at a brighter spot Discuss. Highlight what India has to share with the world?

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  • Blue economy and marine pollution

    Blue economy

    Context

    • Blue economy relates to presentation, exploitation and regeneration of the marine environment. It is used to describe sustainability-based approach to coastal resources. The worry is that the oceans are under severe threat by human activities, especially when the economic gains come at the cost of maintaining environmental sanity.

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    Blue economy

    From the beginning: The Blue economy

    • Origin of the concept: Gunter Pauli’s book, “The Blue Economy: 10 years, 100 innovations, 100 million jobs” (2010) brought the Blue Economy concept into prominence.
    • A project to find best nature inspired and sustainable technologies: Blue Economy began as a project to find 100 of the best nature-inspired technologies that could affect the economies of the world. While sustainably providing basic human needs potable water, food, jobs, and habitable shelter.
    • Inclusive approach and objective: This is envisaged as the integration of Ocean Economy development with the principles of social inclusion, environmental sustainability and innovative, dynamic business models
    • Environment friendly maritime infrastructure: It is creation of environment-friendly infrastructure in ocean, because larger cargo consignments can move directly from the mothership to the hinterland through inland waterways, obviating the need for trucks or railways

    Blue economy

    Significance of Maritime transport

    • One of the largest employers within ocean-related activities: Maritime transport plays a big role in the globalised market in the form of containerships, tankers, and ports, coastal tourism is the largest employer within ocean-related activities.
    • Eighty percent trade happens on the seas: Eighty per cent of world trade happens using the seas, 40 per cent of the world’s population live near coastal areas, and more than three billion people access the oceans for their livelihood.
    • Annual value makes up equivalent to seventh largest GDP: A healthy marine environment is essential for a sustainable future for people and the planet. Its value is estimated to be over $25 trillion, with the annual value of produced goods and services estimated to be $2.5 trillion per year, equivalent to the world’s seventh largest economy in gross domestic product (GDP) terms.
    • Ensures food security: The oceans, seas and coastal areas contribute to food security and economic viability of the human population. The ocean is the next big economic frontier, with the rapidly growing numerous ocean-based industries.

    What are the concerns?

    • Human induced Oceanic pollution: Marine activities have brought in pollution, ocean warming, eutrophication, acidification and fishery collapse as consequences on the marine ecosystems.
    • Oceans are rarely financial institutions: The ocean is uncharted territory, and rarely understood by financial institutions. Hence preparedness of these institutions in making available affordable long-term financing at scale is nearly zero.
    • Developing nations pay heavy price: In this journey of achieving blue economy goals, it is developing nations that pay a heavy economic price.
    • Lack of capacity is a critical hindrance: Many of the developing nations have high levels of external debt. Lack of capacity and technology for transition between agri economy and marine economy is also a critical hindrance.
    • Not having a elaborative guiding principles is a major concern: There is concern that without the elaboration of specific principles or guidance, national blue economies, or sustainable ocean economies, economic growth will be pursued with little attention paid to environmental sustainability and social equity.

    Blue economy

    What should be the approach towards achieving Blue economy?

    • Inclusive discussion and participation is must: The blue economy is based on multiple fields within ocean science and, therefore, needs inter-sectoral experts and stakeholders. It is imperative to involve the civil society, fishing communities, indigenous people and communities for an inclusive discussion.
    • SDG-14 journey cannot undermine the other SDGs: The UN stresses that equity must not be forgotten when supporting a blue economy. Land and resources often belong to communities, and the interests of communities dependent on the ocean are often marginalised, since sectors such as coastal tourism are encouraged to boost the economy.
    • Integrated marine spatial planning with national and global expertise is necessary: Developing the blue economy should be based on national and global expertise. It is important that any blue economy transformation should include using integrated marine spatial planning. This would provide collaborative participation of all stakeholders of the oceans, and would make room for debate, discussion and conflict resolution between the stakeholders.

    Where does India stand at this hour?

    • Suitable natural geography: Vast coastline of almost 7,500 kilometres, with no immediate coastal neighbours except for some stretches around the southern tip. In some sense, India has the advantage of its natural geography
    • Opportunity on G20 presidency: It is an opportunity for India to use its G20 Presidency to ensure environmental sustainability, while providing for social equity.
    • Rising role and significance: India’s engagement in the blue economy has been rising, with its active involvement in international and regional dialogues, and maritime/marine cooperation.

    Conclusion

    • Achieving the Blue economy goal would need tremendous human effort, and would call for global cooperation through various legal and institutional frameworks. This also includes the need to develop newer sectors such as renewable ocean energy, blue carbon sequestration, marine biotechnology and ex-tractive activities, with due attention paid to the environmental impacts.

    Mains question

    Q. What do you understand by mean Blue economy? Highlight the importance of maritime transport and discuss what need to be done to achieve blue economy in a true sense?

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  • What should India do in the current international energy market?

    energy

    Context

    • India marches ahead carrying the same challenge projected as last year that it will have to navigate the choppy waters of a volatile petroleum market without straying from the green path towards clean energy. Energy security cannot be achieved by focusing only on the supply and distribution side of the equation. The demand conservation and efficiency sides are equally important.

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    Current situation of international energy market

    • Fragmented energy market: the energy market has fragmented and energy nationalism is the driving force behind policy.
    • Restricted markets for Russia: Irrespective of how and when the Ukraine conflict ends, Russia will not be allowed access to the western markets for as long as President Putin is at the helm of the affairs. One fallout is the tightening energy embrace between Russia and China.
    • Declining western orbit and increasing non-aligned approach: Three, OPEC plus one which is, in effect, Saudi Arabia plus Russia has stepped outside the Western orbit. Saudi Arabia has made clear it intends to pursue a Saudi first, non-aligned approach to international relations including with the US.
    • Emergence of new energy centres: The new centres of energy power are emergent around countries that have a large share of the metals, minerals and components required for clean energy. China is currently the dominant power.

    What should India do against this backdrop?

    • Government must increase productivity of existing sources: Discounted Russian crude is an opportunistic panacea. It does not provide a sustainable cover to meet our requirements. To secure such a cover, government must increase the productivity of our existing producing fields; additional resources should be allocated for accessing relevant enhanced oil recovery technologies.
    • Secure long- term supply relationship with Saudi Arabia and Iran: Further, it should leverage the country’s market potential to secure a long-term supply relationship with Saudi Arabia and an equity partnership with Iran.
    • Enhance the strategic petroleum reserves: It should enhance the strategic petroleum reserves to cover at least 30 days of consumption and remove the sword of Damocles that the CBI/CVC/CAG wield over the heads of the public sector petroleum companies so that their traders can, without fear, take advantage of market volatility.
    • Expediate gas pipeline grid: The construction of a pan-India national gas pipeline grid should be expedited.

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    Analysis: Phasing out coal and the energy transition in India

    • Coal one of the major sources of energy in India: Coal will remain the bulwark of India’s energy system for decades. It is no doubt the dirtiest of fuels, but it remains amongst, if not the cheapest, source of energy. Plus hundreds of thousands depend on the coal ecosystem for their livelihood.
    • Phasing out is not yet a near possibility: The option of phasing out coal whilst environmentally compelling is not yet a macroeconomic or social possibility.
    • Need a balance: In the interim, the government has to find an energy transition route that balances livelihoods and pushes forward the green agenda.
    • Steps to be taken: Some small, politically feasible steps in that direction would include increased R&D expenditure for coal gasification and carbon capture and sequestration technologies; setting a carbon tax; the establishment of regulatory and monitoring mechanisms for measuring carbon emissions from industry; the closure of inefficient and old plants and a decision not to approve any new ones.
    • Determining competitiveness: In parallel, it would help if Niti Aayog were to pull together a group of economists and energy experts to determine the competitiveness of coal versus solar on a full-cost basis

    Other possible measures 

    • Upgrading the transmission grid: Allocation of funds for upgradation of the transmission grid network to render it resilient enough to absorb clean electrons on an intermittent basis. The sun does not shine at night and the wind does not blow all the time. In parallel, the underlying structural issues currently impeding the scaling up of renewables must be addressed.
    • Repairing the balance sheets of discoms through various regulatory reforms: In parallel, the repair of the balance sheets of state distribution companies (discoms), easing the procedures for the acquisition of land and the removal of regulatory and contract uncertainties are most important.
    • Building up the domestic chip industry: It will take decades to harness our indigenous resources of the metals and minerals critical for clean energy and build up a domestic chip industry. In the interim, diplomats should secure diversified sources of supply to reduce the country’s vulnerability.
    • Developing and commercializing 3G clean energy technologies: Finally, the creation of an enabling ecosystem for developing and commercializing third-generation clean energy technologies like hydrogen, biofuels and modular nuclear reactors. Nuclear, in particular, should be pushed.

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    Conclusion

    • India is not responsible for global warming, but it will be amongst the worst affected. Millions live around its coastline. Their livelihoods will be undermined by rising sea levels. Millions will also be affected by melting glaciers and extremes of temperatures. So irrespective of who is to blame, India has to stay on the path of decarbonization. It cannot afford to develop first and clean up later.

    Mains question

    Q. What is the current situation of international energy market? What are the measures that India should take in the time of global uncertainty of energy market.

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  • In news: Small Savings Schemes

    The Central government raised interest rates on eight of the 12 small savings schemes by 20 to 110 basis points for the January to March 2023 quarter.

    Small Savings Schemes

    • Small Savings Schemes are a set of savings instruments managed by the central government with an aim to encourage citizens to save regularly irrespective of their age.
    • They are popular as they provide returns higher than bank fixed deposits, sovereign guarantee and tax benefits.

    How are they managed?

    • Since 2016, the Finance Ministry has been reviewing the interest rates on small savings schemes on a quarterly basis.
    • All deposits received under various schemes are pooled in the National Small Savings Fund.
    • The money in the fund is used by the Centre to finance its fiscal deficit.

    What are the different saving schemes?

    The schemes can be grouped under three heads –

    1. Post office deposits
    2. Savings certificates and
    3. Social security schemes

    (1) Post Office Deposits

    • Under this we have the savings deposit, recurring deposit and time deposits with 1, 2, 3 and 5 year maturities and the monthly income account.
    • The savings account currently pays an interest of 4% per annum and can be opened individually or jointly with an initial investment of Rs 500.
    • The recurring deposit that pays 5.8% a year compounded quarterly matures after 60 months from the date of opening.
    • It allows investors to save on a monthly basis with a minimum deposit of Rs 100 per month.
    • Investments under the 5-year time deposit up to Rs 1.5 lakh further qualifies for benefit under section 80C of Income Tax Act.

    (2) Savings Certificates

    • Under this, we have the National Savings Certificate and the Kisan Vikas Patra.
    • The National Savings Certificate pays interest at a rate of 6.8% per annum upon maturity after 5 years. The interest that is earned is reinvested into the scheme every year automatically.
    • The NSC also qualifies for tax saving under Section 80C of the income tax act.
    • The Kisan Vikas Patra, which is open to everyone, doubles your one-time investment at the end of 124 months signifying a return of 6.9% compounded annually.
    • The minimum investment amount is Rs 1000 while there is no upper limit.

    (3) Social security schemes

    • In the third head of social security schemes, there is Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme.
    1. Public Provident Fund
    • The Public Provident Fund is a popular saving option for long term goals like retirement.
    • It pays 7.1% a year and qualifies for tax benefit under Section 80C of the Income Tax Act.
    • Upon maturity of the account after 15 years, it can be extended indefinitely in blocks of 5 years.
    • The accumulated amount and interest earned are exempt from tax at the time of withdrawal.
    1. Sukanya Samriddhi Account
    • The Sukanya Samriddhi Account was launched in 2015 under the Beti Bachao Beti Padhao campaign exclusively for a girl child.
    • The account can be opened in the name of a girl child below the age of 10 years.
    • The scheme guarantees a return of 7.6% per annum and is eligible for tax benefit under Section 80C of the Income Tax Act.
    • The tenure of the deposit is 21 years from the date of opening of the account and a maximum of Rs 1.5 lakh can be invested in a year.
    1. Senior Citizen Savings Account
    • And finally, the 5-year ​​Senior Citizen Savings Account can be opened by anyone who is over 60 years to age.
    • It carries an interest of 7.4% per annum payable quarterly and qualifies for Section 80C tax benefit.
    • These time-tested and safe modes of investments don’t offer quick returns, but are safer when compared to market-linked schemes.

     

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  • Research and Development Scenario in India

    development

    Context

    • US, has retained its global leadership for almost a century since World War I thanks to the culture of innovation backed by a solid base of research and development (R&D). China is challenging the leadership of US based on technology and innovation. If India wants to be a Vishwa guru it must invest in R&D.

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    Innovation and missing R&D Investment

    • Engine of growth: Innovation is rightly recognized as an engine for economic growth.
    • Atal innovation Mission: In 2016, the government launched the Atal Innovation Mission (AIM) to create an ecosystem to promote innovation and entrepreneurship in the country.
    • Actual spending is less: All these are steps in the right direction, but the foundation of all this lies in how much India actually spends on R&D, both in absolute terms as well as a percentage of its GDP, in relation to other G20 countries.
    • Sustainable Target: SDG Target 9.5 calls upon nations to encourage innovation and substantially increase the numbers of researchers as well as public and private spending on R&D. Gross domestic expenditure on R&D (GERD) is the proposed aggregate to quantify a country’s commitment to R&D.

    What is the scenario of Global Investment in R&D?

    • Institute for Statistics (UIS): According to UNESCO’s Institute for Statistics (UIS) latest report, the G20 nations accounted for 90.6 per cent of global GERD (current, PPP$) in 2018.
    • Increased spending on R&D: Global R&D expenditure has reached a record high of about 2.2 trillion current PPP$ (2018), while Research Intensity (R&D expenditure as a percentage of GDP) has gradually increased from 1.43 per cent in 1998 to 1.72 per cent in 2018.
    • Investment in PPP terms is inaccurate: Though looking at spending in PPP terms is a reasonable metric for welfare measurement in the economy, when it comes to technological prowess in high-end activities of R&D, it all boils down to measuring hard currency in US dollars.

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    Investment in R&D by G20 countries

    • G20 leader in investment: The G20 countries, accounting for 86.2 per cent of the global GDP and over 60 per cent of the global population in 2021, are the leaders in every way.
    • USA spends the Highest: The US leads the G20 by spending $581.6 billion on R&D followed by the European Union ($323 billion), and China ($297.3 billion) in 2018.
    • India spends negligible amount: India lags way behind with a paltry R&D expenditure of only $17.6 billion in 2018. In terms of their relative shares in G20 R&D expenditure, the US is way ahead with 36 per cent, followed by the EU (20 per cent), and China (18 per cent). India’s share is less than 1 per cent of G20 R&D expenditure in dollar terms.

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    Linkages between Research Intensity and Expenditure on R&D

    • Percentage to GDP: While the absolute expenditure on R&D provides a sense of scale, their percentage to the respective GDP provides the research intensity (RI).
    • South Korea Highest RI: It is interesting to note that in 2018 for which the latest information is available, South Korea has the highest RI at 4.43 per cent, followed by Japan (3.21 per cent), Germany (3.09 per cent), the US (2.83 per cent), France (2.19 per cent), China (2.14 per cent) and EU (2.02 per cent). India is ranked 17th in the G20, with a RI of 0.65 per cent (see infographics).
    • Example of Israel: One of the non-G20 countries is Israel, which, while having an R&D expenditure of just $18.6 billion, a population of only 9.3 million and a per capita income of around $51,430, has the highest RI of over 5 per cent. No wonder, Israel is known as a land of innovations, be it in defence or agriculture.

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    What India can learn from Israel?

    • Innovation growth and competition: The innovation system in Israel is a fundamental driver of its economic growth and competitiveness.
    • Active role of government: The government has played an important role in financing innovation, particularly in SMEs, and in providing well-functioning frameworks for innovation, such as venture capital (VC), incubators, strong science-industry links, and high-quality university education.
    • India can emulate Israel: Israel builds a strong case to show that despite being a smaller nation, sustainable growth can be achieved by prioritising investments in R&D. A lesson India can learn.

    Mains Question

    Q. What is difference between investment in R&D and research intensity? What is the missing part in India’s R&D and innovation ecosystem?