💥Join UPSC 2027,2028 Mentorship (August Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

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

  • [pib] Social Progress Index (SPI) for states and districts

    Economic Advisory Council to Prime Minister (EAC-PM) will release the Social Progress Index (SPI) for states and districts of India on December 20, 2022.

    Social Progress Index (SPI) Report

    • SPI is a comprehensive tool intended to be a holistic measure of the Social Progress made by the country at the national and sub-national levels.
    • The report has been prepared by Institute for Competitiveness, headed by Dr Amit Kapoor and the Social Progress Imperative, headed by Michael Green.
    • It was mandated by Economic Advisory Council to the Prime Minister of India.

    Objectives of the report

    • With state and district-wise rankings and scorecards, the report aims to provide a systematic account of the social progress made at all levels in the country.
    • The report also sheds light on the achievements of the districts that have performed well on the index and the role of the states in achieving social progress.
    • A special section of the report provides an analysis of the Aspirational Districts of India, leading to a broader understanding of the social progress at the grassroots level.
    • The report will act as a critical enabler and tool for policymakers in the coming years for achieving sustained socio-economic growth.

    Components of SPI

    SPI assesses the performance of states and districts on three dimensions of social progress:

    1. Basic Human Needs: It assesses the performance of states and districts in terms of Nutrition and Basic Medical Care, Water and Sanitation, Personal Safety and Shelter.
    2. Foundations of Wellbeing: It evaluates the progress made by the country across the components of Access to Basic Knowledge, Access to Information and Communication, Health and Wellness, and Environmental Quality.
    3. Opportunity: It focuses on aspects of Personal Rights, Personal Freedom and Choice, Inclusiveness, and Access to Advanced Education.

    (This newscard will be updated once the report is published.)

    Need for SPI

    • GDP is not a holistic measure of a nation’s development: It would be incorrect to state that the economic progress is completely divorced from progress made in areas mentioned above.
    • Social outcomes of developmental economics: The primary goal of the SPI is to provide a rigorous tool to benchmark progress and stimulate progress within countries.
    • No single holistic parameter available: Several indicators, like GHI and HDI, go beyond GDP, but none captures social progress as finely as SPI.
    • Doing away with biased reports: India does not display a respectable position in the index, as even the small neighbours like Nepal have a better rank. India is also the lowest rank holder in BRICS.

     

    Click and get your FREE Copy of CURRENT AFFAIRS Micro Notes

    (Click) FREE 1-to-1 on-call Mentorship by IAS-IPS officers | Discuss doubts, strategy, sources, and more

  • Financial Inclusion in Age of Digitization

    Financial Inclusion

    Context

    • The use of technology in financial inclusion stands to be pertinent in today’s context as it paves the way towards inclusive growth through the upliftment of disadvantaged sections of society.

    Importance of Financial Inclusion

    • Meaning of Financial inclusion: It refers to the availability to both individuals and companies of useful and cost-effective financial goods and services, including payments, transactions, savings, credit, and insurance, that are sustainably and ethically provided.
    • Provides social mobility: The importance of financial inclusion lies in the fact that it allows social mobility. These resources help empower individuals and foster communities, which can aid in promoting economic growth.
    • More financial services: Moreover, account holders are more likely to utilize additional financial services such as credit and insurance to launch and grow enterprises, make investments in their children’s or own health or education, manage risk, and recover from financial setbacks, all of which can enhance their overall quality of life.

    Financial Inclusion

    Challenges to the financial inclusion

    • Inoperative bank accounts: Nearly 80 percent of the Indian population has a bank account, and nearly 18 percent (81.38 million) of bank accounts are inoperative, having “zero balance”. Moreover, up to 38 percent of accounts are inactive, which means that there have been no deposits or withdrawals in the past year, demonstrating that many Indians are still not fully integrated into the formal banking system.
    • Poor telecommunication infrastructure: India still needs a robust telecommunication infrastructure with a stable broadband internet connection. Despite progress in increasing technological features with increasing speeds, the inability of the entire country to adapt to these innovations has widened the gap.
    • All citizens are not cell phone users: India additionally faces the hurdle of getting its citizens online, with more than 310 million individuals needing a basic cell phone. This prevents account holders from receiving crucial information, such as details relating to account transactions.
    • Increasing dependency on local agents: In addition, financial institutions also need to be more willing to deliver messages for transactions of small quantities. These factors have led to an increasing dependency on local agents.

    Financial Inclusion

    The correlation between Technology, digital divide and financial inclusion

    • Rural- Urban digital Divide: There is an evident divide between the urban-rural regions that dominate India. Only 4.4 rural families have computers, compared to 14.4 percent of urban households and 14.9 percent of rural homes have internet connectivity, compared to 42 percent of families in metropolitan regions. Meanwhile, only 13 percent of adults in rural regions have access to the internet, compared to 37 percent in metropolitan areas.
    • High lending rates in rural area: Specifically, such gaps are associated with various factors in finance, starting with small-time lenders charging high-interest rates common in rural regions. Access to credit still needs to be solved. Government programmes are yet to reach more remote areas to improve loan availability efficiently.
    • Unawareness about Online loans: Individuals find that online loans need more options from reliable financial institutions or digital lending. Additionally, rural clients need help accessing prospective financial services due to complicated banking procedures such as requiring identity credentials and maintaining a specific balance in an account.
    • Limited access to technology: The digital divide is also a result of limited access to computer and communication technologies. In India, fewer people can afford the device needed to access digital information.
    • Single nationwide approach is problematic: India additionally faces the burden of providing diversified content across different regions, as individuals across India have different mother tongues. Moreover, the number of individuals who have access to computers or are knowledgeable enough to utilise the internet varies too widely between states. Thus, a blanket approach cannot be implemented nationwide.
    • Lack of Financial literacy: Indian citizens lack the potential to maximise technological interventions. About 266 million adults are illiterate. The lack of financial literacy has also greatly impeded the growth of financial inclusion, with many financial cyber-crimes peaking in proportion to the growing distrust among rural residents, leading to lower adoption rates and a 6-percent jump in cybercrimes in the same year.
    • Concerns of data privacy: As Personal Identifiable Information (PII) guidelines are not strictly enforced and adhered to, large quantities of data are readily accessible to numerous parties, raising serious concerns about data privacy.

    Financial Inclusion

    What can be done to bridge digital divide for financial inclusion?

    • Digital inclusion strategies: It lies in the hands of the government to implement a financial inclusion policy and look at the reasons behind financial exclusion and effectively address them. Information and Communication Technology policies are primarily top-down and supply-focused. Thus, it is necessary to develop financial goods and services focused on the needs of citizens and the disadvantaged. These policies should focus on digital inclusion strategies to ensure that rural areas can access proper internet connectivity.
    • Information in regional language: to ensure digital financial inclusion, the government should encourage the middle-aged bracket to educate themselves in reading and writing to use the various facilities they provide. Government websites have information primarily in Hindi and English, excluding large sections of the population. A systemic strategy focused on digital skills, and financial literacy should be implemented in each region, keeping in mind the language barrier and access to technology.
    • Focus on vulnerable sections: To combat financial fraud, implementing a one-to-one Management of Financial Services (MFS) agent mentorship programme that focuses on vulnerable populations and teaches them the fundamentals of mobile and online interaction is possible. Additionally, removing the barriers to financial service access for low-income persons by reducing transaction costs could facilitate increased participation, as observed in Nepal, where free and easily accessible accounts were more prevalent among women

    Conclusion

    • The digital divide affects every area of life, including literacy, wellness, mobility, security, access to financial services, etc. Therefore, for a fast-growing nation such as India, the focus needs to shift from simple economic growth to equitable and inclusive growth.

    Mains Question

    Q. What are the challenges to Digital financial inclusion in India? Explain in detail the strategies needed to tackle the financial inclusion?

    (Click) FREE1-to-1 on-call Mentorship by IAS-IPS officers | Discuss doubts, strategy, sources, and more

  • Poverty Estimate using National Family Health Survey

    Poverty

    Context

    • The recent release of the National family health survey (NFHS) data for 2019-21 allows for a detailed analysis of the progress in the reduction of absolute poverty and related determinants like nutrition.

    Poverty estimation in India

    • Planning Commission Expert Group (1962): It formulated the separate poverty lines for rural and urban areas at ₹20 and ₹25 per capita per year respectively.
    • VM Dandekar and N Rath (1971): They made the first systematic assessment, based on National Sample Survey (NSS) data. They suggested providing 2250 calories per day in both rural and urban areas.
    • YK Alagh Committee (1979): It constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
    • Lakdawala Committee (1993): It suggested that consumption expenditure should be calculated based on calorie consumption as earlier. State specific poverty lines should be constructed. It asked for discontinuation of scaling of poverty estimates based on National Accounts Statistics.
    • Tendulkar Committee (2009): The current official measures of poverty are based on the Tendulkar poverty line, fixed at daily expenditure of ₹27.2 in rural areas and ₹33.3 in urban areas is criticized by many for being too low.

    Poverty

    How poverty is estimated under NFHS?

    • Multidimensional poverty index: The NFHS surveys are part of a multinational attempt to provide estimates of a multidimensional poverty index. Its computation rests on estimates of poverty according to 10 different indicators:
    1. Nutrition
    2. Child mortality
    3. Years of schooling
    4. School attendance
    5. Cooking fuel
    6. Sanitation
    7. Drinking water
    8. Electricity
    9. Housing
    10. Assets
    • The deprivation index: the deprivation index for each indicator is the per cent poor (deprived) according to that indicator. The aggregation of the 10 indicators into one index involves legitimate issues of weighting, but individual components do not suffer from this drawback.

    Poverty

    What are the findings of NFHS?

    • Multidimensional poverty declined: at a compounded annual average rate of 4.8 per cent per year in 2005-2011 and more than double that pace at 10.3 per cent a year during 2011-2021.
    • Declining child mortality: There are some issues with the 2011 child-mortality data, but for each of the 10 components of the MPI index, the rate of decline in 2011-2021 is considerably faster than in 2005-2011.
    • Average decline in overall indicators: The average equally weighted decline for nine indicators was 1.9 per cent per annum in 2005-2011 and a rate of 16.6 per cent per annum, more than eight times higher in 2011-2021.
    • Consumption inequality decline: Every single household survey or analysis has shown that consumption inequality declined during 2011-2021. This is consistent with the above finding of highly inclusive growth during 2011-2021.

    Poverty

    What are the efforts behind inclusive growth and reduced poverty?

    • A major factor behind the inclusive nature of growth during 2011-2021 is the focus of government policies on each of the individual indicator’s indicative of a dignified standard of living. A direct impact of this dedicated fiscal push is that slow-moving variables such as housing, access to cooking fuel, sanitation, etc, have witnessed a remarkable increase.
    • Swachh Bharat Mission: The government’s Swachh Bharat mission in 2014-2021 constructed over 110 million toilets even if some were without easy access to water, many were.
    • Saubhagya Yojana: Similarly, close to one-third of Indians were deprived of electricity till as recently as 2014. It was only after a dedicated push (Saubhagya Yojana) that India managed to electrify every village, and eventually households. Electricity deprivation declined by a 28.2 per cent rate post-2014; between 2005 and 2011, the rate of decline was close to zero.
    • Jan Dhan Yojana: Another example is the Jan Dhan Yojana which made financial inclusion a reality in India, especially for women.
    • Ujjwala Yojana: On access to modern cooking fuel (through the Ujjwala Yojana), deprivation was nearly halved from 26 per cent to 14 per cent in just five years. The previous halving (2005/6 to 2015/16) took 10 years.
    • Awas Yojana: The affordable housing scheme (Awas Yojana) has meant that less than 14 per cent are now deprived, compared to thrice that number in 2011/12.
    • Jal Jeevan Mission: More recently, government has embarked on an ambitious project of ensuring universal access to piped water under the Jal Jeevan Mission. Rural piped water coverage was a little less than 17 per cent in 2019, but is now well above 54 per cent and expected to at least be near, if not meet, the 100 per cent target by 2024.

    Conclusion

    • Extreme poverty in India is surely on decline but pandemic have pushed people again back to the poverty. Pandemic have put the break on inclusive growth of people. Government must realize these and plan accordingly.

    Mains Question

    Q. Analyze the data of NFHS for poverty estimation in India? How government policies have helped to reduce the extreme poverty in India?

    Click and Get your FREE copy of Current Affairs Micro notes

  • India’s Direct Benefit Transfer Schemes

    Transfer

    Context

    • Last week, the International Monetary Fund (IMF) lauded India’s Direct Benefit Transfer (DBT) Scheme as a “logistical marvel” that has reached hundreds of millions of people and specifically benefitted women, the elderly and farmers. Paolo Mauro, Deputy Director in the IMF’s Fiscal Affairs Department, praised the role of technological innovation in achieving this feat.

    What is Direct Benefit Transfer(DBT)?

    • With the aim of reforming Government delivery system by re-engineering the existing process in welfare schemes for simpler and faster flow of information/funds and to ensure accurate targeting of the beneficiaries, de-duplication and reduction of fraud Direct Benefit Transfer (DBT) was started on 1st January, 2013.
    • DBT Mission was created in the Planning Commission to act as the nodal point for the implementation of the DBT programmes. The Mission was transferred to the Department of Expenditure in July, 2013 and continued to function till 14.9.2015. To give more impetus, DBT Mission and matters related thereto has been placed in Cabinet Secretariat under Secretary (Co-ordination & PG).

    Transfer

    Efforts behind the efficient DBT

    • Mission-mode approach for financial inclusion: Government endeavoured to open bank accounts for all households, expanded Aadhaar to all, and scaled up the coverage of banking and telecom services.
    • Public Finance Management System through Aadhar: It evolved the Public Finance Management System and created the Aadhaar Payment Bridge to enable instant money transfers from the government to people’s bank accounts.
    • Participation of various stakeholders for extensive UPI: The Aadhaar-enabled Payment System and Unified Payment Interface further expanded interoperability and private-sector participation.
    • Directly receiving of subsidies: This approach not only allowed all rural and urban households to be uniquely linked under varied government schemes for receiving subsidies directly into their bank accounts but also transferred money with ease.

    What is the Present status of DBT?

    • The status of JAM trinity (Jan Dhan Aadhar Mobile)
    • By 2022, more than 135 crore Aadhaar’s have been generated,
    • There are 47 crore beneficiaries under Pradhan Mantri Jan Dhan Yojana,
    • Mobile subscribers number more than 120 crores.
    • Riding on this network, the DBT programme has reached commanding heights towards achieving the government’s vision of “sabka vikas”.
    • Last mile banking through Bank Mitras: 5 lakh Bank Mitras delivering branchless banking services.
    • DBT applicable to government schemes: Becoming the major plank of the government’s agenda of inclusive growth, it has 318 schemes of 53 central ministries spanning across sectors, welfare goals and the vast geography of the country.

    Transfer

    How benefits are delivered through DBT?

    • DBT in rural areas: In rural Bharat, DBT has allowed the government to provide financial assistance effectively and transparently to farmers with lower transaction costs be it for fertilisers or any of the other schemes including the PM Kisan Samman  Nidhi, PM Fasal Bima Yojana, and PM Krishi Sinchayi Yojana  thus becoming the backbone for supporting the growth of the agricultural economy.
    • DBT in urban area: In urban India, the PM Awas Yojana and LPG Pahal scheme successfully use DBT to transfer funds to eligible beneficiaries.
    • Benefits under MGNAREGA: The benefits received under the Mahatma Gandhi National Rural Employment Guarantee Act and Public Distribution System drive the rural demand-supply chain.
    • Various assistance programmes: Various scholarship schemes and the National Social Assistance Programme use the DBT architecture to provide social security.
    • Scheme for rehabilitation: DBT under rehabilitation programmes such as the Self Employment Scheme for Rehabilitation of Manual Scavengers opens new frontiers that enable social mobility of all sections of society.
    • DBT as last mile support in Pandemic: The efficacy and robustness of the DBT network were witnessed during the pandemic. It aided the government to reach the last mile and support the most deprived in bearing the brunt of the lockdown. From free rations to nearly 80 crore people under the Pradhan Mantri Garib Kalyan Yojana, fund transfers to all women Jan Dhan account holders and support to small vendors under PM-SVANidhi, DBT helped the vulnerable to withstand the shock of the pandemic.

    Transfer

    What are the reasons for successful DBT schemes?

    • An enabling policy regime: Proactive government initiatives and supportive regulatory administration allowed the private and public sector entities in the financial sector to overcome longstanding challenges of exclusion of a large part of the population.
    • Creation of a dedicated ecosystem: These are essential elements of the pioneering ecosystem created by the government for the aggressive rollout of the ambitious DBT programme, achieving impressive scale in a short span of six years.

    Conclusion

    • Direct Benefit Transfer has transformed the welfare aspect of the governance. Going forward digital and financial literacy, robust grievance redressal, enhancing awareness and an empowering innovation system are some of the aspects that would require continued focus. This would play a vital role for India in meeting the diverse needs of its population and ensuring balanced, equitable and inclusive growth.

    Mains Question

    Q.Enlist the schemes that comes under DBT. How DBT has changed the lives of needy people in urban and rural India?

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

     

  • Food Security, Success Story and Challenges Ahead

    Food Security

    Context

    • The Hunger Hotspots Outlook (2022-23) a report by the Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme (WFP) forebodes escalating hunger, as over 205 million people across 45 countries will need emergency food assistance to survive. 16 October is celebrated as World Food Day.

    What is the current situation of Food security worldwide?

    • Adverse impact of COVID 19 pandemic: Globally, food and nutrition security continue to be undermined by the impacts of the COVID 19 pandemic, climate change, spiralling food inflation, conflict, and inequality.
    • Challenge of Severe hunger continues: Today, around 828 million people worldwide do not have enough to eat, and over 50 million people are facing severe hunger.

    Food Security

    What are the challenges for ensuring food security?

    • The challenge of Climate change: Recent climate shocks have raised concerns about India’s wheat and rice production over the next year. Therefore, it is important to place a greater focus on climate adaptation and resilience building.
    • Rising population will need more resource: By 2030, India’s population is expected to rise to 1.5 billion. Agro food systems will need to provide for and sustainably support an increasing population.
    • The challenge of Soil degradation: Nutrition and agricultural production are not only impacted by climate change but also linked to environmental sustainability. Soil degradation by the excessive use of chemicals, non-judicious water use, and declining nutritional value of food products need urgent attention.

    How India managed its food security?

    • Constant efforts towards Self-sufficiency: India has had an inspiring journey towards better production and achieving self-sufficiency and is now one of the largest agricultural product exporters. During 2021-22,it recorded $49.6billion in total agriculture exports a 20%increase from 2020-21.
    • Efficient targeted public distribution system: One of India’s greatest contributions to equity in food is its National Food Security Act (NFSA)2013 which anchors the Targeted Public Distribution System (TPDS), the PM POSHAN scheme (earlier known as the Midday Meals scheme), and the Integrated Child Development Services (ICDS).
    • Extensive food safety net: Today, India’s food safety nets collectively reach over a billion people. The WFP works with State and national governments to strengthen these systems to reach the people who need them most.
    • Large scale digitization of programmes: The Government continues to take various measures to improve these programmes with digitisation and measures such as rice fortification, better health, and sanitation.
    • Better buffer stock policy: Food safety nets and inclusion are linked with public procurement and buffer stock policy visible during the global food crisis (2008-12)and the COVID19 pandemic fallout, whereby vulnerable and marginalised families in India continued to be buffered by the TPDS which became a lifeline.
    • Successful implementation of PMGKAY: An International Monetary Fund paper titled ‘Pandemic, Poverty, and Inequality: Evidence from India’ asserted that‘ extreme poverty was maintained below 1% in 2020 due to the Pradhan Mantri Garib KalyanAnna Yojana (PMGKAY

    Food Security

    How India and World can manage food security?

    • Avoiding conventional input intensive agriculture: There is increased recognition to move away from conventional input intensive agriculture towards more inclusive, effective and sustainable agro food systems that would facilitate better production.
    • Promoting sustainable practices: Since 1948, the FAO has continued to play a catalytic role in India’s progress in the areas of crops, livestock, fisheries, food security, and management of natural resources through the promotion of sustainable practices.
    • Focus on millets: Millets have received renewed attention as crops that are good for nutrition, health, and the planet. As climate-smart crops, they are hardier than other cereals. Since they need fewer inputs, they are less extractive for the soil and can revive soil health.
    • India’s Efforts as an example: India has led the global conversation on reviving millet production for better lives, nutrition, and the environment, including at the UN General Assembly, where it appealed to declare 2023 as the International Year of Millets. It is the world’s leading producer of millets, producing around 41% of total production in2020. The national government is also implementing a Sub-Mission on Nutrition-Cereals (Millets) as part of the National Food Security Mission.
    • G20 presidency an opportunity for India: India’s upcoming G20 presidency is an opportunity to bring food and nutrition security to the very centre of a resilient and equitable future.

    Food Security

    Conclusion

    • India can lead the global discourse on food and nutrition security by showcasing home grown solutions and best practices, and championing the principle of leaving no one behind working continuously to make its food system more equitable, empowering, and inclusive.

    Mains Question

    Q.Food security has become increasingly challenging due to unpredictable weather conditions. Illustrate. How India can contribute to the global food security issue.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

     

  • Global Hunger Index is out, India in ‘serious’ category at rank 107

    hunger

    India ranks 107 out of 121 countries on the Global Hunger Index in which it fares worse than all countries in South Asia barring war-torn Afghanistan.

    Global Hunger Index (GHI)

    • The Global Hunger Index is a peer-reviewed annual report, jointly published by Concern Worldwide and Welthungerhilfe.
    • It determines hunger on a 100-point scale, where 0 is the best possible score (no hunger) and 100 is the worst.
    • It is designed to comprehensively measure and track hunger at the global, regional, and country levels.
    • The aim of the GHI is to trigger action to reduce hunger around the world.

    For each country in the list, the GHI looks at four indicators:

    1. Undernourishment (which reflects inadequate food availability): calculated by the share of the population that is undernourished (that is, whose caloric intake is insufficient)
    2. Child Wasting (which reflects acute undernutrition): calculated by the share of children under the age of five who are wasted (that is, those who have low weight for their height)
    3. Child Stunting (which reflects chronic undernutrition): calculated by the share of children under the age of five who are stunted (that is, those who have low height for their age)
    4. Child Mortality (which reflects both inadequate nutrition and unhealthy environment): calculated by the mortality rate of children under the age of five

    India’s performance

    • India’s child wasting rate (low weight for height), at 19.3%, is worse than the levels recorded in 2014 (15.1%) and even 2000 (17.15),
    • It is the highest for any country in the world and drives up the region’s average owing to India’s large population.
    • Prevalence of undernourishment has also risen in the country from 14.6% in 2018-2020 to 16.3% in 2019-2021.
    • This translates into 224.3 million people in India considered undernourished.

    How India performs among its neighbours?

    • India’s score of 29.1 places it in the ‘serious’ category. India also ranks below Sri Lanka (64), Nepal (81), Bangladesh (84), and Pakistan (99).
    • Afghanistan (109) is the only country in South Asia that performs worse than India on the index.
    • China is among the countries collectively ranked between 1 and 17 having a score of less than five.

    Has India improved somewhere?

    • India has shown improvement in child stunting, which has declined from 38.7% to 35.5% between 2014 and 2022, as well as child mortality which has also dropped from 4.6% to 3.3% in the same comparative period.
    • On the whole, India has shown a slight worsening with its GHI score increasing from 28.2 in 2014 to 29.1 in 2022.

    Reasons for such poor performance

    • Poor maternal health: Mothers are too young, too short, too thin and too undernourished themselves, before they get pregnant, during pregnancy, and then after giving birth, during breast-feeding.
    • Poor sanitation: Poor sanitation, leading to diarrhoea, is another major cause of child wasting and stunting.
    • Food insecurity: Low dietary diversity in India is also a key factor in child malnutrition.
    • Poverty: Almost 50 million households in India are dependent on these small and marginal holdings.
    • Livelihood loss: The rural livelihoods loss after COVID and lack of income opportunities other than the farm sector have contributed heavily to the growing joblessness in rural areas.

    Issues over credibility of GHI

    • India has ranked among many African countries while it is among the top 10 food-producing countries in the world.
    • The GHI is largely children-oriented with a higher emphasis on under-nutrition than on hunger and its hidden forms, including micronutrient deficiencies.
    • The first component — calorie insufficiency — is problematic for many reasons.
    • The lower calorie intake, which does not necessarily mean deficiency, may also stem from reduced physical activity, better social infrastructure and access to energy-saving appliances at home, among others.
    • For a vast and diverse country like India, using a uniform calorie norm to arrive at deficiency prevalence means failing to recognise the huge regional imbalances in factors that may lead to differentiated calorie requirements at the State level.

    Conclusion

    • The low ranking does not mean that India fares uniformly poor in every aspect.
    • This ranking should prompt us to look at our policy focus and interventions and ensure that they can effectively address the concerns raised by the GHI, especially against pandemic-induced nutrition insecurity

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Finance Commission’s Approach to Equitable Delivery of Goods and Services

    finance commission

    Context

    • 15th Finance commission on horizontal devolution agreed that the Census 2011 population data better represents the present need of States, to be fair to, as well as reward, the States which have done better on the demographic front, Finance commission has assigned a 12.5 per cent weight to the demographic performance criterion. Population, area, forest and ecology, demographic performance, tax efforts, income and distance are the criteria for horizontal distribution of funds.

    Why equitable delivery is necessary in the country?

    • To fulfil the need of basket of Goods: There is a basket of goods and services that should be delivered by the State. It is best not to call them public goods, since “public goods” have a specific meaning for economists and this basket has items that are typically collective private goods.
    • To achieve Aantodaya approach (last person): Curlew Island is in the Andaman and Nicobar Islands. Until the 2011 Census, it had a population of two. Pulomilo Island, also in Andaman and Nicobar, had a population of 20 in 2011. At the time of elections, we read of astounding attempts made, so that voters in remote locations can vote. No one should be disenfranchised because of remoteness of location. By the same token, a resident, regardless of location, must be entitled to that basket.
    • To achieve poverty alleviation: The quality of public services affects economic growth via its impact on poverty alleviation, human capital formation and corruption.

    finance commission

    What are the Problems with Equitable delivery targets?

    • High cost of delivery: States can have differential sources of revenue. Alternatively, the cost of delivering that basket may vary across geographical zones.
    • Problems associated with migration: Over time, villages of course get depopulated. They are reclassified, get absorbed into larger agglomerations, or disappear because of migration.

    finance commission

    How equitable delivery can be achieved?

    • State need to take honest responsibility: The State cannot abdicate its responsibility of providing the basket.
    • Economic compulsion: Migration is a voluntary decision, often driven by the pull (and push) of economic forces. That voluntary decision cannot be replaced by fiat.
    • Dividing the pool between the governments: The Union Finance Commission has a vertical task, dividing the divisible pool between the Union government and states.
    • Adjusting to the criteria set by FC: It also has a horizontal task, dividing State share between different states. Accordingly, from the 1st to the 15th, Finance commission have adopted different formulae, with an attempt to also create incentives, by attaching weights to fiscal efficiency and even demographic performance.
    • This leaves variables like population, geographical area, income distance, infrastructure distance and forest cover:
    • expenditure equalisation based on needs/costs of public services;
    • Revenue equalisation measured by the ability of the state to raise revenue from one or more sources; and
    • Macro indicators covering broader economic or non-economic indicators that approximate fiscal capacity, where data constraints make it difficult to apply the other approaches.
    • Addressing Geographic area and population: Needs/costs are sought to be measured through geographical area and population. All Finance Commissions have used area as another criterion in the devolution formula on the ground of need — the larger the area, greater is the expenditure requirement for providing comparable services.

    Conclusion

    • Equitable access to public goods and services in low income and inequal (economic inequality) country like India is cumbersome task. Finance commission is trying their best for equitable allocation of resources.

    Mains Question

    Q. How Equity is different from equality?  What is the finance commission’s criteria for horizontal allocation of resources among the states ?

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

     

  • Migrant workers in India

    Migrant

    Context

    • India has used Aadhaar (digital identity) and UPI (digital payments) extensively to address the challenges of identification and financial inclusion in social protection delivery, particularly in the case of migrants.

    Who is a migrant worker?

    • A “migrant worker” is a person who either migrates within their home country or outside it to pursue work.
    • Usually, migrant workers do not have the intention to stay permanently in the country or region in which they work.
    • As per the census 2011, the total number of internal migrants in India is 36 crore or 37% of the country’s population.
    • The Economic Survey pegged the size of the migrant workforce at roughly 20 percent or over 10 crores in 2016.

    Migrant

    What are the problems faced by migrants?

    • Issues with finding local Employment: Most migrant workers have a seasonal nature of employment. During off-seasons, they struggle to feed their families. Repeated lockdowns made situations more difficult for migrants to find jobs in their localities. They faced travel restrictions which hindered their job search as well.
    • Lack of Insurance Benefits in a Pandemic Environment: Migrant workers work in precarious conditions with little wages and no access to government schemes and services. Poor and unsafe working and living conditions make them prone to diseases. Greater threats of occupational illnesses, nutritional diseases, alcoholism, HIV, and communicable diseases are rampant in the migrant workforce.
    • Issue of timely and Fair Payment of Wages: The informal workforce in India consists of more than 150.6 million regular and daily wage earners. Most of these workers are unaware of their rights as ‘migrant workers. Many unscrupulous agents coerce them and don’t pay minimum wages as per law.
    • Lack of portability of benefits: Migrants registered to claim access to benefits at one location lose access upon migration to a different location. This is especially true of access to entitlements under the PDS.  The ration card required to access benefits under the PDS is issued by state governments and is not portable across states.  This system excludes inter-state migrants from the PDS unless they surrender their card from the home state and get a new one from the host state.
    • Lack of affordable housing: The proportion of migrants in urban population is 47%. In 2015, the Ministry of Housing and Urban Affairs identified migrants in urban areas as the largest population needing housing in cities. There is inadequate supply of low-income ownership and rental housing options.

    Migrant

    Government steps for migrant workers

    • Pradhan Mantri Garib Kalyan Yojana: After the lockdown, Pradhan Mantri Garib Kalyan Yojana with a financial package of Rs. 1.7 lakh crore was launched to help poor, needy, and unorganized sector workers of the country.
    • PM SVANidhi Scheme: PM SVANidhi Scheme was launched to facilitate collateral-free working capital loans up to Rs.10,000/- of one-year tenure, to approximately, 50 lakh street vendors, to resume their businesses.
    • Pradhan Mantri Garib Kalyan Rojgar Abhiyan: In order to facilitate the employment of migrant workers who have gone back to their home state, Pradhan Mantri Garib Kalyan Rojgar Abhiyan was initiated in 116 districts in Mission Mode.
    • State migrant cell: Migrant workers’ Cell is being created to prepare a database of migrant workers in states with mapping.
    • eShram portal: It is a national database created to register the unorganised workers in the country, including the migrant workers.
    • National policy on migrant workers: NITI Aayog has been mandated to prepare a draft national policy on migrant workers to reimagine labour-capital relations while integrating the migrant workers within the formal workforce.

    How technology could provide Solutions?

    • Providing digital public infrastructure (DPI):  Digital public infrastructure systems that enable the effective provision of essential society-wide functions and services  can enable a paradigm shift, allowing governments to co-create solutions with the private sector and civil society.
    • Adopting Public private partnership models: There are three key areas where DPI can enable public-private partnerships (PPP) in the delivery of social protection of migrants,
    1. Awareness of entitlements: One barrier faced at the initial stage is lack of awareness of entitlements or of the need to reapply, when migrants move from one state to another. Jan Saathi is an application that provides migrants withinformation on eligible social security schemes. Organisations such as Haqdarshak not only inform potential beneficiaries about their eligibility for various schemes, Central or State, but also help them avail entitlements.
    2. Information about livelihoods and housing: The informal nature of the labour market makes access to affordable and safe living conditions a challenge, especially if the family migrates as a unit. Ministry of Housing and Urban Affairshas introduced the Affordable Rental Housing Complexes under PMAY-Urban but the availability of such facilities is inadequate compared to the number of migrants. Bandhu’s ecosystem of applications connect migrant workers directly with employers and housing providers, to give them more informed choices. Jobsgaar and MyRojgaar also play a similar role by connecting workers to employers.
    3. Healthy Grievance redressal Mechanism: Gram Vaani bridges the gap in grievance redressal by providing a platform where citizens can use Interactive Voice Response (IVR) to record their grievance in accessing entitlements. Aajeevika Bureau and The Working People’s Charter built the India Labourline to provide legal aid and mediation services to migrant workers.
    • Adopting a well-designed data: While a growing ecosystem of private players (NGOs, civil society organisations, not-for-profit and for-profit entities) are addressing these needs, well designed data exchanges can help unlock a strong public-private collaboration in the delivery of social protection.

    Migrant

    What more government can do to address the issue of migrants?

    • Creating centralized data: The state’s digital efforts are often in siloes and the need to maximize the use of data across schemes and departments is a high priority.
    • E-Shram: Initiatives such as direct benefit transfers and linking schemes for the portability of entitlements have shown promise. e-Shram, which is a national database of unorganized workers, aims to reduce access barriers to social protection for migrants.
    • Making portable entitlement: Recent announcements of API-based integration of e-Shram with the various state government labor departments and with the One Nation One Ration Card scheme are a step in that direction.
    • Working with the private sector: Enabling linkages of migrant data with the private sector can lead to benefits on the demand side, in the form of reduced transaction costs in identifying jobs, affordable housing, and redressal of grievances.
    • Engaging the private sector: Private players who have established relationships with these mobile populations can help the state in planning and forecasting the demand for benefits. An example of this is the digital payment ecosystem since the introduction of UPI.

    Conclusion

    • Digital technologies have potential solutions to problems and transform the livelihood of migrants. The need for adequate data protection and safeguards is essential for the implementation of any such initiative.

    Mains Question

    Q.Enlist the problem faced by migrant workers? Elaborate on how use of technology can solve the many problems of migrants.

     

  • Centre restores Modified Interest Subvention Scheme (MISS)

    The Union Cabinet has decided to restore the interest subvention on short-term agriculture loans to 1.5% for all financial institutions, including cooperative banks.

    What is the news?

    • The Union Cabinet has approved to restore Interest Subvention on short term agriculture loans to 1.5% for all financial institutions.
    • Thus, Interest Subvention of 1.5% will be provided to lending institutions for the financial year 2022-23 to 2024-25 for lending short term agri-loans upto Rs 3 lakh to the farmers.

    What is MISS?

    • Kisan Credit Card scheme was introduced for farmers, to empower them to purchase agriculture products and services on credit at any time.
    • To ensure that the farmers have to pay a minimal interest rate to the bank, the GoI introduced Interest Subvention Scheme (ISS), now renamed as Modified Interest Subvention Scheme (MISS).
    • It aims to provide short term credit to farmers at subsidized interest rates.

    Features of MISS

    • Under this scheme, short term agriculture loan upto Rs. 3.00 lakh is available to farmers engaged in Agriculture and other allied activities including Animal Husbandry, Dairying, Poultry, fisheries etc. at the rate of 7% p.a.
    • An additional 3% subvention (Prompt Repayment Incentive – PRI) is also given to the farmers for prompt and timely repayment of loans.
    • Therefore, if a farmer repays his loan on time, he gets credit at the rate of 4% p.a.
    • For enabling this facility to the farmers, GoI provides Interest Subvention (IS) to the Financial Institutions offering this scheme.
    • This support is 100% funded by the Centre, it is also the second largest scheme of DA&FW as per budget outlay and coverage of beneficiaries.

    Benefits of MISS

    • Ensuring hassle-free credit availability at cheaper rate to farmers has been the top priority of GoI.
    • Increase in Interest Subvention will ensure sustainability of credit flow in the agriculture sector as well as ensure financial health and viability of the lending institutions.
    • Banks will be able to absorb increase in cost of funds and will be encouraged to grant loans to farmers for short term agriculture requirements and enable more farmers to get the benefit of agriculture credit.
    • This will also lead to generation of employment since short term agri-loans are provided for all activities including Animal Husbandry, Dairying, Poultry, fisheries.
    • Farmers will continue to avail short term agriculture credit at interest rate of 4% per annum while repaying the loan in time.

    Who gets the subvention?

    • The lending institutions include- Public Sector Banks, Private Sector Bank, Small Finance Banks, Regional Rural Banks, Cooperative Banks and Computerized PACS directly ceded with commercial banks.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Demographic dividend

    Context

    The UN report, World Population Prospects 2022, forecasts that the world’s population will touch eight billion this year and rise to 9.8 billion in 2050. What is of immediate interest to India is that its population will surpass China’s by 2023 and continue to surge.

    India’s potential workforce and growth as projected by consulting firms

    •  Deloitte’s Deloitte Insights (September 2017) expects “India’s potential workforce to rise from 885 million to “1.08 billion people over the next two decades from today”, and “remain above a billion people for half a century,” betting that “these new workers will be much better trained and educated,” than their existing counterparts.
    • McKinsey & Company’s report, ‘India at Turning Point’ (August 2020), believes the “trends such as digitisation and automation, shifting supply chains, urbanisation, rising incomes and demographic shifts, and a greater focus on sustainability, health, and safety are accelerating” to “create $2.5 trillion of economic value in 2030 and support 112 million jobs, or about 30% of the non-farm workforce in 2030.”
    • Four pillarsIn its May 14, 2022 issue, The Economist had this to say about India, “As the pandemic recedes, four pillars are clearly visible that will support growth in the next decade. The four pillars are:
    • 1) The forging of a single national market.
    • 2) An expansion of industry owing to the renewable-energy shift and a move in supply chains away from China,
    • 3) Continued pre-eminence in IT.
    •  4) High-tech welfare safety-net for the hundreds of millions left behind by all this.
    • The Financial Times in an article, ‘Demographics: Indian workers are not ready to seize the baton’, believes that India’s bad infrastructure and poorly skilled workforce will impede its growth.

    Comparing India’s preparedness with China’s in 1970s

    • China is enduring an ongoing population implosion, which by 2050, will leave it with only 1.3 billion people, of whom 500 million will be past the age of 60.
    • India’s population, by contrast, would have peaked at 1.7 billion, of whom only 330 million will be 60 years or older.
    • Simply put, India is getting a demographic dividend that will last nearly 30 years.
    • There is so much going on for India today compared to China, the only country it can be reasonably compared to.
    • It is still a young country and in a much better position to transform itself compared to China of the 1970s.
    • It is still an open society where mass protest matters and produces results.
    • Indians have not been traumatised as Chinese were at the time of Mao Zedong’s death.
    • IT backbone: The IT technologies now available in India, and most importantly the Internet they run on have matured exponentially.
    • Many things right from video conferencing to instantaneous payments and satellite imaging are getting better and cheaper by the day.
    • Better administrative system: Creaky and inadequate as they are, India’s administrative systems manage to deliver and its infrastructure is in far better shape today than it was for China at the start of its reforms.
    • No rural urban divide: India does not have a Hukou system which in China tethers rural folk to rural parts creating a deep divide between a small and prosperous urban China and a much larger, very deprived rural China.

    Way forward for India

    • To wring the best out of its demographic dividend, India needs to invest massively in quality school and higher education as well as healthcare across India on an unprecedented scale, literally in trillions of rupees between now and 2050 when it would have reached the apogee of its population growth.

    Conclusion

    India must seize the moment and not be incremental in its approach. Given the will it can initiate and see through a transformation that will stun the world, even more than China’s has so far.