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

  • The Nobel in economics as a need to course correct

    Claudia Goldin Wins Nobel Prize In Economics For Studying Women At Work

    Central idea

    Claudia Goldin’s Nobel Prize win highlights the belated acknowledgment of gender dynamics in labor markets, prompting a reevaluation of entrenched biases in economics. Feminist economists stress the imperative to dismantle androcentric biases, advocating for a more inclusive economic theory that reflects diverse experiences.

    Key Terms for quality answers:

    • Androcentric biases
    • Economic man
    • Gender inequalities
    • Unpaid work
    • Masculinity in economics
    • Empirical findings
    • Feminist economists
    • Social mechanisms

    Key Phrases for improving mains score:

    • Androcentric Biases: Are gender-based prejudices or preferences that favor male perspectives, often manifested in economic theories that reflect traditional gender roles and reinforce a male-centric viewpoint.
    • Economic Man: Is a theoretical construct representing a rational, self-interested individual in economic models. It simplifies human behavior for analytical purposes but is critiqued for its failure to capture the complexities of real-life decision-making.
    • Humanizing Economics: Involves infusing empathy, emotions, and a more realistic understanding of human behavior into economic analyses, recognizing that individuals are not solely motivated by rational self-interest.

    Key Highlights:

    • Claudia Goldin wins Nobel Prize in Economic Sciences for gender dynamics research in labor markets.
    • Recognition prompts reflection on the delayed acknowledgment of gender-focused economic research.
    • Economics traditionally male-dominated, leading to the marginalization of gender inequality issues.

    Challenges:

    • Under-representation of women in economics.
    • Androcentric biases in economic theories, perpetuating gender hierarchies.
    • Economic models ignoring gendered experiences and unpaid work, especially by women.
    • Limited understanding of non-market spaces like households, hindering accurate economic analysis.
    • Economic man assumptions perpetuate gender stereotypes and fail to question existing hierarchies.
    • Masculinity in economics detaches the discipline from gendered experiences, particularly of women.

    Analysis:

    • Feminist economists call for an economic theory free of androcentric biases to address gender inequalities.
    • Economic models fail to account for the contributions of women as unpaid workers, impacting the accuracy of empirical findings.
    • Biases in economic theory can affect statistical methods and interpretation of empirical results.
    • Economic rationality may overlook social mechanisms, leading to misinterpretation of empirical findings.

    Way Forward:

    • Educational Initiatives: Propose educational programs to sensitize economists to gender biases and promote inclusivity.
    • Policy Changes: Advocate for policy changes within academic institutions to encourage diverse perspectives in economic research.
    • Recognizing Diverse Contributions: Encourage acknowledgment of the work of economists from diverse backgrounds.
    • Inclusive Policies: Advocate for policies that actively promote diversity and inclusivity within economics departments.
    • Training Economists: Suggest incorporating training on mixed methods in economics education.
    • Interdisciplinary Collaboration: Promote collaboration with sociologists, anthropologists, and other disciplines to enrich economic research

    Conclusion:

    Claudia Goldin’s Nobel Prize win serves as a catalyst for a much-needed evolution in economic thinking. By addressing historical biases, overcoming gender-based challenges, and embracing a more inclusive and nuanced approach, the discipline can truly reflect the complexities of reality.

  • Bidenomics and Global Economic Landscape in 2024

    Central Idea

    • The year 2024 is poised to be a momentous one for the global economy, marked by significant elections in some of the world’s largest economies, including India, Russia, the UK, the EU, and the US.
    • “Bidenomics” is the nickname for the economic vision of President Joe Biden. It’s used to convey his administration’s economic gains, policies and plans.

    Bidenomics and its Relevance

    • Policy Shifts: The potential election outcome in the US could have far-reaching consequences, especially concerning ‘Bidenomics’—President Biden’s distinctive economic policy approach.
    • Radical Departures: Trump’s policies diverged significantly from established US and global norms, with actions like withdrawing from the Paris Climate Agreement and adopting protectionist trade policies against nations like China.
    • Bidenomics: President Biden introduced a policy shift aimed at reversing decades of economic trends, emphasizing income equality and reducing the influence of big corporations.
    • 3 major aspects of Bidenomics:
    1. Public Investments: Focus on smart investments in infrastructure and clean energy.
    2. Empowering Workers: Prioritizing workers’ rights and education to strengthen the middle class.
    3. Promoting Competition: Encouraging competition to reduce costs and foster small business growth.

    Performance of Bidenomics

    • Macro Indicators: On a macroeconomic level, Bidenomics has shown positive results, as indicated by GDP growth, unemployment rates, and inflation trends.
    • GDP Growth: The US has outperformed major developed nations in terms of GDP growth, with a rapid post-pandemic recovery.
    • Unemployment: Unemployment rates have decreased significantly under Biden’s leadership, with job creation outpacing the number of job seekers.
    • Inflation: However, inflation spiked due to external factors but has since moderated.

  • Women and water and the potential of green jobs

    What’s the news?

    • Water, a vital resource for life, is poised to play a central role in the transition to a green economy. This transition brings not only environmental benefits but also the potential to drive significant employment growth, particularly for women.

    Central idea

    • Water is essential for a green economy, offering immense potential for job generation, particularly for women. Women globally are pivotal players in water management, yet their expertise remains underutilized. As green jobs surge in India, how can women’s roles in water management be enhanced and recognized?

    Backdrop

    • Green Jobs in Water Management: These jobs contribute to preserving or restoring environmental quality. A promising estimate by the International Labour Organisation posits that jobs in this sector could escalate from 3 million (2020) to 19 million by 2030 in India.
    • Water and Global Employment: A 2016 UN report underscores that nearly 1.5 billion people, or half the global workforce, are in water-related sectors. Water thus fosters both direct (managing resources, infrastructure, services) and indirect jobs.

    Harse reality

    • A World Bank evaluation of 122 water projects found that those involving women were six to seven times more effective than those that did not.
    • Despite this evidence, women constitute less than 17 percent of the paid workforce in water, sanitation, and hygiene in developing economies, and women’s representation as technical experts remains disproportionately low.

    The Role of Women in Efficient Water Management

    • Household Water Management: Women are typically responsible for managing water within households. They oversee water collection, storage, and distribution for domestic use, ensuring a safe and sustainable water supply for their families.
    • Community Engagement: In many communities, women actively engage in the management of communal water sources. They take the lead in maintaining these sources, making sure they remain accessible and functional for all community members.
    • Agriculture: Women play a crucial role in agriculture, which is a major consumer of water resources. They are involved in activities such as irrigation, crop cultivation, and livestock care. Their knowledge of efficient water use is vital for agricultural sustainability.
    • Environmental Stewardship: Women often act as environmental stewards, safeguarding local ecosystems, rivers, lakes, and forests. Their traditional practices and knowledge contribute to the preservation of water resources and the environment.
    • Community Development: Women actively participate in community development projects related to water infrastructure, sanitation, and hygiene. They serve on water and sanitation committees, helping plan and implement projects that benefit the entire community.
    • Innovative Solutions: Women frequently devise innovative solutions to address water-related challenges. They may create rainwater harvesting techniques, sustainable farming practices, or household-level water treatment methods, enhancing water resource management.

    Unlocking Opportunities through Government Programs

    • Traditionally, women’s involvement in water management has been limited to voluntary or part-time roles, often at the lowest level of decision-making.
    • Recent government initiatives in India, such as the Jal Jeevan Mission, Atal Mission for Rejuvenation and Urban Transformation, Atal Bhujal Yojana, and Jal Shakti Abhiyan, present an opportunity to expand women’s participation in water management and provide access to decent work.
    • These programs prioritize community ownership and support both direct and indirect jobs.

    The Potential of Jal Jeevan Mission

    • The Jal Jeevan Mission, in particular, has the potential to generate a substantial number of jobs.
    • A study by the Indian Institute of Management, Bangalore, estimated that the mission could create millions of person-years of direct and indirect employment, although gender-disaggregated data are lacking.

    Way forward

    • Addressing Skill Gaps and Capacity Building:
    • Water management jobs require specific skills and training, yet there is often a gap between the skills needed and the expertise available.
    • While some training programs exist for wastewater treatment and watershed management, they do not cover emerging employment opportunities in the water sector.
    • Promoting Sustainable Employment:
    • Despite robust policies for community participation, sustainable employment creation has been lacking.
    • Investing in training women, providing access to finance, and leveraging self-help groups can foster women’s self-employment in water management, strengthening water security in both rural and urban areas.

    Conclusion

    • Government initiatives such as the Jal Jeevan Mission are poised to unlock this potential. By addressing skill gaps and promoting women’s participation, India can not only create green jobs but also empower women in the vital task of water management, contributing to a more sustainable and inclusive future.

  • Circular migration

    What’s the news?

    • Circular migration gained prominence in the wake of globalization and technological advancements, facilitating easier mobility. As the world grapples with migration challenges, circular migration emerges as a balanced approach.

    Central idea

    • Circular migration, characterized by the cyclical movement of people between their country of origin and a destination country in search of seasonal employment, has gained significance in the global context. It offers unique opportunities and challenges in the realm of migration policy and development.

    Defining Circular Migration

    • Philippe Fargues defines circular migration based on specific criteria, including temporary residence, multiple entries into the destination country, freedom of movement between origin and destination, legal rights for migrants, protection of their rights, and a demand for temporary labor in the destination country.
    • A key aspect is the completion of at least two loops between two countries, signifying repeated movement.
    • For instance, if a migrant moves from country A to B and back to A, they are considered a return migrant. However, if they continue to country B again, they have completed two loops, earning them the label of a circular migrant.

    Circular Migration as Public Policy

    • For countries of origin: Remittances from circular migrants boost the domestic economy, fostering infrastructure development and improving living standards. However, it also poses the risk of losing skilled individuals to other nations.
    • For destination countries: Circular migration provides a source of low-skilled labor while minimizing permanent population growth

    The Advantages of Circular Migration in India

    • Rural to Urban Migration:
    • The growth of jobs in sectors like manufacturing, construction, and services has driven a substantial flow of migrants from rural areas to urban cities.
    • This trend has been particularly pronounced between 2004–2005 and 2011–2012 when the construction sector witnessed a significant increase in employment, especially for rural males.
    • This movement has provided rural populations with access to urban employment opportunities.
    • Inter-State Migration:
    • Uneven development following liberalization policies has led to inter-State migration. States like West Bengal, Odisha, and Bihar have witnessed high rates of out-migration.
    • While Delhi was historically a prominent destination, recent trends indicate an increased flow of migrants to southern States as well.
    • Economic Benefits:
    • Migrants often transition from agricultural jobs in their home states to low-skill jobs in destination states.
    • This shift typically results in increased income, with daily wage laborers in Kerala earning substantially more compared to their counterparts in states like West Bengal.
    • Household Welfare: Circular migration contributes to better household welfare through remittances sent back by migrants. These funds support improved nutrition, enhanced access to education and healthcare, and an overall increase in the standard of living for migrant families.
    • Empowerment of Women: The absence of male family members due to migration often leads to increased autonomy and decision-making power for women in migrant households. This shift in gender dynamics can have positive social and cultural implications.

    Challenges

    • Exploitation and Unsafe Conditions: Migrants, especially in southern States, often find themselves vulnerable to exploitation by middlemen or brokers. They may be subjected to unhygienic and unsafe working conditions, often without protective equipment.
    • Language Barriers: Language differences pose a significant obstacle for migrants, particularly when migrating to regions where the local language differs from their native tongue.
    • Resentment and Wage Disputes: Indigenous wage groups and labor unions may resent circular migrants, viewing them as competitors willing to work for lower wages. This can lead to wage disputes and conflicts.
    • Subsistence Migration: Many circular migrants engage in subsistence-level employment, with limited opportunities for savings or asset creation. Jobs are often seasonal and irregular, contributing to economic precarity.
    • Return Migration during Crises: The COVID-19 pandemic highlighted the vulnerability of circular migrants. When a lockdown was imposed in 2020, many migrants embarked on long journeys back to their hometowns due to the lack of job opportunities in the host States.

    The Way Forward: Measures to fully unlock the potential of circular migration

    • Ensuring Migrant Rights: Robust protection of migrant rights is crucial to address exploitation and abuse.
    • Skills Training: Providing migrants with skills training and language proficiency programs can enhance their employability and integration into host communities.
    • Safety Nets: Establishing social safety nets for circular migrants during times of crisis, such as the pandemic, is essential to prevent humanitarian disasters.
    • Integration Efforts: Encouraging integration initiatives in destination areas can help migrants feel more included and less marginalized.
    • Data Collection and Research: Governments should invest in data collection and research to better understand the extent and dynamics of circular migration.

    Conclusion

    • Circular migration presents a viable pathway to balance the needs of development and individual economic advancement. As circular migration continues to shape the global landscape, it is imperative that governments and policymakers adapt their strategies to harness its potential for the greater good.

  • Propelling India’s development the right way

    What’s the news?

    • The op-ed acknowledges India’s technological achievements, emphasizing the need to revive state support, particularly in emerging sectors. It underscores the urgency of addressing persistent inequalities and promoting inclusive economic growth for a more prosperous future.

    Central idea

    • Aim for the moon is often synonymous with bold ambition, verging on recklessness. India’s foray into space research in the 1960s was initially met with skepticism, given its status as a young and struggling nation. Today, India boasts remarkable achievements in space exploration. However, these accomplishments raise a pertinent question: How do these feats align with the persistent poverty and destitution afflicting millions of Indians?

    Historical Foundations of India’s Scientific and Technological Capabilities

    • Indian Institutes of Technology (IITs): Between 1951 and 1961, India founded five Indian Institutes of Technology. These institutions rapidly gained global recognition as centers of academic excellence. They played a critical role in nurturing a talent pool of engineers and scientists who would later contribute to India’s technological advancements.
    • Indian Institutes of Management (IIMs): In 1961, India inaugurated the first two Indian Institutes of Management. These institutions aimed to foster managerial talent, aligning with India’s broader goals of building expertise and human capital in various fields.
    • Public Sector Units (PSUs): Throughout the 1950s and 1960s, India established numerous public sector units across diverse industrial sectors. These sectors included steel production, fertilizer manufacturing, machine tools, electric machinery, drug production, and petrochemicals. These PSUs not only bolstered industrialization but also served as vital testing grounds for emerging technologies.

    India’s Moonshot Development Strategy

    • The moonshot development strategy aimed to leverage modern industrialization to address developmental challenges.
    • Early visionaries like Vikram Sarabhai envisioned satellite technology for nationwide communication, agricultural improvements, and healthcare education.
    • Nevertheless, this approach faced criticism for its heavy reliance on public investment and the alleged misdirection of resources toward capital- and technology-intensive industries instead of labor-intensive sectors.

    How have inequalities posed significant hurdles to India’s progress and development?

    • Lack of Effective Government Intervention:
    • India’s development strategy’s lackluster record was not due to excessive government emphasis on technology but rather because the government could not effectively address inequalities and ensure social development.
    • One of the missed opportunities was the failure to implement a successful program of land redistribution.
    • Ownership Disparities: Ownership of assets remains significantly low among socially oppressed communities, including Dalits and the Scheduled Caste (SC) population. This lack of asset ownership creates barriers to accessing education and economic opportunities.
    • Education Underinvestment: India has consistently underinvested in basic education for the masses. This educational deficit further exacerbates inequalities and limits opportunities for those who are socioeconomically disadvantaged.
    • Replicated Inequalities in the Labor Market: The historical inequalities in social and economic spheres translate into labor market disparities. Better-paying jobs tend to be concentrated among privileged groups with greater access to higher education, further deepening the divide.
    • Employment Disparities: The data from the Periodic Labour Force Survey highlights significant disparities in employment. In 2021–22, a higher percentage of SC workers (38.2%) were engaged in casual employment, which often involves manual labor, compared to workers from other general category castes (11.2%).
    • Contrast with East Asian Countries: East Asian countries like Japan and China implemented land reforms and other measures in the 1950s that created a relatively egalitarian social structure. This laid the foundation for progressive economic and social changes in the subsequent years.
    • Impact on Industrial and Economic Growth: Inequalities have negatively impacted industrial and economic growth in India. The skewed domestic demand, driven by the upper-income classes, has hindered the growth of manufacturing sectors producing high-quality, mass-consumption goods like food products and garments.
    • Narrow Social Base for Entrepreneurship: Entrepreneurship in India has emerged from a narrow social base, limiting the diversity and inclusivity of the entrepreneurial ecosystem.

    Way forward

    • Reinstate state support:
    • India should recognize the strengths and weaknesses of its post-independence development strategy.
    • The audacious attempt to build technological and industrial capabilities with generous state support was the right approach.
    • India must reinstate such efforts, especially in rapidly growing economic sectors like semiconductors and biotechnology.
    • Abandoning industrial policy in a globalized economy, as done after 1991, is a mistake, especially when countries like the United States and China actively support their industries.
    • Make Economic Growth Inclusive:
    • India needs to redouble efforts to ensure that economic growth is inclusive and broad-based.
    • Access to education, particularly higher education, should be made accessible to all, including marginalized communities.
    • Strengthen human and social capabilities:
    • While technology has played a significant role in India’s development, it’s equally important to focus on building human and social capabilities.
    • Empowering the billion-strong population with the skills and capabilities required for upward mobility is crucial.
    • Achieving this would be equivalent to a significant leap in economic progress.

    Conclusion

    • India’s journey toward technological prowess should coexist with a commitment to alleviate inequality and ensure inclusive growth. A moonshot approach to development, grounded in state support for technological advancement, is imperative. By reconciling these objectives, India can pave the way for a prosperous and equitable future.

  • NPCI Unveils Innovative UPI Features

    upi

    Central Idea

    • The National Payments Corporation of India (NPCI) has introduced a range of groundbreaking features on the popular Unified Payments Interface (UPI) platform.

    Hello! UPI: Voice-Enabled UPI Payments

    • Hello! UPI, a remarkable addition, facilitates voice-enabled UPI payments in Hindi and English.
    • Users can make UPI payments through voice commands via apps, telecom calls, and IoT devices.
    • Future plans include expanding this feature to support several regional languages, further enhancing accessibility.

    Credit Line on UPI:  Streamlined Access to Credit

    • The RBI Governor introduced Credit Line on UPI, an initiative aimed at promoting financial inclusion and innovation.
    • This offering allows users to access pre-sanctioned credit from banks via UPI, simplifying the credit acquisition process.
    • Features include interest-free credit periods, defined charges, and seamless customer engagement channels.
    • The goal is to expedite the credit access process, driving economic growth and digital banking efficiency.

    UPI LITE X:  Offline Money Transfers

    • UPI LITE X introduces offline money transfers, enabling users to send and receive funds even without internet connectivity.
    • This feature empowers transactions in areas with poor network coverage.
    • UPI LITE payments are known for their speed and efficiency, making them a preferred choice for users.

    UPI Tap & Pay:  Convenience Redefined

    • UPI Tap & Pay offers a new way to complete payments at merchant locations.
    • In addition to traditional scan-and-pay, users can now tap Near Field Communication (NFC)-enabled QR codes.
    • This feature enhances convenience, making transactions swift and effortless.

    Conversational Payments:  AI-Enabled Transactions

    • Conversational UPI Payments and Conversational Bill Payments represent a paradigm shift in human-machine interaction.
    • These AI-enabled transactions aim to deepen the adoption of digital payments across India.
    • Users can make voice-enabled UPI payments through UPI Apps, telecom calls, and IoT devices in Hindi, English, and regional languages.
    • NPCI has collaborated with AI4Bharat at IIT Madras to develop language models for Hindi and English payments.

    BillPay Connect:  Simplified Bill Payments

    • BillPay Connect introduces a nationalized number for bill payments across India.
    • Customers can conveniently fetch and pay bills through messaging apps with a simple ‘Hi.’
    • Even users without smartphones or immediate data access can pay bills via a missed call, followed by a verification call.
    • Voice Assisted Bill Payments via smart home devices offer added convenience and instant confirmation.
    • This innovation enhances security and reassurance for both customers and collection centers.

    Conclusion

    • These pioneering features unveiled by NPCI mark a significant leap in India’s digital payment landscape.
    • They not only enhance accessibility but also redefine convenience, making digital transactions more user-friendly.
    • With innovative offerings like voice-enabled payments and streamlined credit access, NPCI continues to play a pivotal role in India’s technological advancement.
    • The journey towards a digitally empowered India takes a giant stride forward with these game-changing UPI features.

  • Urban Cooperative Banks (UCBs): Concerns and Considerations

    Central Idea

    • The Reserve Bank of India (RBI) Governor recently addressed the issues and vulnerabilities surrounding Urban Cooperative Banks (UCBs), highlighting the importance of addressing these concerns.

    What are Urban Cooperative Banks (UCBs)?

    • UCBs are primary cooperative banks primarily situated in urban and semi-urban areas, catering to the financial needs of small borrowers and businesses.
    • They are governed by the Banking Regulations Act, 1949, the Banking Laws (Cooperative Societies) Act, 1955, and registered under the Cooperative Societies Act of the respective State.
    • Initially, UCBs were permitted to lend exclusively for non-agricultural purposes; however, they have diversified their size and operations since 1996.
    • Approximately 79% of UCBs are concentrated in five states: Andhra Pradesh, Gujarat, Karnataka, Maharashtra, and Tamil Nadu.

    Types of UCBs

    UCBs are categorized into different tiers by the RBI based on their deposit size:

    • Tier 1: Deposits up to Rs 100 crore.
    • Tier 2: Deposits ranging from Rs 100 to 1,000 crore.
    • Tier 3: Deposits between Rs 1,000 to Rs 10,000 crore.
    • Tier 4: Deposits exceeding Rs 10,000 crore.

    Key concerns/addresses raised by RBI

    (1) Operational Stability

    • UCBs must enhance their financial and operational resilience to contribute to the overall stability of the financial and banking sector.
    • The quality of governance within UCBs plays a pivotal role in ensuring the stability of these individual banks.

    (2) Setting up right priorities

    • Boards and directors of UCBs must prioritize integrity and transparency in financial reporting, refraining from innovative accounting practices that obscure the actual financial position.
    • Proactive management of Asset Liability is essential to manage liquidity risk systematically.
    • Establishing robust IT and cybersecurity infrastructure, along with the availability of necessary skills at the bank level, is crucial.
    • Governance practices, especially those related to Compliance, Risk Management, and Internal Audit, need strengthening.

    (3) Functioning of Boards

    • Ensuring directors possess adequate skills and expertise.
    • Constituting a professional board of management.
    • Considering the diversity and tenure of board members.
    • Promoting transparent and participatory board discussions.
    • Ensuring the effective functioning of board-level Committees.

    (4) Credit Risk Management

    • Upholding risk management through robust underwriting standards.
    • Implementing effective post-sanction monitoring.
    • Timely recognition and mitigation of emerging stress.
    • Pursuing follow-ups with large Non-Performing Asset (NPA) borrowers to facilitate recovery and maintain adequate provisioning.

    Conclusion

    • Addressing the concerns and vulnerabilities in Urban Cooperative Banks is vital for the overall stability and resilience of the banking sector.
    • The RBI’s recommendations highlight the importance of governance, risk management, and transparency in ensuring the health of UCBs.

  • UPI-CBDC Interoperability: Advancing Retail Digital Rupee Adoption

    upi-cbdc

    Central Idea

    • The convergence of Unified Payments Interface (UPI) Quick Response (QR) codes with Central Bank Digital Currency (CBDC) applications is set to revolutionize digital transactions in India.
    • This strategic integration enables users of the retail digital rupee to seamlessly transact using UPI QR codes, making transactions convenient for both customers and merchants.

    Understanding Interoperability

    • Interoperability refers to the technical compatibility that allows different payment systems to function together.
    • It empowers various payment systems to process transactions across platforms, contributing to efficiency, innovation, and adoption for end-users.

    UPI QR Code-CBDC Interoperability: Explained

    The Reserve Bank of India (RBI) is driving this interoperability between UPI and CBDC as part of its ongoing pilot project for the retail digital rupee (e₹-R).

    • Initially, e₹-R users required a specific QR code for transactions.
    • With UPI-CBDC interoperability, any UPI QR code becomes compatible with CBDC apps.
    • The digital rupee, issued by RBI, is a tokenized digital version of the rupee stored in a digital wallet linked to a savings bank account.
    • UPI, directly linked to a user’s account, can now transact seamlessly with CBDC.

    Benefits for Customers and Merchants

    The convergence of UPI and CBDC yields several advantages:

    • Customers can use a single QR code for various transactions, eliminating the need for multiple platforms.
    • Daily essentials like groceries and medicines can be purchased using any UPI QR code.
    • Merchants can accept CBDC payments without creating separate QR codes.
    • Transactions are streamlined and efficient, enhancing the user experience.

    Enhancing CBDC Adoption

    The UPI-CBDC interoperability leverages the widespread use of UPI to boost digital rupee adoption.

    • More than 70 mobile apps and 50 million merchants already accept UPI payments.
    • Integrating UPI with CBDC simplifies transactions, increasing the digital rupee’s utility.
    • Prominent banks like State Bank of India, HDFC Bank, and Axis Bank have introduced UPI interoperability on their digital rupee platforms.
    • This seamless integration is expected to transform the digital currency landscape, driving its acceptance and utilization.

    Conclusion

    • The UPI-CBDC interoperability marks a significant milestone in India’s digital payment ecosystem.
    • By merging the familiarity of UPI with the innovation of CBDC, the retail digital rupee becomes more accessible, user-friendly, and efficient.
    • This strategic integration is poised to accelerate the adoption of digital currencies, reshaping the way transactions are conducted in the country.

  • The State Hunger Index (SHI)

    What’s the news?

    • Despite boasting the world’s largest public distribution system and comprehensive food security schemes, India’s standing on the Global Hunger Index (GHI) remains alarming.

    Central idea

    • The 2022 GHI ranked India a staggering 107 out of 121 nations, trailing behind Nigeria (103) and Pakistan (99). The GHI, encompassing calorie undernourishment, child malnutrition, and under-five mortality dimensions, highlights India’s ongoing battle against these challenges.

    Extent of the Issue

    • The State of Food Security and Nutrition in the World report for 2022 reveals a staggering statistic – India is home to approximately 224.3 million undernourished individuals.
    • Alarming disparities surface among various states, prompting the utilization of subnational data to develop a more nuanced and localized hunger index.
    • By harnessing such data, India can assess the extent of undernourishment at the state and union territory level, a crucial step towards achieving the Sustainable Development Goals aimed at eradicating hunger and malnutrition.

    The State Hunger Index (SHI)

    • Indicators: The SHI is derived from the Global Hunger Index (GHI) framework, utilizing four main indicators:
      • Prevalence of stunting, wasting, and under-five mortality among children below five years of age.
      • Body Mass Index (BMI) undernourishment among the working-age population.
    • Calorie Undernourishment Replacement: Calorie undernourishment, a GHI indicator, is replaced by BMI undernourishment due to data unavailability post-2012.
    • Data Sources: SHI calculations involve data from various sources, including:
      • National Family Health Survey (NFHS-5)
      • Longitudinal Ageing Study in India (LASI)
    • Calculation: Normalized values of the indicators are combined using techniques recommended by the GHI.
    • Score Range and Categories:
      • SHI scores range from 0 to 100.
      • Higher scores indicate higher hunger levels.
      • The categories of SHI scores are as follows:
        • Below 10: Low hunger
        • 10-20: Moderate hunger
        • 20-30: Serious hunger
        • 30-40: Alarming hunger
        • 50 or above: Extremely alarming hunger

    Findings of the State Hunger Index (SHI)

    • Alarming Hunger Levels: States like Bihar, Jharkhand, and Chhattisgarh have alarmingly high SHI scores of 35, indicating significant hunger levels.
    • Moderate Hunger Levels: States such as Gujarat, Uttar Pradesh, Assam, Odisha, Madhya Pradesh, Tripura, Maharashtra, and West Bengal score above the national average (29), indicating moderate hunger levels.
    • Lower Hunger Levels: Chandigarh stands out with a notably low SHI score of 12, suggesting relatively lower hunger levels.
    • Moderate Hunger Category: States like Sikkim, Puducherry, and Kerala have SHI scores below 16, placing them in the ‘moderate hunger’ category.
    • Serious Hunger Concerns: Several states score below the national average but above 20, pointing to serious hunger challenges in these regions.

    Calorie Undernourishment: A Critical Challenge

    • Deteriorating GHI Score: Over the past few years, India’s Global Hunger Index (GHI) score has worsened primarily due to the increasing prevalence of calorie undernourishment. This underscores the urgent need to address this challenge effectively.
    • Escalating Proportions: Data from the Food and Agriculture Organization reveals that the proportion of calorie undernourishment has been on the rise since 2017, reaching a concerning 16.3% in 2020. This trend mirrors statistics from over a decade ago, such as those from 2009.
    • Government Disputes and Data Concerns: Despite these alarming figures, the Indian government has raised doubts about the accuracy of the data and methodologies employed in calculating the GHI. However, the absence of empirical evidence to support these disputes leaves room for further clarity.
    • Data Limitations: Notably, a challenge in understanding the scale of calorie undernourishment stems from the lack of recent National Sample Survey (NSS) rounds on nutritional intake since 2011-12. This survey previously offered insights into the prevalence of undernourishment at both national and subnational levels.
    • Impact on Health and Development: Calorie undernourishment directly affects health and development, leading to weakened immune systems, stunted growth, impaired cognitive development, and increased susceptibility to diseases.
    • Economic and Social Implications: The persistence of calorie undernourishment has far-reaching socio-economic consequences, hindering productivity, reducing human capital potential, and perpetuating the cycle of poverty.

    Way forward

    • Urgent Focus on Calorie Undernourishment: Recognize the urgent need to address calorie undernourishment, which has contributed to India’s declining GHI score.
    • Reviving NSS Rounds: Prioritize conducting new National Sample Survey (NSS) rounds on nutritional intake to obtain updated and accurate data on undernourishment levels.
    • Evidence-Based Approach: Encourage the Indian government to substantiate their concerns about GHI data accuracy with empirical evidence.
    • Collaborative Efforts: Collaborate between government agencies, NGOs, researchers, and communities to formulate and implement targeted strategies.
    • Alignment with SDGs: Align efforts with Sustainable Development Goals (SDGs), particularly Goal 2 focused on eradicating hunger and malnutrition.

    Conclusion

    • While the GHI is not immune to criticism regarding its methodology and aggregation techniques, it remains a critical tool for gauging undernourishment and child nutrition. Despite strides in reducing extreme poverty, disparities persist in addressing food insecurity, hunger, and child malnutrition. India must prioritize targeted interventions to overcome these challenges and fulfill its commitment to sustainable development.

  • Progress track: PM Jan Dhan Yojana’s Milestones

    jan dhan

    Central Idea

    • As the PM Jan Dhan Yojana (PMJDY) completes 9 years, its remarkable journey is marked by over 50 crore bank accounts and deposits exceeding ₹2 lakh crore.
    • The scheme’s success lies in its commitment to financial inclusion, creating avenues for underprivileged segments to access banking services and government schemes.

    What is PM Jan Dhan Yojana (PMJDY)?

    • The PMJDY is a financial inclusion program launched by the Indian government in 2014.
    • It is National Mission for Financial Inclusion to ensure access to financial services, namely, a basic savings & deposit accounts, remittance, credit, insurance, pension in an affordable manner.
    • Under the scheme, a basic savings bank deposit (BSBD) account can be opened in any bank branch or Business Correspondent (Bank Mitra) outlet, by persons not having any other account.

    Benefits under PMJDY

    • One basic savings bank account is opened for unbanked person.
    • There is no requirement to maintain any minimum balance in PMJDY accounts.
    • Interest is earned on the deposit in PMJDY accounts.
    • Rupay Debit card is provided to the account holder.
    • Accident Insurance Cover of Rs.1 lakh (enhanced to Rs. 2 lakh to new PMJDY accounts opened after 28.8.2018) is available with RuPay card issued to the PMJDY account holders.
    • An overdraft (OD) facility up to Rs. 10,000 to eligible account holders is available.

    Is PMJDY a success?

    • Dormancy of accounts: The PMJDY scheme has led to an increase in the number of bank accounts in rural areas. The percentage of zero-balance accounts has significantly decreased from 58% in March 2015 to a mere 8%, indicating a more active engagement with banking services.
    • Low or no transactions: Insurance coverage for the account holder is linked to their transaction history, and many accounts remain frozen due to lack of transactions, taking several weeks or months to reactivate.
    • False promise of overdraft: The promised overdraft facility of Rs 5000 for new account holders has not been provided as promised, leading to scepticism about the scheme’s success.
    • Payments bottleneck: The lack of proper connectivity, electricity, internet, and ATM facilities in rural areas has hindered the activation of RuPay cards and PIN numbers, which should have been considered before implementing such a large-scale program.

    Future prospects

    • Voluntary Participation: The government aims to persuade PMJDY account holders to opt for voluntary micro-insurance schemes like PMJJBY and Pradhan Mantri Suraksha Bima Yojana.
    • Persuasion over Compulsion: The focus is on financial literacy campaigns, special drives, and awareness programs conducted by banks to help account holders make informed choices.
    • Multi-Level Coordination: Collaboration with line ministries, including Anganwadi and Asha workers, enhances awareness campaigns and ensures wider coverage.
    • Leveraging Databases: Utilization of databases like the E-Shram portal for labour-related information aids in identifying potential beneficiaries.