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GS Paper: GS3

  • DRDO tests Autonomous Flying Wing Technology Demonstrator

    The Defence Research and Development Organisation (DRDO) has successfully carried out the maiden test flight of a new Unmanned Aerial Vehicle (UAV), an autonomous Flying Wing Technology Demonstrator, from the Aeronautical Test Range, Chitradurga, Karnataka.

    About the Indigenous Drone

    • The Unmanned Aerial Vehicle (UAV) is powered by a small turbofan engine.
    • It is developed under unmanned combat aerial vehicle (UCAV) programme.
    • It is designed and developed by Aeronautical Development Establishment (ADE), Bengaluru, a premier research laboratory of DRDO.
    • The engine is Russian TRDD-50MT originally designed for cruise missiles.
    • A small turbo fan engine is being developed indigenously for meeting the requirement.

    Various initiatives by DRDO

    • DRDO is in the process of developing UAVs of different classes to met the requirements of the armed forces.
    • Rustom-2, the indigenous Medium Altitude Long Endurance (MALE) UAV under development, had crossed a milestone by reaching an altitude of 25,000 feet and an endurance of 10 hours.
    • It is now being designed to reach an altitude of 30,000 feet and 18 hours endurance.
    • An Unmanned Combat Aerial Vehicle is also on the drawing board.

    Significance of the development

    • Operating in a fully autonomous mode, the aircraft exhibited a perfect flight, including take-off, way point navigation and a smooth touchdown.
    • This flight marks a major milestone in terms of proving critical technologies towards the development of future unmanned aircraft.
    • This is a significant step towards self-reliance in strategic defence technologies.

     

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  • [pib] Coalition for Disaster Resilient Infrastructure (CDRI)

    The Union Cabinet has approved the categorization of the Coalition for Disaster Resilient Infrastructure (CDRI) as an ‘International Organization’.

    What is the news?

    • The cabinet also signed as the Headquarters Agreement (HQA) with CDRI for granting it the exemptions, immunities and privileges as contemplated under the United Nations (Privileges & Immunities) Act, 1947.
    • This will provide CDRI an independent and international legal persona so that it can efficiently and effectively carry out its functions internationally.

    What is CDRI?

    • The CDRI is an international coalition of countries, UN agencies, multilateral development banks, the private sector, and academic institutions that aim to promote disaster-resilient infrastructure.
    • Its objective is to promote research and knowledge sharing in the fields of infrastructure risk management, standards, financing, and recovery mechanisms.
    • It was launched by the Indian PM Narendra Modi at the 2019 UN Climate Action Summit in September 2019.
    • CDRI’s initial focus is on developing disaster-resilience in ecological, social, and economic infrastructure.
    • It aims to achieve substantial changes in member countries’ policy frameworks and future infrastructure investments, along with a major decrease in the economic losses suffered due to disasters.

    Its inception

    • PM Modi’s experience in dealing with the aftermath of the 2001 Gujarat earthquake” as the chief minister led him to the idea.
    • The CDRI was later conceptualized in the first and second edition of the International Workshop on Disaster Resilient Infrastructure (IWDRI) in 2018-19.
    • It was organized by the National Disaster Management Authority (NDMA), in partnership with the UN Office for Disaster Risk Reduction (UNDRR), the UN Development Programme, the World Bank, and the Global Commission on Adaptation.

    Its diplomatic significance

    • The CDRI is the second major coalition launched by India outside of the UN, the first being the International Solar Alliance.
    • Both of them are seen as India’s attempts to obtain a global leadership role in climate change matters and were termed as part of India’s stronger branding.
    • India can use the CDRI to provide a safer alternative to China’s Belt and Road Initiative (BRI) as well.

    Why designated as International Organization?

    • Deputing experts to other countries
    • Deploying funds globally and receive contributions from member countries
    • Making available technical expertise to assist countries
    • Imparting assistance to countries in adopting appropriate risk governance arrangements and strategies for resilient infrastructure
    • Aligning with the Sustainable Development Goals (SDGs), the Paris Climate Agreement and the Sendai Framework for Disaster Risk Reduction
    • Leveraging international engagement to foster disaster-resilient infrastructure at home; and,
    • Providing Indian scientific and technical institution as well as infrastructure developers an opportunity to interact with global experts.

    Try this PYQ:

    Q.Consider the following statements:

    1. Climate and Clean Air Coalition (CCAC) to Reduce Short Lived Climate Pollutants is a unique initiative of G20 group of countries
    2. The CCAC focuses on methane, black carbon and hydrofluorocarbons.

    Which of the above statements is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

     

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  • UAPA necessary to act against terrorists: Minister

    A Union Minister has said it was necessary to have certain laws like the Unlawful Activities Prevention Act (UAPA) so that action could be taken against terrorists and those who “behead other people”.

    Unlawful (Activities) Prevention Act (UAPA)

    • The UAPA is aimed at effective prevention of unlawful activities associations in India.
    • Its main objective was to make powers available for dealing with activities directed against the integrity and sovereignty of India
    • It is an upgrade on the Terrorist and Disruptive Activities (Prevention) Act TADA, which was allowed to lapse in 1995 and the Prevention of Terrorism Act (POTA) was repealed in 2004.
    • It was originally passed in 1967 under the then Congress government led by former Prime Minister Indira Gandhi.
    • Till 2004, “unlawful” activities referred to actions related to secession and cession of territory. Following the 2004 amendment, “terrorist act” was added to the list of offences.

    Major feature: Designation of Terrorists

    • The Centre had amended UAPA, 1967, in August 2019 to include the provision of designating an individual as a terrorist.
    • Before this amendment, only organisations could be designated as terrorist outfits.
    • Section 15 of the UAPA defines a “terrorist act” as any act committed with intent to threaten or likely to threaten the unity, integrity, security, economic security, or sovereignty of India or with intent to strike terror or likely to strike terror in the people or any section of the people in India or in any foreign country.
    • The original Act dealt with “unlawful” acts related to secession; anti-terror provisions were introduced in 2004.

    Who makes such designation?

    • The UAPA (after 2019 amendment)seeks to empower the central government to designate an individual a “terrorist” if they are found committing, preparing for, promoting, or involved in an act of terror.
    • A similar provision already exists in Part 4 and 6 of the legislation for organizations that can be designated as a “terrorist organisations”.

    How individuals are declared terrorists?

    • The central government may designate an individual as a terrorist through a notification in the official gazette, and add his name to the schedule supplemented to the UAPA Bill.
    • The government is not required to give an individual an opportunity to be heard before such a designation.
    • At present, in line with the legal presumption of an individual being innocent until proven guilty, an individual who is convicted in a terror case is legally referred to as a terrorist.
    • While those suspected of being involved in terrorist activities are referred to as terror accused.

    What happens when an individual is declared a terrorist?

    • The designation of an individual as a global terrorist by the United Nations is associated with sanctions including travel bans, freezing of assets and an embargo against procuring arms.
    • The UAPA, however, does not provide any such detail.
    • It also does not require the filing of cases or arresting individuals while designating them as terrorists.

    Removing the terrorist tag

    • The UAPA gives the central government the power to remove a name from the schedule when an individual makes an application.
    • The procedure for such an application and the process of decision-making will is decided by the central government.
    • If an application filed by an individual declared a terrorist is rejected by the government, the UAPA gives him the right to seek a review within one month after the application is rejected.
    • The central government will set up the review committee consisting of a chairperson (a retired or sitting judge of a High Court) and three other members.
    • The review committee is empowered to order the government to delete the name of the individual from the schedule that lists “terrorists” if it considers the order to be flawed.
    • Apart from these two avenues, the individual can also move the courts to challenge the government’s order.

     

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  • What is PSLV Orbital Experimental Module (POEM)?

    The ISRO has launched three Singaporean satellites in precise orbit through the PSLV Orbital Experimental Module or ‘POEM’.

    What is POEM?

    • The POEM is a platform that will help perform in-orbit experiments using the final, and otherwise discarded, stage of ISRO’s workhorse rocket, the Polar Satellite Launch Vehicle (PSLV).
    • The PSLV is a four-stage rocket where the first three spent stages fall back into the ocean, and the final stage (PS4) — after launching the satellite into orbit — ends up as space junk.
    • However, in PSLV-C53 mission, the spent final stage will be utilised as a “stabilised platform” to perform experiments.
    • POEM is carrying six payloads, including two from Indian space start-ups Digantara and Dhruva Space.

    Features of POEM

    • POEM has a dedicated Navigation Guidance and Control (NGC) system for attitude stabilisation, which stands for controlling the orientation of any aerospace vehicle within permitted limits.
    • The NGC will act as the platform’s brain to stabilize it with specified accuracy.
    • POEM will derive its power from solar panels mounted around the PS4 tank, and a Li-Ion battery.
    • It will navigate using four sun sensors, a magnetometer, gyros & NavIC.
    • It carries dedicated control thrusters using Helium gas storage. It is enabled with a telecomm and feature.

    Has ISRO repurposed and used PS4 rocket junk earlier?

    • The Indian space agency first demonstrated the capability of using PSLV-C44 as an orbital platform in 2019.
    • It injected Microsat-R and Kalamsat-V2 satellites into their designated orbits.
    • The fourth stage in that mission was kept alive as an orbital platform for space-based experiments.
    • While in that mission, the fourth stage had Li-Ion batteries, solar panels are an addition this time.
    • The latest repurposing and upgrade of the fourth stage of the PSLV rocket involves the stabilization of the orbital platform.

     

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  • What are Primary Agricultural Credit Society (PACS)?

    The Cabinet Committee on Economic Affairs (CCEA) has approved a proposal to digitise around 63,000 primary agricultural credit societies (PACS).

    What are the Primary Agricultural Credit Societies (PACS)?

    • PACS is a basic unit and smallest co-operative credit institutions in India.
    • In 1904 the first Primary Agricultural Credit Society (PACS) was established.
    • It works on the grassroots level (gram panchayat and village level).
    • PACS is the final link between the ultimate borrowers, i.e., rural people, on the one hand, and the higher agencies, i.e., Central cooperative bank, state cooperative bank, and Reserve Bank of India, on the other.

    Who regulates PACS?

    • PACS are registered under the Co-operative Societies Act and also regulated by the RBI.
    • They are governed by the “Banking regulation Act-1949” and Banking Laws (Co-operative societies) Act 1965.

    Various objectives of PACS

    1. To raise capital for the purpose of making loans and supporting members’ essential activities.
    2. To collect deposits from members with the goal of improving their savings habit.
    3. To supply agricultural inputs and services to members at reasonable prices,
    4. To arrange for the supply and development of improved breeds of livestock for members.
    5. To make all necessary arrangements for improving irrigation on land owned by members.
    6. To encourage various income-generating activities through supply of necessary inputs and services.

    Functions of PACS

    • As registered cooperative societies, PACS have been providing credit and other services to their members.
    • PACS typically offer the following services to their members:
    1. Input facilities in the form of a monetary or in-kind component
    2. Agriculture implements for hire
    3. Storage space

    Who can form PACS?

    • A primary agricultural credit society can be formed by a group of ten or more people from a village. The society’s management is overseen by an elected body.
    • The membership fee is low enough that even the poorest agriculturist can join.
    • Members of the society have unlimited liability, which means that each member assumes full responsibility for the society’s entire loss in the event of its failure.

    What capitalizes PACS?

    • The primary credit societies’ working capital is derived from their own funds, deposits, borrowings, and other sources.
    • Share capital, membership fees, and reserve funds are all part of the company’s own funds.
    • Deposits are made by both members and non-members.
    • Borrowings are primarily made from central cooperative banks.

    Why need digitization?

    • PACS account for 41 % (3.01 Cr. farmers) of the KCC loans given by all entities in the country and 95 % of these KCC loans (2.95 Cr. farmers) through PACS are to the small and marginal farmers.
    • The other two tiers viz. State Cooperative Banks (StCBs) and District Central Cooperative Banks (DCCBs) have already been automated by the NABARD and brought on Common Banking Software (CBS).
    • Majority of PACS have so far been not computerized and still functioning manually resulting in inefficiency and trust deficit.

    Significance of digitization

    • Computerization of PACS will increase their transparency, reliability and efficiency, and will also facilitate the accounting of multipurpose PACS.
    • Along with this, it will also help PACS to become a nodal centre for providing services such as direct benefit transfer (DBT), Interest subvention scheme (ISS), crop insurance scheme (PMFBY), and inputs like fertilizers and seeds.

    Try this PYQ from CSP 1999:

    Q.The farmers are provided credit from a number of sources for their short and long term needs. The main sources of credit to the farmers include-

    (a) the Primary Agricultural Cooperative Societies, commercial banks, RRBs and private money lenders

    (b) the NABARD, RBI, commercial banks and private money lenders

    (c) the District Central Cooperative Banks (DCCB), the lead banks, IRDP and JRY

    (d) the Large Scale Multi-purpose Adivasis Programme, DCCB, IFFCO and commercial banks

     

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  • Govt. hikes GST for household items

    The Goods and Services Tax (GST) Council has decided to hike and lower GST on certain commodities.

    What is the news?

    • From July 18, tax hikes will kick in for over two dozen goods and services, ranging from unbranded food items, curd and buttermilk to low-cost hotels, cheques and maps.
    • Tax rates will be lowered for about half-a-dozen goods and services, including ropeways and truck rentals where fuel costs are included.
    • It scrapped GST for items imported by private vendors for use by defence forces.

    What is GST?

    • GST launched in India on 1 July 2017 is a comprehensive indirect tax for the entire country.
    • It is charged at the time of supply and depends on the destination of consumption.
    • For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).
    • GST, being a consumption-based tax, resulted in loss of revenue for manufacturing-heavy states.

    What are GST Slabs?

    • In India, almost 500+ services and over 1300 products fall under the 4 major GST slabs.
    • There are five broad tax rates of zero, 5%, 12%, 18% and 28%, plus a cess levied over and above the 28% on some ‘sin’ goods.
    • The GST Council periodically revises the items under each slab rate to adjust them according to industry demands and market trends.
    • The updated structure ensures that the essential items fall under lower tax brackets, while luxury products and services entail higher GST rates.
    • The 28% rate is levied on demerit goods such as tobacco products, automobiles, and aerated drinks, along with an additional GST compensation cess.

    Why rationalize GST slabs?

    • From businesses’ viewpoint, there are just too many tax rate slabs, compounded by aberrations in the duty structure through their supply chains with some inputs are taxed more than the final product.
    • These are far too many rates and do not necessarily constitute a Good and Simple Tax.
    • Multiple rate changes since the introduction of the GST regime in July 2017 have brought the effective GST rate to 11.6% from the original revenue-neutral rate of 15.5%.
    • Merging the 12% and 18% GST rates into any tax rate lower than 18% may result in revenue loss.

    Haven’t GST revenues been hitting new records?

    • Yes, they have – GST revenues have scaled fresh highs in three of the first four months of 2022, going past ₹1.67 lakh crore in April.
    • But there is another key factor — the runaway pace of inflation.
    • Wholesale price inflation, which captures producers’ costs, has been over 10% for over a year and peaked at 15.1% in April.
    • Inflation faced by consumers on the ground has spiked to a near-eight year high of 7.8% in April.
    • The rise in prices was the single most important factor for higher tax inflows along with higher imports.

     

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  • CAPSTONE: NASA’s satellite, newly launched

    NASA has launched CAPSTONE, a microwave oven-sized CubeSat weighing just 55 pounds (25 kg).

    What is CAPSTONE?

    • CAPSTONE, short for Cislunar Autonomous Positioning System Technology Operations and Navigation Experiment, is designed to test a unique, elliptical lunar orbit.
    • It aims to help reduce risk for future spacecraft by validating innovative navigation technologies, and by verifying the dynamics of the halo-shaped orbit.

    Its launch

    • It is heading toward an orbit intended in the future for Gateway, a Moon-orbiting outpost that is part of NASA’s Artemis program.
    • The orbit is known as a near-rectilinear halo orbit (NRHO).
    • It is significantly elongated, and is located at a precise balance point in the gravities of Earth and the Moon.
    • This offers stability for long-term missions like Gateway, NASA said on its website.

    Mission details

    • CAPSTONE will enter NRHO, where it will fly within 1,600 km of the Moon’s North Pole on its near pass and 70,000 km from the South Pole at its farthest.
    • The spacecraft will repeat the cycle every six-and-a-half days and maintain this orbit for at least six months to study dynamics.

     

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  • Downturn in tech startup ecosystem

    Context

    The startup ecosystem which has been in overdrive for the past few years — propelled by a combination of factors, but largely, by the era of cheap money — is now showing signs of weakness.

    Factors that helped fuel the tech startups

    • With the combination of accelerated financial inclusion (bank accounts), ease of identification (Aadhaar) and connectivity (mobile phones) it was said that it is ultimately a bet on the Indian consumer, and the economy, not on government regulations/policies.
    • Low-interest rates: In the era of cheap money and negative real interest rates, uncomfortable questions over the true market size and profitability were swept under the rug.
    • Growth fuelled by cash burn: High cash burn rates were the norm as both startups and investors sought growth by subsidising the customer.

    What is going wrong?

    • Lack of profitability: Among the startups that have gone public in recent times, Paytm’s losses stood at Rs 2,396 crore in 2021-22, while for Zomato and PB Fintech (PolicyBazaar) losses were Rs 1,222 crore and Rs 832 crore respectively.
    • Drying-up of investment: Sure, investors will continue to pour money.
    • Some early age start-ups will continue to be funded, as will some of the more mature ones.
    • But investors are likely to be more circumspect in their dealings.
    • Impact on valuation: There are also reports of startups in diverse markets, ranging from Ola to OYO, planning to raise funds at lower valuations.
    • Among those who have gone public in recent times, most are trading much below their listing price.
    • Tighter financial conditions, a re-rating of the market, will impact both fundraising efforts and valuations.

    Lack of discretionary spending capacity

    • Many numbers were given as indicators of the size of the market or TAM (the total addressable market).
    • Smartphone users: One such number thrown around is the smartphone users in the country — some have pegged this at 500 million.
    • UPI transactions: The transactions routed through the UPI platform — in May there were almost six billion transactions worth Rs 10 trillion.
    • Bank account holders: We have the near universality of bank accounts.
    • But in reality, for most of these startups, the market or even the potential market is just a fraction of this.
    • There aren’t that many consumers with significant discretionary spending capacity, and those with the capacity aren’t increasing their spending as these companies would hope.
    • No increase in spending: What is equally worrying is the complete absence of any increase in spending by even these consumers who would have the capacity to spend more.
    • While more consumers are on-board digital payment platforms — Paytm has about 70 million monthly transacting users — these numbers suggest that when it comes to consumers with considerable discretionary spending, the size of the market shrivels considerably.

    Conclusion

    Tech startups are about to witness a tough time ahead. Some startups will survive this period. Many may not. And changes in the dynamics of private markets will also have a bearing on public markets.

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  • online marketplace

    Context

    The proliferation of a wide range of e-commerce platforms has created convenience and increased consumer choice. However, these platforms also have given rise to several concerns as well.

    What is e-commerce ?

    • Electronic commerce or e-commerce is a business model that lets firms and individuals buy and sell things over the Internet.
    • Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.
    • India’s e-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51%, the highest in the world.
    • The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest e-commerce market in the world by 2034.

    Advantages of e-Commerce

    • The process of e-commerce enables sellers to come closer to customers that lead to increased productivity and perfect competition. The customer can also choose between different sellers and buy the most relevant products as per requirements, preferences, and budget. Moreover, customers now have access to virtual stores 24/7.
    • e-Commerce also leads to significant transaction cost reduction for consumers.
    • e-commerce has emerged as one of the fast-growing trade channels available for the cross-border trade of goods and services.
    • It provides a wider reach and reception across the global market,with minimum investments. It enables sellers to sell to a global audience and also customers to make a global choice. Geographical boundaries and challenges are eradicated/drastically reduced.
    • Through direct interaction with final customers, this e-commerce process cuts the product distribution chain to a significant extent. A direct and transparent channel between the producer or service provider and the final customer is made. This way products and services that are created to cater to the individual preferences of the target audience.
    • Customers can easily locate products since e-commerce can be one store set up for all the customers’ business needs
    • Ease of doing business: It makes starting, managing business easy and simple.
    • The growth in the e-commerce sector can boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.

    Issues created by the e-commerce sites

    • Predatory pricing: These companies resort to predatory pricing to acquire customers even as they suffer persistent financial losses.
    • SEBI is rightly revisiting the valuation norms of such companies looking to list on the stock exchange.
    • Exclusionary practice: They take away choice from suppliers and consumers.
    • This, in the long run, can be viewed as an exclusionary practice that eliminates other players from the market. 
    • Lack of level playing field: While neutrality is the fundamental basis of a marketplace and a level playing field is in the fitness of things, claims of outfits such as Flipkart or Amazon to be a marketplace for a wide variety of sellers can be questioned.
    • A few select sellers, who are generally affiliated with the platform, reap the benefits of greater visibility and better terms of trade — reduced commissions and platform-funded discounts.
    • Undue advantage to associated companies: The associate companies are prominent sellers on their platform.
    • It is alleged that undue advantage is given while recommending or listing these products.
    • Cartelisation: Online travel aggregators are often accused of cartelisation.
    • Information asymmetry: The aggregators gather shopping habits, consumer preferences, and other personal data.
    • The platforms are accused of using this data to create and improve their own products and services, taking away business from other sellers on their platform.
    • They capitalise on this data and information about other brands to launch competing products on their marketplace.
    • This information asymmetry is exploited by the aggregators to devour organisations they promise to support.
    • Problems in dispute resolution mechanism: Another issue often noticed is the lack of a fair and transparent dispute resolution mechanism for sellers on these platforms.
    • Delayed payments, unreasonable charges, and hidden fees are common occurrences.
    • Unreasonable and one-sided contracts allow travel aggregators to have a disparity clause (in the rates) which allows them to offer rooms at a much cheaper rate but bars the hotels from doing so.

    Impact of the e-commerce

    • The online aggregator platforms have also damaged large segments of small and medium businesses through their dominant position and the malpractices this position allows them to indulge in.
    • The ultimate loss bearer is the consumer who will have a reduced bargaining position.

    Way forward

    • Comprehensive rules: It is time that a set of comprehensive rules and regulations is put together.
    • These regulations need to be inclusive, should eliminate the conflicts of interest inherent in current market practices, and prevent any anti-competitive practices.
    • Model agreement: A model agreement that is fair and allows a level playing field between the aggregators and their business partners should be implemented.
    • Learning from EU act: There is a lot to learn from the Digital Markets Act of the EU that seeks to address unfair practices by these gatekeepers.
    • Need for dispute resolution mechanism: Strong and quick grievance redressal and dispute resolution mechanisms should be established.
    • Punitive penalties: The rules should allow for punitive penalties for unfair practices.
    • Fair competition rules: Market dominance and subsequent invoking of fair competition rules should be triggered at the level of micro-markets and for product segments.

    Conclusion

    The nature of our success in dealing with this change will lie in the ways in which we deal with the concerns of all players.

     

  • India’s gig workforce to reach 2.35 Cr by 2030: NITI Aayog

    A NITI Aayog report has identified that is expected to grow to 2.35 crore by 2029-30.

    Do you know?

    According to a study released by NITI Aayog, the number of gig workers in India is estimated to be 77 lakh in 2020-21. Isn’t it too low to imagine? Seems like there is huge under-reporting.

    What is the Gig Economy?

    • In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees.
    • A gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career. e.g Employee models of Uber, Ola, Swiggy etc
    • In this economy, tech-enabled platforms connect the consumer to the gig worker to hire services on a short-term basis.
    • Gig workers include self-employed, freelancers, independent contributors and part-time workers.

    Where does gig culture exist in Indian Economy?

    • Sectors such as media, real estate, legal, hospitality, technology-help, management, medicine, allied and education are already operating in gig culture.
    • The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and demand for flexible lifestyles.

    Key Drivers for Gig Economy

    • Unconventional work approach by millennials: Hectic lifestyles of employees in private sectors have created a negative perception of full-time employment among millennials.
    • Emergence of a start-up culture: The start-up ecosystem in India has been developing rapidly. For start-ups, hiring full-time employees leads to high fixed costs and therefore, contractual freelancers are hired for non-core activities.
    • MNCs are hiring contractual employees: MNCs are adopting flexi-hiring options, especially for niche projects, to reduce operational expenses after the pandemic.
    • Rise in freelancing platforms: Rise in freelancing platforms has also aided in the development of the gig economy.
    • Business Models: Gig employees work on various compensation models such as fixed-fee (decided during contract initiation), time & effort, actual unit of work delivered and quality of outcome.
    • Impact of Covid-19: Many laid-off employees are focusing on developing skills to avail freelance job opportunities and become a part of this burgeoning economy.

    Why is Gig Economy preferred by workers?

    • Profit through multiple work: One can work on freelancing as well as work full-time somewhere else.
    • Women empowerment: It is very beneficial for womenwho work on this concept when they cannot continue their work or take a break from career due to marriage or child birth.
    • Leisure and dependency: Retired peoplecan stay active after retirement as this will keep them engaged away from loneliness and depression and can earn as well on their own.
    • Flexibility and diversity to the workers: It offers flexibility when workers can work according to their convenience and schedule rather than routine like in full-time jobs.
    • Work from home: The travel costs and energy to travel to the workplace is reduced.

    Why is Gig Economy preferred by Employers?

    • Efficiency, efficacy and productivity of workers in the gig economy are much more than that of a stable full-time job.
    • More rconomical for employers-when employment givers can’t afford to hire full-time workers, they hire people for specific projects and pay them.
    • Start-up companies and entrepreneurs – who do not have big financial space – can grow only if they can leverage the services of contract employees or freelancers.
    • In a gig economy, businesses save resources in terms of benefits, office space and training.
    • Competition and efficiency among workers is improved.

    Challenges faced in Gig economy

    • No perks and benefits: There are no labour welfare emoluments like pension, gratuity, etc. for the workers.
    • Job insecurity: Gig workers may face unfair termination. They may also attain minimum wages and less paid leave.
    • No legal protection: Workers do not have the bargaining power to negotiate a fair deal with their employers.
    • Unionization of workers will be difficult.
    • Confidentiality of documents etc. of the workplace is not guaranteed
    • Urban nature: The gig economy is not accessible for people in many rural areas where internet connectivity and electricity is unavailable.

    New classification by NITI Aayog: Platform vs. Non-platform Workers

    • The NITI Aayog report broadly classifies gig workers into platform and non-platform-based workers.
    • The consequent platformisation of work has given rise to a new classification of labour — platform labour — falling outside of the purview of the traditional dichotomy of formal and informal labour.
    • While platform workers are those whose work is based on online software applications or digital platforms.
    • Non-platform gig workers are generally casual wage workers and own-account workers in the conventional sectors, working part-time or full time.

    Recommendations made by NITI Aayog

    • The NITI Aayog has recommended steps to provide social security, including paid leave, occupational disease and accident insurance, support during irregularity of work and pension plans for the country’s gig workforce.
    • It has also recommended introducing a ‘Platform India initiative’ on the lines of the ‘Startup India initiative’.

     

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