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

  • [pib] CIL ASHIS Scheme

    Why in the News?

    Coal India Limited (CIL) has launched a CSR initiative named CIL ASHIS to provide scholarships to children who lost their parents to COVID-19 and were unable to continue their studies.

    What is CIL ASHIS Scheme?

    • The CIL ASHIS Scheme, launched by Coal India Limited (CIL), stands for Ayushman Shiksha Sahayata.
    • The scheme aims to provide financial support for the education of children who lost their parents to COVID-19, ensuring they can continue their studies and achieve their dreams.

    Features of the CIL ASHIS Scheme

    • Each eligible child receives a scholarship worth ₹45,000 per year.
    • The scholarship is provided for a period of 4 years.
    • The scheme targets 1,645 children who have been identified as needing assistance.
    • Compassionate Appointment for:
      • Dependents of CIL employees who lost their lives while in service.
      • Beneficiaries need to apply for compassionate appointments through CIL’s established procedures.

    PYQ:

    [2024] With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements:

    1. CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities.
    2. CSR rules do not specify minimum spending on CSR activities.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

  • India’s Fintech funding plummets amid global slowdown, shows report    

    Why in the news? 

    Despite achieving a significant milestone in H1 2024, the fintech sector has encountered notable funding difficulties.

    What is the Fintech Sector?

    • The fintech sector encompasses technologies and innovations that aim to compete with traditional financial methods in the delivery of financial services. This includes a wide range of applications like mobile banking, online payments, digital lending, and blockchain technology.

    Present Report Insights

    • Funding Decline: The Indian fintech sector recorded $795 million in funding in H1 2024, a decrease of 11% from H2 2023 and 59% from H1 2023.
    • Global Ranking: Despite the decline, the Indian fintech ecosystem ranked among the top three globally funded sectors alongside the US and UK in H1 2024.
    • Major Transactions: Only two funding rounds exceeded $100 million in 2024, with Perfios becoming the only unicorn. Bengaluru led the funding, followed by Mumbai and Pune.
    • Segment Performance: Alternative Lending, RegTech, and BankingTech were the top-performing segments, with Alternative Lending securing $646 million, making up 81% of the total funding.
    • Acquisitions and IPOs: There were six acquisitions and five IPOs in H1 2024, marking significant activity despite the overall funding challenges.

    Significance of Fintech Sector

    • Financial Inclusion: Fintech innovations enhance financial inclusion by providing access to financial services to unbanked and underbanked populations.
    • Economic Growth: The sector contributes significantly to economic growth by fostering innovation, creating jobs, and boosting consumer spending.
    • Efficiency and Transparency: Fintech solutions improve efficiency and transparency in financial transactions, reducing costs and fraud.
    • Support for Startups: The sector offers numerous opportunities for startups, driving entrepreneurship and competition.

    Challenges 

    • Data Security: Fintech companies must implement strong security measures to protect sensitive customer data from cyber-attacks and data breaches. For example, Acko, a leading Indian fintech startup, has faced issues with data breaches in the past, highlighting the importance of robust data security protocols in the industry.
    • Regulatory Compliance: The fintech industry is highly regulated, requiring companies to stay updated on the latest government policies and ensure compliance to avoid penalties. For example, the Reserve Bank of India (RBI) has issued guidelines to protect consumers from predatory lending practices by digital lenders, underscoring the need for fintech firms to navigate the evolving regulatory landscape.
    • Customer Acquisition and Retention: Attracting and retaining customers is critical for fintech firms. For example, BharatPe, a prominent Indian fintech company, has faced challenges in customer retention due to its focus on merchant acquisition.
    • Funding and Investment: Securing adequate funding and investments remains a challenge for many fintech startups.  For example, Paytm, one of India’s largest fintech companies, has faced scrutiny from investors due to its inability to achieve profitability

    How India Can Improve Its Fintech Sector

    • Supportive Regulatory Environment: Create a regulatory framework that encourages innovation while ensuring consumer protection and systemic stability, facilitating a balanced growth of the fintech ecosystem.
    • Infrastructure Development: Invest in digital infrastructure, such as high-speed internet and mobile connectivity, to support the widespread adoption and efficient functioning of fintech applications across the country.
    • Focus on Cybersecurity: Ensure robust cybersecurity measures to protect against fraud and cyber-attacks, building trust among users and maintaining the integrity of fintech services.
    Steps taken by the government: 

    • Regulatory Sandbox: The Securities and Exchange Board of India (SEBI) introduced a framework for regulatory sandbox in 2020 to allow fintech companies to experiment with new products and services in a controlled environment.
    • Digital Personal Data Protection Bill: Introduced in 2022, this bill aims to create a framework for the protection of personal data collected by fintech companies.
    • Guidelines on Digital Lending: In 2022, the Reserve Bank of India (RBI) issued guidelines to protect consumers from predatory lending practices by digital lenders.
    • Promoting Financial Inclusion: The Pradhan Mantri Jan Dhan Yojana (PMJDY) has helped in enrolling over 523.9 million beneficiaries for new bank accounts, enabling fintech startups to reach a large consumer base.
    • Aadhar and UPI: The unique biometric identification system Aadhar and the Unified Payments Interface (UPI) have improved transparency and delivery of financial service

    Conclusion: Fintech companies in India face challenges including data security, regulatory compliance, customer acquisition, and securing investments. Addressing these ensures sustainable growth and trust in a competitive market environment.

    Mains PYQ: 

    Q Has digital illiteracy, particularly in rural areas, coupled with a lack of Information and Communication Technology (ICT) accessibility hindered socio-economic development? Examine with justification. (UPSC IAS/2021)

  • Women get only 7% MSME credit: RBI ED  

    Why in the News?

    • The RBI has highlighted that low labour force participation among women is a significant barrier to financial inclusion and broader economic growth.
      • It pointed out that only 7% of the outstanding loans to micro, small, and medium enterprises (MSMEs) are to women-led businesses.

    Barriers to Financial Inclusion

    • Economic Participation: RBI emphasized that greater participation of women in economic activities is essential for financial inclusion and economic growth.
    • Participation Disparity: Official data shows female labor force participation at 32.8% in FY22, compared to over 77% for men.
    • Credit Disparity: Women-led businesses constitute nearly a fifth of MSMEs, yet they receive only 7% of the outstanding credit to this sector, highlighting a significant disparity.

    Efforts and Challenges in Financial Inclusion

    • Successes: RBI expressed satisfaction with access to financial services, citing the success of the Pradhan Mantri Jan-Dhan Yojana (PMJDY) scheme and social security transfers.
    • Addressing Demand-side Issues: While supply-side challenges have been addressed, demand-side issues still need attention.
    • Structural Barriers: Structural issues such as low levels of capital, labour participation, societal norms restricting women from inheriting property, and limited access to education and training impede women’s financial inclusion.

    Stereotyping and Behavioral Issues

    • Higher Risk Perception: Nigam noted that women borrowers often face stereotyping by financiers, being considered higher risks, leading to higher interest rates, greater insistence on collateral, or outright loan rejections.
    • Behavioural Challenges: He also mentioned behavioural issues among women borrowers, such as being more risk-averse, less confident in negotiating loan terms, and less likely to apply for new loans due to fear of rejection.

    Policy Moves: Priority Sector Lending and Financial Literacy Initiatives

    • Priority Sector Lending (PSL): The PSL mandate has become a viable business model for banks and micro-lenders, but demand-side constraints persist.
    • RBI Initiatives: To address these challenges, the RBI has initiated financial inclusion efforts, including opening 2,400 financial literacy centres at the block level in partnership with nonprofits and requiring lead banks to have a literacy centre in each district.

    Government Schemes:

    Stand Up India Scheme Mudra Yojana Scheme Annapurna Scheme
    Launched April 2016 April 2015 (under PMMY) –
    Objective To promote entrepreneurship among women and SC/ST To provide financial support to non-corporate, non-farm small/micro enterprises To support women entrepreneurs in the food catering business
    Eligibility Women entrepreneurs and SC/ST entrepreneurs above 18 years of age All non-farm enterprises, including women-owned businesses Women entrepreneurs planning to start or expand their food catering business
    Loan Amount INR 10 lakh to INR 1 crore Up to INR 10 lakh, categorized into three types:            

    1. Shishu: Up to INR 50,000           
    2. Kishor: INR 50,001 to INR 5 lakh            
    3. Tarun: INR 5,00,001 to INR 10 lakh
    		 Up to INR 50,000
    Purpose For setting up a greenfield enterprise in manufacturing, services, or trading sectors For business activities in manufacturing, processing, trading, or service sectors For starting or expanding the food catering business
    Repayment Period Up to 7 years with a maximum moratorium period of 18 months – 36 months, including a grace period of 1 month

    About SEHER Program (In News)

    • The Women Entrepreneurship Platform (WEP) and TransUnion CIBIL have launched SEHER, a pioneering credit education program aimed at empowering women entrepreneurs in India.
    • SEHER aims to facilitate their access to financial tools crucial for business growth and employment creation.

  • Unemployment Vs Wages

    Why in the news?

    Recently, there have been contentious talks regarding Pakistan’s unemployment being lower than India’s.

    According to Keynes, lower wage rate will lead to lower income of workers and thus to lower demand of goods. Lower demand will lower output that in turn will lower employment.

    Issues related to Unemployment vs Wages

    • Questioning on Data Accuracy and Interpretation: There is skepticism about the accuracy of unemployment data, particularly regarding the CMIE Consumer Pyramids Household survey. This raises questions about the basis of claims regarding unemployment rates and the subsequent policy responses.
    • Labor Force Participation: Concerns are raised about the significant withdrawal of individuals from India’s labor force, indicating potential issues with labor force participation rather than solely unemployment rates.
    • Youth Unemployment: The high youth unemployment rate of 45% is highlighted as a significant concern, suggesting challenges in integrating young people into the workforce and addressing their employment needs.
    • Informal Employment: The prevalence of informal employment, such as subsistence agriculture and informal wage employment, is noted as a structural issue in the labor market, potentially impacting wages and job quality.
    • Wage Levels: Despite low reported unemployment rates, there are concerns about the adequacy of wages, particularly for the poor. This raises questions about the quality of employment and the extent of underemployment or disguised unemployment.
    • Policy misalignment: Certain policy proposals, such as increasing public sector employment or implementing fiscal job guarantees, are critiqued for potentially misdiagnosing the problem and offering unsustainable solutions that may not address underlying wage issues.

    Steps taken by the Government: 

    • Pradhan Mantri Rojgar Protsahan Yojana (PMRPY): This scheme incentivizes employers to generate employment by having the government pay the entire 12% employer’s contribution to the Employees’ Provident Fund and Employees’ Pension Scheme for new employees for the first three years of their employment
    • Pradhan Mantri Mudra Yojana (PMMY): This scheme provides collateral-free loans up to ₹10 lakh to micro and small businesses and individuals to help them set up or expand their enterprises, thereby promoting self-employment.
    • Aatmanirbhar Bharat Package: This economic stimulus package, announced in response to the COVID-19 pandemic, includes various long-term schemes and policies aimed at making India self-reliant and creating employment opportunities.
    • Garib Kalyan Rojgar Abhiyaan: This 125-day campaign was launched to boost employment and livelihood opportunities for migrant workers and others affected in 116 districts across 6 states.
    • PM GatiShakti: This is a multi-modal connectivity plan that aims to create infrastructure and generate employment opportunities in sectors like roads, railways, airports, ports, and logistics.

    Way forward: 

    • Addressing Labor Force Participation: Implement policies aimed at increasing labor force participation, particularly among youth and marginalized groups, by creating more formal employment opportunities.
    • Improving Informal Employment Conditions: Develop strategies to formalize the informal sector by providing incentives for informal employers to register their businesses, improve working conditions, and ensure compliance with labor laws.
    • Enhancing Wage Levels: Take steps to improve wage levels, particularly for low-skilled workers engaged in subsistence agriculture, marginal self-employment, and informal wage employment.

    Mains PYQ:

    Q Besides the welfare schemes, India needs deft management of inflation and unemployment to serve the poor and the underprivileged sections of the society. Discuss.

  • This is the year to get the Sustainable Development Goals back on track

    Why in the News? 

    2024 is an election year across the world and newly elected governments need to focus on the all-important sustainability issue. Year 2024 is an election year across the world.

    • At least 64 countries, both developed and developing, accounting for 49% of the world population, will go to the polls.

    Causes of Global Slow Progress: 

    • Impact of Global Crises: The outbreak of the COVID-19 pandemic and other global crises virtually halted progress towards the SDGs. These crises have diverted attention and resources away from sustainable development efforts.
    • Neglect of Environmental Goals: There has been little to no attention towards goals related to the environment and biodiversity, including responsible consumption and production, climate action, life below water, and life on land.
    • Defiance of Integrated Nature of SDGs: The current practice of pursuing SDGs is criticized for defying the integrated and indivisible nature of the goals. This lack of integration hampers efforts to achieve sustainable development outcomes comprehensively.
    • Risk of Environmental Degradation: The slow progress and neglect of environmental goals pose a significant risk of accelerated environmental degradation. This threatens the overarching target of balancing human well-being and a healthy environment.

    Why the world is not on track to achieve most SDGs by 2030?

    • Insufficient Progress: Despite reaffirmations of commitment by world leaders, progress towards achieving the SDGs remains slow. The world is only on track to meet 15% of the 169 targets that comprise the 17 goals.
    • Investment Gap: There is a significant gap in investment for SDGs, particularly in developing countries. The estimated investment gap exceeds $4 trillion, with nearly $2 trillion needed for the energy transition alone.
    • Lack of Synergistic Action: There is a lack of synergistic action in addressing SDGs, despite the integrated nature of the goals. Few studies and empirical evidence exist on the synergies and trade-offs among SDGs, hindering progress.
    • Barriers to Synergies: Various barriers, including knowledge gaps, political and institutional barriers, and economic issues, impede synergistic action.Inadequate data collection, and an inability to attribute co-benefits to specific actions hinder progress.
    • Misaligned Policies: Policies may be misaligned, leading to barriers for meeting greater targets. For example, ambitious renewable energy targets may not align with smaller-scale of steps taken to achieve SDG goal.
    • Limited Understanding of Cost Estimation: Exploiting resources without considering climate change impacts and synergistic opportunities can be detrimental to national and global efforts.

    Way forward:

    • Call for Action: There is a call for action to strengthen the environment for synergistic action, transparently identify opportunities and limits to synergies, and develop reporting frameworks to assess the value created from specific SDG interventions.
    • Urgent Action Areas Identified: The UN SDG Report, 2023 identified five key areas for urgent action, including commitments of governments, concrete policies to eradicate poverty and reduce inequality, strengthening of national and subnational capacity, recommitment of the international community, and strengthening of the UN development system.
    • Global Reaffirmation and Commitment: World leaders acknowledged the situation and reaffirmed their commitments to delivering the SDGs by 2030. However, the effectiveness of these global pronouncements at the ground level remains uncertain.

    Mains PYQ 

    Q National Education Policy 2020 isin conformity with the Sustainable Development Goal-4 (2030). It intends to restructure and reorient education system in India. Critically examine the statement. (2020)

  • [4 April 2024] The Hindu Op-ed: Turning the spotlight on the urban poor

    [4 April 2024] The Hindu Op-ed: Turning the spotlight on the urban poor

    PYQ Relevance:

    Mains: 
    Q. Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (UPSC CSE 2023)

    Prelims:

    Q. Disguised unemployment generally means (UPSC CSE 2013)

    (a) large number of people remain unemployed
    (b) alternative employment is not available
    (c) marginal productivity of labour is zero
    (d) productivity of workers is low

    Note4Students: 

    Mains: Social Issues; Population; Unemployment;

    Mentor comments: Unemployment/Underemployment is the most contentious issue that continues to be a challenge for the Socioeconomic landscape of India. As one of the world’s most populous nations with a diverse workforce, fluctuations in the unemployment rate have far-reaching implications for the country’s growth and development. So, we need to analyze the current status of India’s Dynamic Population. The recently published, India Employment Report 2024 is the third in a series of regular publications by the ILO on labor and employment issues. This report on Youth Employment, Education, and Skills examines the challenge of youth employment in the context of the emerging economic, labor market, educational, and skills scenario in India and changes over the past two decades.

    Let’s learn. 

    —

    Why in the News?

    The recent India Employment Report (IER) 2024 Report by the Institute for Human Development and International Labour Organization (ILO) poses questions on the trickle-down effect of employment.

    Key highlights of the IER 2024 Report:

    • Poor Employment Conditions:
      • The overall labor force participation and employment rates are reflecting issues such as stagnant or declining wages, increased self-employment among women, and a higher proportion of unpaid family work among youth.
      • The share of the young population with secondary or higher education in the total unemployed has almost doubled from 35.2% in 2000 to 65.7% in 2022.
    • Youth Employment Challenges:
      • Youth employment and underemployment surged between 2000 and 2019, with educated youths experiencing significantly higher levels of joblessness.
      • The Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and the Unemployment Rate (UR) showed a long-term deterioration between 2000 and 2018 but witnessed an improvement after 2019.
    • Widening Regional Gaps: Significant states consistently rank lower in employment indicators. For example, states like Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, Jharkhand, and Chhattisgarh have struggled with poor employment outcomes over the years, reflecting the influence of regional policies.
    Case Study from Kolkata:

    A study conducted in 37 slums across Kolkata in 2012 and revisited in 2022-23 found that the major occupations in slums have remained the same over the decade, with a significant proportion of the working population engaged in unskilled labor. The share of employment in skilled and semi-skilled labor and private organizations decreased between 2012-19, while employment in petty businesses or small shops increased by 9%. The study also found that employment in truck driving and cleaning, and construction and related work gained momentum in the last 10 years.
    • Widening Gender Gaps:
      • India is facing low rates of female labor force participation.
      • Although educational attainment has improved across all groups, social inequalities persist despite affirmative action and targeted policies, with Scheduled Castes and Scheduled Tribes facing barriers to accessing better job opportunities.
    • Informal Employment challenges: Although non-farm employment growing faster than farm employment before 2018, it has not grown sufficiently to absorb workers from agriculture. Around 90% are engaged in informal work, especially after 2018 it is increased.
    • Lack of necessary skills: 75% of workers are unable to send emails with attachments, 60% are unable to copy and paste files, and 90% are unable to perform basic spreadsheet tasks like putting a mathematical formula.
    • Declining Wages of Casual Workers:
      • While wages of skilled laborers maintained a modest upward trend during 2012–22, wages have remained low for unskilled workers. 
      • As much as 62% of the unskilled casual agricultural workers and 70% of such workers in the construction sector at the all-India level did not receive the prescribed daily minimum wages in 2022.
    • No Security to Industrial Workers: Recently, online platforms and gig workers have been expanding, but it is, to a large extent, the extension of informal work, with hardly any social security provisions.
    • Trends in Regional Migration:
      • India is expected to have a migration rate of around 40% in 2030 and will have an urban population of around 607 million.
      • The present pattern of migration also shows regional imbalance in the labor markets.
      • Usually, migration in India is seen from the eastern, north-eastern, and central regions to southern, western, and northern regions.

    What are the suggestive measures given by ILO?

    • To address labour market disparities:
      • Enhance women’s participation.
      • Integrate high-quality skills training to uplift economically disadvantaged groups.
      • Promote a fair labour market.
    • To enhance our focus on enhancing Employment:
      • Working on macroeconomic policies especially manufacturing sector.
      • Supporting MSMEs through a decentralized approach.
      • Increase agricultural productivity.
      • Building a sustainable economy.
    • To enhance job quality and build strategies:
      • Building robust labor Policy.
      • Promote Digital economy.
      • Focusing on sustained urban culture and migration policy.

    https://www.thehindu.com/opinion/lead/turning-the-spotlight-on-the-urban-poor/article68025389.ece

    https://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—sro-new_delhi/documents/publication/wcms_921154.pdf

  • UNEP Food Waste Index Report, 2024

    Why in the news?

    The Food Waste Index Report, 2024 was recently released by the United Nations Environment Programme (UNEP) and Waste & Resources Action Programme (WRAP), a UK based non-profit organization.

    Food Waste Index Report:

    • It tracks the global and national generation of food and inedible parts wasted at the retail and consumer (household and food service) levels.
    • It was first launched in 2011.
    • It was conceived as a tool to monitor progress towards international targets, such as those outlined in the SDG 12.3, which calls for halving food waste by 2030.

     

    Key Findings of the 2024 Report

    1. Total Food Waste Generation in 2022:
      • Globally, 1.05 billion tonnes of food waste were generated in 2022.
    2. Distribution of Food Waste by Sector:
      • Households accounted for 60% of the total food waste.
      • Food services were responsible for 28% of the total food waste.
      • Retail accounted for 12% of the total food waste.
    3. Per Capita Food Waste:
      • The average per capita food waste was 132 kilograms in 2022.
    4. Economic Cost of Food Waste:
      • The economic toll of food loss and waste is estimated at $1 trillion.
    5. Contribution to Greenhouse Gas Emissions:
      • Food loss and waste contribute significantly to greenhouse gas emissions, accounting for 8-10% of annual global emissions.
    6. Regional Trends:
      • Food waste levels vary minimally across income groups.
      • Hotter climates tend to generate more household food waste due to consumption patterns and infrastructure limitations.
      • Rural areas generally exhibit lower levels of food waste compared to urban areas.
    7. Policy Integration:
      • Only 21 countries, including Australia, Japan, the United Kingdom, the United States, and the European Union, have included food loss and waste reduction in their climate plans or Nationally Determined Contributions (NDCs).

    PYQ:

    2019: In India, ‘extended producer responsibility’ was introduced as an important feature in which of the following?

    (a) The Bio-medical Waste (Management and Handling) Rules, 1998

    (b) The Recycled Plastic (Manufacturing and Usage) Rules, 1999

    (c) The e-Waste (Management and Handling) Rules, 2011

    (d) The Food Safety and Standard Regulations, 2011

     

    Practice MCQ:

    Which of the following statements is correct about the Food Waste Index Report?

    (a) It tracks only the global generation of food waste at the retail level.

    (b) It was first launched in 2011 to monitor progress towards reducing food waste in households and food service sectors.

    (c) It is a tool aimed at monitoring progress towards international targets outlined in SDG 12.3 to halve food waste by 2030.

    (d) It primarily focuses on tracking inedible parts wasted at the industrial level.

     

  • India ranks 134th in global human development index, says UNDP report

    Why in the news? 

    Recently, India’s progress in the global Human Development Index (HDI), as reported by the United Nations Development Programme (UNDP)

    Context-

    • India’s ranking on the United Nations Human Development Index (HDI) improved by one position in 2022 to 134 out of 193 countries compared to 135 out of 191 countries in 2021. Switzerland has been ranked number one.

    The Human Development Index (HDI)-

    About 

    The Human Development Index (HDI), initially introduced by the UNDP in 1990, is a statistical composite index. It measures a country’s average achievement across three fundamental dimensions:

    • Health: This dimension is represented by life expectancy at birth. It reflects the overall health and well-being of the population and their access to healthcare services.
    • Education: This dimension includes indicators such as expected years of schooling for children entering school and mean years of schooling for adults. It assesses the level of educational attainment and the availability of educational opportunities within a country.
    • Standard of Living: This dimension is measured by Gross National Income (GNI) per capita, adjusted for purchasing power parity (PPP). It reflects the economic prosperity and living standards of the population, including income levels and access to basic necessities.

    Background

    • The Human Development Index (HDI) was developed by Pakistani economist Mahbub ul Haq and Indian economist Amartya Sen. It is used by the United Nations Development Programme (UNDP) to assess a country’s development as part of the Human Development Report.
    • Alongside the Human Development Index (HDI), the United Nations Development Programme (UNDP) also presents the Human Development Report (HDR) which present-
    1. Multidimensional Poverty Index (MPI),
    2. Inequality-adjusted Human Development Index (IHDI),
    3. Gender Inequality Index(GII) since 2010 and
    4. Gender Development Index (GDI) since 2014

    Key Points as per Report- 

    • India’s Rank on the HDI: India moved up one rank on the Human Development Index (HDI) from 135 in 2021 to 134 in 2022, with slight improvements in life expectancy and Gross National Income (GNI) per capita.
    • Comparison with Neighbors: India ranks below its southern neighbour Sri Lanka (ranked 78) and China (ranked 75) in the High Human Development category, and below Bhutan (ranked 125) and Bangladesh (ranked 129) in the Medium Human Development category.
    • Reducing inequalities: The report highlights a reverse trend in reducing inequalities between wealthy and poor nations. Despite interconnected global societies, collective action on climate change, digitalization, poverty, and inequality is lacking, leading to a widening human development gap.
    • Challenges in Democracy: While nine in 10 people worldwide endorse democracy, over half express support for leaders who may undermine it. Political polarization and limited control over government decisions are prevalent, leading to protectionist or inward-turning policy approaches.

    Action Plans as per report-

    • Multilateral Cooperation: Strengthen international cooperation and collaboration among governments, NGOs, businesses, and other stakeholders to address global challenges collectively. This could involve fostering dialogue, partnerships, and agreements that promote shared goals and responsibilities.
    • Policy Coordination: Enhance coordination and coherence in policymaking at national and international levels to ensure that policies address interconnected challenges comprehensively. This may involve integrating diverse perspectives, aligning strategies across sectors, and leveraging resources efficiently.
    • Investment in Sustainable Development: Increase investments in sustainable development initiatives that prioritize environmental conservation, social equity, and economic prosperity. This could include funding for renewable energy, education, healthcare, infrastructure, and poverty alleviation programs.
    • Empowering Communities: Empower local communities and grassroots organizations to participate in decision-making processes and contribute to problem-solving efforts. This could involve providing resources, capacity-building support, and platforms for civic engagement.
    • Promotion of Dialogue and Understanding: Foster dialogue, empathy, and mutual understanding among diverse communities to mitigate polarization and build social cohesion. This could involve promoting education, cultural exchange programs, media literacy, and initiatives that promote tolerance and respect for human rights.
    • Transparency and Accountability: Enhance transparency, accountability, and integrity in governance structures and institutions to rebuild trust and confidence among citizens. This could involve strengthening anti-corruption measures, promoting open government initiatives, and ensuring inclusive and participatory decision-making processes.
    • Investment in Education and Awareness: Invest in education, public awareness campaigns, and media literacy programs to increase awareness of global challenges, their interconnections, and the importance of collective action. This could help foster a sense of shared responsibility and mobilize public support for collaborative solutions.
    • Promotion of Inclusive Economic Growth: Promote inclusive economic growth that benefits all segments of society, reduces inequality, and creates opportunities for marginalized populations. This could involve implementing policies that support job creation, entrepreneurship, social protection, and access to essential services.
    • Resilience Building: Build resilience to global challenges such as climate change, pandemics, and economic crises by investing in preparedness, adaptation, and mitigation strategies. This could involve strengthening healthcare systems, disaster risk reduction measures, and social safety nets.
    • Advocacy and Leadership: Advocate for political leadership and commitment at all levels to prioritize collective action and address shared challenges effectively. This could involve mobilizing political will, engaging with policymakers, and holding leaders accountable for their actions.

    Conclusion-

    Strengthening multilateral cooperation, policy coordination, sustainable development investment, empowering communities, promoting dialogue, transparency, education, inclusive economic growth, resilience building, and advocating for leadership are vital for addressing global challenges collectively and fostering a sustainable future.

    Mains PYQ-

     Q- Despite the consistent experience of high growth, India still goes with the lowest indicators of human development. Examine the issues that make balanced and inclusive development elusive.(UPSC IAS/2019)

  • Has poverty really dropped to 5% in India?

    Why in the news? 

    • NITI Aayog’s B.V.R. Subrahmanyam stated that less than 5% of Indians live below the poverty line based on HCES(Household Consumption Expenditure Survey) 2022-23 findings.

    Context:

    • According to the World Bank, in India, 21.9% of the population lives below the national poverty line in 2011.
    • In 2018, almost 8% of the world’s workers and their families lived on less than US$1.90 per person per day (international poverty line).
    • About HCES (Household Consumption Expenditure Survey): The HCES is usually conducted by the National Statistical Office (NSO) every 5 years. It is designed to collect information on the consumption of goods and services by households

    What does the  HCES Survey say?

    • The survey indicates 2.5 times increase in consumption expenditure since 2011-12, but critics question income rise parity on basis of the following conditions:
      • Nominal vs. Real Terms: Consumption has increased about 40% per capita in real terms over the past 11 years, despite nominal terms showing a 2.5 times increase.
      • Wage Growth: Data from the Periodic Labour Force Survey (PLFS) reveals a 3.2% annual increase in wages for agricultural workers since 2011, indicating real wage growth.
      • Tax Data: Tax records demonstrate robust growth in the wages of salaried workers since 2011, further supporting the claim of increased incomes lead to higher consumption.

     

    How the Poverty line is defined in India? Does the poverty line need to be raised?

    • The poverty line in India: Historically based on the Tendulkar Committee observation, the poverty line, currently approximates ₹1,500 in rural and ₹1,800 in urban areas. However, it lacks a clear conceptual basis, diverging from traditional calorie-based metrics. Additionally, there’s no officially declared poverty line presently.
    • Poverty Line Calculation: NITI Aayog’s task force calculates the poverty line in India using data from the National Sample Survey Office, which is part of the Ministry of Statistics and Programme Implementation.
    • Need for raising the Poverty line: In 2011-12, India’s poverty rate was 12.5%, but it has decreased to 5% by 2022-23. Using the Tendulkar poverty line, poverty levels are around 2%, indicating the need to increase the poverty line. Extreme poverty has been reduced, but raising the poverty line is necessary, as indicated by different calculations.

    What is the Criticism faced along the lines of income rise parity?

    • Real Wage Growth: Contrary to claims of wage growth, numerous studies indicate that real wages have grown by less than 1% annually since 2017, and have even declined for construction workers.
    • Employment Data: The celebrated increase in employment shown in the latest PLFS survey for 2022-23 is misleading, as it primarily stems from a rise in unpaid family helpers rather than genuine job creation.
    • Unpaid Workers: The prevalence of unpaid family helpers, particularly among women, has increased significantly, with 37.5% of women workers now being unpaid, up from 32% in previous years.
    • Paid Employment Rates: When considering only paid employment (those receiving compensation for work), the rates are notably low, with only 48% for men and 13% for women, indicating a lack of genuine employment opportunities and wage growth for most working families.
    • Stagnant Demand for Mass Consumption Goods: Despite overall consumption growth, demand for mass-consumption goods and fast-moving consumer goods (FMCGs) remains stagnant, suggesting limited improvement in the purchasing power of the majority of the population.
    • Two-Wheeler Sales: Sales of two-wheelers, a key indicator of consumer demand, have not recovered to pre-demonetization levels (pre-November 2016), indicating persistent challenges in the broader economy affecting consumer spending habits.

    The Other side of the coin- 

    • Concerns with Private Sector Data: There is skepticism regarding the quality of data provided by private sector entities like CMIE, particularly regarding indicators such as female labor force participation rates.
    • Female Labor Force Participation Rate: CMIE data suggests a significantly low female labor force participation rate in India, with only 9% of women reportedly working, raising questions about the accuracy and reliability of these statistics.
    • Comparison with Other Countries: The data implies that India’s female labor force participation rate is lower than that of countries like Yemen and Iraq, highlighting the severity of the issue and prompting concerns about the credibility of the data.

    Way Forward: Measures to improve the data and poverty line – 

    • Revising Poverty Line Definition: Develop a clear conceptual basis for defining the poverty line, moving away from historical metrics like the Tendulkar poverty line towards more comprehensive and inclusive criteria, such as calorie-based metrics or multidimensional poverty indicators.
    • Official Declaration of Poverty Line: Establish an officially declared poverty line, supported by rigorous research and consultation with experts, to provide clarity and consistency in poverty estimation efforts.
    • Enhanced Monitoring and Evaluation: Strengthen monitoring and evaluation mechanisms to regularly review and update the poverty line based on evolving socio-economic conditions, ensuring its relevance and accuracy over time.

    Conclusion:

    The poverty line in India, historically based on the Tendulkar poverty line, needs revision due to its lack of conceptual basis and the absence of an official declaration. Despite reductions in extreme poverty, concerns persist over stagnant wage growth, misleading employment data, and the need for improved poverty measurement methodologies.

  • Key Insights: All India Household Consumption Expenditure Survey

    Why in the News?

    • Recently, the government has disclosed the broad findings of the All India Household Consumption Expenditure Survey conducted between August 2022 and July 2023.

    About All India Household Consumption Expenditure Survey (CES):

    • The CES is a quinquennial (recurring every five years) survey conducted by the National Statistical Office (NSO).
    • It is designed to collect information on the consumption spending patterns of households across the country, both urban and rural.
    • The data gathered in this exercise reveals the average expenditure on goods (food and non-food) and services.
    • It helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.

    Key Findings of the recent Survey:

    • Rise in Monthly Per Capita Consumption Expenditure:
      • Urban: Witnessed a 33.5% increase to ₹3,510.
      • Rural: Marked a 40.42% surge to ₹2,008 since 2011-12.
    • Shift in Spending Pattern:
      • Food Expenditure: Decreased from 52.9% to 46.4% in rural households and from 42.6% to 39.2% in urban households since 2011-12.
      • Implications: Potential impact on retail inflation calculations due to reduced weightage of food prices.
    • Inclusion of Social Welfare Benefits:
      • Separate calculation for items received through schemes like PM Garib Kalyan Ann Yojana.
      • Items Included: Computers, mobile phones, bicycles, and clothing.
    • Adjusted Monthly Per Capita Expenditure:
      • Rural: ₹2,054;
      • Urban: ₹3,544 (excluding free education and healthcare sops).
    • Socio-Economic Disparities:
      • Bottom 5%: Rural – ₹1,373; Urban – ₹2,001.
      • Top 5%: Rural – ₹10,501; Urban – ₹20,824.
    • State-wise analysis:
      • Sikkim: Highest MPCE – Rural: ₹7,731; Urban: ₹12,105.
      • Chhattisgarh: Lowest MPCE – Rural: ₹2,466; Urban: ₹4,483.

    Major Shifts Includes:

    • Broad-based Growth:
      • Rural-Urban Dynamics: B.V.R. Subrahmanyam, CEO of Niti Aayog, highlights that India’s growth story is “broad-based,” with rural incomes and expenditures outpacing those in urban areas.
      • Narrowing Divide: The urban-rural consumption gap has decreased from 91% in 2004-05 to 71% in 2022-23, indicating diminishing inequality.
    • Shifts in Consumption Patterns:
      • Food Expenditure: Rural households’ spending on food has fallen below 50% of their total expenditure for the first time. Lower spending on staples like pulses and cereals is accompanied by increased expenditure on consumer durables and services.
      • Income Growth: Rising expenditures on items such as TVs, fridges, and mobile phones suggest improved incomes and evolving lifestyles.
    • Changing Poverty Metrics:
      • Poverty Estimates: Based on MPCE averages, poverty levels are projected to be below 5%, according to Mr. Subrahmanyam. Informal estimates indicate a decline in poverty, with destitution nearly eradicated due to various welfare schemes.
      • Inclusive Growth: Government initiatives such as Ayushman Bharat and free education have contributed to lifting millions out of poverty, reflecting a multi-dimensional approach to poverty alleviation.