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[op-ed snap] Why income inequality in India may be fuelling populist politics

Note4students

Mains Paper 3: Economy | Inclusive growth and issues arising from it.

From UPSC perspective, the following things are important:

Prelims level: Basics aspects of income inequality in India.

Mains level: The news-card analyses the growing concern on income inequality in India and populist politics over it, in a brief manner.


Context

  • After Congress party promised a nationwide farm loan waiver if voted to power in the 2019 Lok Sabha elections, the ruling party is contemplating on a nationwide farm income support scheme.

Background

  • While the recourse to populism exposes the limited imagination of India’s political class, it also suggests an urgent redistributive urge in one of the world’s fastest growing economies.
  • This urge seems to be shaped by the growing concern on income inequality in India.

 Growing concern on income inequality in India

  • Data from the World Values Survey (WVS) shows that among large economies for which consistent time series data is available for the past two decades, India has seen the highest increase in the share of people who think that incomes should be made more equal in their country.
  • In 1989-93, barely 13% of Indian respondents said incomes should be made more equal.
  • By 2010-14, this figure had increased to 48%—the highest in the world.
  • The latest round of the WVS (2010-14) also asked respondents whether they thought “an essential characteristic of democracy is that the state should make incomes equal”.
  • Once again, India, along with Turkey, had the highest share of respondents (32%) who replied in the affirmative.
  • Thus, even before inequality became fashionable in the post-Piketty world, concern about inequality has been growing in the country.
  • One big reason for this is the country’s high levels of inequality.
  • Inequality in the country may not be as high as the French economist would have made us believe, but it is worryingly high.
  • Even household surveys, which are likely to underestimate inequality, present a disturbing picture of inequality in India.
  • Estimates of income inequality provided by the nationally representative India Human Development Survey (IHDS) suggest that income inequality is far higher than consumption inequality and is comparable to countries in Latin America, infamous for their high levels of inequality.

Estimates of growing inequality

  • The levels of wealth inequality are higher, data from the All India Debt and Investment Survey (AIDIS) analysed by the economists Ishan Anand and Anjana Thampi show.
  • Their estimates show that the top 1% in India accounted for nearly 28% of the country’s wealth in 2012, an increase of 11 percentage points since 1991.

Implications

  • The rise in income inequality also manifests itself in the slowdown in wages across industries.
  • Data from the Annual Survey of Industries (ASI) shows that wages of workers have lagged productivity growth even as managerial compensation has seen an impressive rise.
  • Over the past three decades, the wage share of net value added has been declining even as the profit share has been rising, the data shows.
  • In effect, the productivity growth in the industrial sector has benefited managers and owners far more than blue-collar workers.

Why upper castes tend to be more affluent?

  • Given that white-collar workers accounted for less than a sixth of the workforce over the past two decades according to the ASI data, the gains from higher productivity and growth seem to have accrued only to a small minority.
  • The distribution of such white-collar jobs is very unequal. Data from IHDS shows that it is the upper castes who account for a disproportionately high share of white-collar jobs.
  • It is not surprising, therefore, upper castes also tend to be more affluent compared to other social groups.
  • The key difference between upper castes and other social groups lies in their greater access to education.
  • The rising premium on education in India’s job market and the absence of any discrimination against them has meant that upper castes have been able to access well-paying jobs more easily compared to other social groups and have, in turn, been able to maintain their position on the socioeconomic ladder.

Way Forward

  • Research by a team of World Bank economists showed last year that despite the improvements in educational mobility in the country, India has one of the highest levels of inequality in access to education.
  • As the inequities in opportunities across the country do not receive the attention they deserve, politicians are able to sell their populist cards and get away with that.
Electoral Reforms In India

[op-ed snap] Universal Basic Income can be funded by reducing subsidies to the rich

Note4students

Mains Paper 3: Economy | Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

From UPSC perspective, the following things are important:

Prelims level: Basics aspects of Universal basic income.

Mains level: The news-card analyses the issues and challenges in the implementation of universal basic income, in a brief manner.


Context

  • There are reports that the ruling party in Sikkim has announced Universal Basic Income Supplement (UBIS) in its election manifesto, and, more intriguingly, the Centre is considering such a measure “for people below the Poverty Line”.
  • The latter is a contradiction in terms since UBIS is an unconditional grant to all citizens, not just to the poor — that’s what “universal” means.

Background

  • Many people, who are much above the official poverty line, suffer from variety of insecurities.
  • For instance, farmers face weather and market risks but non-farmers also face several kinds of risks, including in their jobs, often in the informal sector, where some of them are refugees from agrarian and ecological distress or are victims of the recent disaster of demonetisation.

Case for UBIS

  • UBIS avoids the problem of deciphering who is poor and who is not, which is an intricate problem in India.
  • The India Human Development Survey found that in 2011-12 about half of the officially poor did not have the BPL card, while about one-third of the non-poor had it.
  • UBS is more a part of a citizen’s right to minimum economic security, a right which many countries recognise, but so far India does not, even though it should easily fall under the Supreme Court’s interpretation of the “right to life” in the Constitution.
  • Should the government give money to the riches like Ambanis as well? The answer could be a yes, as citizens they are entitled to it, just as they have the right to get police protection, even though they can afford their own protection.

How to fund UBIS?

  • Experts have suggested funding it from reducing some of the subsidies that are at present enjoyed mainly by the better-off, also taking a bit from the various tax concessions mostly to business (called “revenues foregone” in the Central Budget), and taxing the currently exempt wealth, inheritance, and long-term capital gains, and collecting more taxes from the currently under-assessed and under-taxed property values.
  • Only a quarter of the 10 per cent of GDP thus potentially mobilisable could go to UBIS; the rest can be spent on infrastructure, health and education.
  • This allows roughly a grant of about Rs 16,000 to each household.
  • If, to start with, it is given only to women, it’ll halve the cost (about Rs 2.1 trillion, at 1.25 per cent of the GDP).
  • The special treatment to women is recognition of the hard work most of them do for their households, and outside.
  • It is also a means to raise their (currently low) autonomy and status within the Indian family.

Challenges

  • The better-off (businessmen, large farmers, the salaried class) will not easily give up on the subsidies they have enjoyed all these years or pay substantially more taxes.
  • Experts are generally against the idea as UBIS merely adds significantly to the fiscal deficit or is funded by scaling down some of the current major anti-poverty programmes.
  • Since UBIS is to be given to the rich and the middle classes as well, it can be expensive.
  • According to some experts, a significant UBIS with a simultaneous increase in the taxes on the rich will help macro-economic stability, apart from assuaging the poor who will face some of the price rise in commodities or services, when subsidies are withdrawn.
  • For example, the price of urea will rise for all farmers, if the fertiliser subsidy is curtailed, even though most of the subsidy goes to large farmers and factories.
  • It is also important to keep in mind that if the declared UBIS amount is too small, only serving as a rhetorical token before elections, people will see through it as another electoral “jumla”.

Some practicalities of UBIS any policy-maker has to consider

  • How do you reach everybody in India when many people still do not have bank accounts or access to banking agents?
  • Aadhaar or some other form of identification will be necessary, but the horror stories one has heard about the poor being denied PDS because of the lack of Aadhaar authentication make one wary of bureaucratic callousness in this respect.
  • UBIS needs to be transparently linked right from the beginning to some cost of living index — this is particularly important because of the callous way Indian governments have let their contribution under the National Old Age Pensions Scheme stagnate at a measly Rs 200 per month per pensioner for the last 12 years.
  • UBIS could be different for adults and children, but one probably should not go that way because in the absence of proper age records it may give an opportunity to some corrupt officials.
  • How should the grant money be allocated between the Centre and the states? The state governments have to be part of the active negotiations.
  • Different states may have different fiscal capacities and also different kinds of logistical capabilities in reaching out to people particularly in remote areas. In the estimate for subsidies to the better-off, state-level subsidies have been included.
  • In the beginning, however, the central government may have to bear most of the cost, and the Finance Commission may have to work out the eventual modalities of allocation of the burden between the Centre and the states.

Way Forward

  • UBIS is a policy issue that requires government’s serious attention and deliberation.
  • It should not be considered as something to woo voters just before elections.

Should district mineral foundations be with state mining departments?

Note4students

Mains Paper 2: Governance | Mechanisms, laws, institutions and Bodies constituted for the protection and betterment of the vulnerable sections.

From UPSC perspective, the following things are important:

Prelims level: DMF

Mains level: Welfare of the mining affected people


News

  • The Odisha government is planning to move its district mineral foundations (DMF) to its steel and mines department from the planning and convergence department.

District Mineral Foundation

  1. DMF is a trust set up as a non-profit body, in those districts affected by the mining works, to work for the interest and benefit of persons and areas affected by mining related operations.
  2. It is funded through the contributions from miners.
  3. Its manner of operation comes under the jurisdiction of the relevant State Government.
  4. The DMF were mandated through the Mines and Minerals (Development & Regulation) Amendment Act, (MMDRA) 2015.

Contributions to DMF

  1. Every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the DMF of the district in which their mining operations are carried on.
  2. Miners have to contribute an amount equal to 30% of the royalty payable by them to the DMFs.
  3. If the mining area is spread across several districts, the fund is shared on a pro-rata basis by these districts.
  4. DMF contribution would not be exceeding one-third of royalty and the Central Government retains the power to prescribe the rates of contribution, though DMF’s operation is under state governments.
  5. The contributions made to DMFs are collected by the State Governments and the details in this regard are not maintained centrally at the moment.

Why such move by Odisha?

  1. Odisha is the only one in India, where the planning department is the nodal authority for DMFs.
  2. Elsewhere, they are under respective mines departments, as money for them is generated from mining companies operating in affected districts.
  3. The amount is determined on the basis of the royalty that companies pay to mines departments.
  4. The plan aims to improve implementation and use of funds.
  5. Odisha has more than Rs 5,800 crore in DMFs, the most in India (total Rs 23,000 crore), owing to key mining districts such as Keonjhar, Sundargarh and Angul.

Priority areas under DMF

The various state DMF rules and the Pradhan Mantri Khanij Khestra Kalyan Yojana (PMKKKY) guidelines stipulate some “high priority” issues for DMFs, including

  • drinking water
  • health
  • women and child welfare
  • education
  • livelihood and skill development
  • welfare of aged and disabled
  • sanitation

Is the mines department, a suitable custodian?

  1. Its objectives and aims make it clear that DMFs are meant to alleviate poverty and improve human development indicators.
  2. Hence they are more aligned to state and district planning departments along with other concerned departments that overlook the high priority issues.
  3. The mining department is only concerned with the source of funds.
  4. The primary role of the mining department is in fact mineral development and not human development.

A reasonable move

  1. Placing DMFs under the state planning and convergence department is in fact a very reasonable step that Odisha had taken.
  2. Since proper planning is crucial for effective functioning of DMFs and ensuring that the money is spent well, it makes sense to place it under this department.
  3. Also convergence with certain poverty alleviation and human development schemes is important for DMFs.

Way Forward

  1. With significant financial corpus, DMFs can help improve the reach and delivery of these schemes. These include critical issues such as child nutrition, healthcare, education, livelihood, welfare of old and disabled etc.
  2. Therefore, restricting DMF to the state mining departments will only limit its scope and effective operation as well as optimal utilisation of funds.
Coal and Mining Sector

Government launches Global Housing Technology Challenge to build houses in shorter time

Note4students

Mains Paper 1: Social Issues | Urbanization , their problems & remedies

From UPSC perspective, the following things are important:

Prelims level: GHTC

Mains level:  Housing for all


News

  • To make the construction of houses cost-effective and innovative, the Ministry of Housing and Urban Affairs launched the Global Housing Technology Challenge (GHTC).

Global Housing Technology Challenge (GHTC)

  1. The aim of the initiative — under the Pradhan Mantri Awas Yojana Urban (PMAY-U) — is to fast-track the construction of affordable housing and meet the target of constructing 1.2 crore houses by 2022.
  2. GHTC-India challenge is a well-conceptualized and designed programme to bring out the most innovative, simple, effective and appropriate solutions for making housing available and affordable to the common man.
  3. Under the challenge, a grand expo-cum-conference on GHTC will be organised in March which will be a unique platform not only for the stakeholders but also for the States/Union Territories and technical institutions.

Affordable Sustainable Housing Accelerators

  • GHTC-India challenge will also focus on identifying and mainstreaming proven demonstrable technologies for lighthouse projects and spotting potential future technologies for incubation and acceleration support through ASHA (Affordable Sustainable Housing Accelerators) — India.
Housing for all – PMAY, etc.

National Action Plan for Drug Demand Reduction (2018-2023)

Note4students

Mains Paper 2: Governance | Issues relating to development & management of Social Sector/Services relating to Health, Education, Human Resources

From UPSC perspective, the following things are important:

Prelims level: NAPDDR

Mains level: Preventing Drug abuse in India


News

  • The Ministry of Social Justice and Empowerment has drafted a five-year action plan for addressing the problem of drug and substance abuse in the country, dumping a long-pending draft policy on the matter.

National Action Plan for Drug Demand Reduction (2018-2023)

  1. It aims to employ a multi-pronged strategy — involving education, de-addiction and rehabilitation of affected individuals and their families — to address the issue.
  2. The objective is to create awareness and educate people about the ill-effects of drugs abuse on the individual, family, workplace and the society at large in order to integrate them back into the society.
  3. The ministry has planned several measures for controlling sale of sedatives, painkillers and muscle relaxant drugs, and checking online sale of drugs by stringent monitoring by cyber cell, under the national action plan.

Various measures in the Plan

  1. It includes holding awareness generation programmes at schools, colleges, universities, workplaces and for police functionaries, paramilitary forces, law enforcement agencies, judicial officers and Bar council, among others.
  2. Plans are also afoot for awareness generation through social, print, digital and online media, and engagement of celebrities, besides strengthening the national toll-free helpline for drug prevention.
  3. It also calls for persuading principals, directors, vice chancellors of educational institutions to ensure that no drugs are sold within/nearby the campus.
  4. It also includes identification of vulnerable areas based on survey, skill development, vocational training and livelihood support of ex-drug addicts through National Backward Classes Finance and other Development Corporations and continuous research on drug use pattern.

Other Initiatives

  1. The ministry, in collaboration with the National Drug Dependence Treatment Centre (NDDTC) under the AIIMS, is also conducting a national survey on the extent and pattern of substance abuse.
  2. A steering committee would be constituted under the chairmanship of the secretary, Social Justice Ministry, and with representatives from the Ministries of Health, HRD, WCD, MHA, Skill development and Entrepreneurship, among others.
  3. The committee will hold quarterly meetings to monitor effective implementation of the NAPDDR.
  4. As a part of the plan, module for re-treatment, ongoing treatment and post-treatment of addicts of different categories and age groups will be developed and database on substance use will be maintained.
Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

Fish from Andhra Pradesh, West Bengal banned in Patna

Note4students

Mains Paper 2: Governance | Issues relating to development & management of Social Sector/Services relating to Health, Education, Human Resources

From UPSC perspective, the following things are important:

Prelims level: Formalin

Mains level: Food Safety


News

  • Bihar has imposed a blanket ban for 15 days on sale of fish from Andhra Pradesh and West Bengal in capital Patna after samples were found to be contaminated with formalin.

Formalin traces found

  1. Fishes from these states were contaminated with formalin—a cancer causing chemical, used to preserve the fish.
  2. Apart from formalin, traces of other heavy metals like lead, chrorium and mercury was also found to be more than normal levels in the samples.

What is formalin?

  1. Formalin is derived from formaldehyde which is a known cancer-causing agent. It is used to preserve bodies in mortuaries.
  2. It can also increase shelf life of fresh food.
  3. While fromalin can cause nausea, coughing and burning sensation in eyes, nose and throat in the short term, it can cause cancer if consumed over a long period of time.

Why is fish laced with formalin?

  1. Fish is a highly perishable commodity.
  2. If it isn’t maintained at the proper temperature of 5 degree Celsius, it gets spoilt.
  3. To avoid that and increase its shelf life, the sellers use chemicals such as formalin and ammonia.
  4. If the point of sale is far from the place of catch, formalin is used as a preservative.
  5. Meanwhile, ammonia is mixed with the water that is frozen to keep fish fresh.

About the ban

  1. The ban includes storage and transportation of fish from Andhra Pradesh and West Bengal.
  2. Anybody found violating the ban would face a prison term up to seven years and a fine of Rs 10 lakh.
  3. With samples collected from Patna testing positive, the government has now decided to collect fish samples from different districts and test them for the same.
  4. If found positive, the ban would be extended over the entire state.
Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

Census of Estuarine Crocodiles

Note4students

Mains Paper 3: Environment | Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level: Bhitarkanika NP

Mains level: Conservation of biodiversity


News

  • The number of crocodiles rose to 1742 from last year’s census of 1698 in the Bhitarkanika National Park in Odisha’s Kendrapara district.

Census of Estuarine Crocodiles

  1. The latest census figure of these reptiles, which was released by forest department, has come out with an encouraging trend of rise in the number of estuarine crocodiles.
  2. The census of estuarine or saltwater crocodiles was carried out along the water-bodies of Mahanadi deltaic region in and around the Bhitarkanika National Park between Thursday and Monday.
  3. The enumerators sighted 619 hatchlings, 347 yearlings, 273 juveniles, 178 sub-adults and 325 adults, according to the census report.
  4. The giants included a 21 feet long croc which finds a pride of place in the Guinness Book of Records as the world’s largest living crocodile, he said.

Good signs

  1. Four decades ago when the Govt. of India and the United Nations Development Programme (UNDP) had thought of saving crocodiles in Bhitarkanika area.
  2. The population was then estimated to be 95, including 34 adult but now, it stands to 1742.
  3. Since 1977, salt-water crocodile eggs have also been collected locally, and young crocodiles have been released in the creeks and the estuaries.

Estuarine crocodiles in India

  1. Estuarine crocodiles are also found in West Bengal’s Sunderbans, having the country’s largest mangrove cover.
  2. The mangrove wetlands in Andaman Islands are also home to these species, but those cannot match the density and population of crocodile available in wild habitats of Bhitarkanika.
  3. The region is criss-crossed by innumerable water inlets, creeks and nullahs all forming the part of Bhitarkanika river system.
Wildlife Conservation Efforts