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  • The $5 trillion arithmetic

    Context

    The Indian government has set itself a big target, namely, that the Indian economy will have an aggregate income or gross domestic product (GDP) of $5 trillion by 2024-25.

    Lack of clarity

    • There is little effort to take it beyond a slogan.
    • When it comes to targets and aims pertaining to the economy, it is important to have-
      • The officials and advisers go beyond the headline.
      • To lay out the details and the road-map for the target.
    • Matter for investors: For international observers and particularly investors, not to see these details creates doubts about professionalism.

    What growth rate is required to reach that target?

    • How long will it take to achieve the target at the present growth rate?
      • In 2018-19, India’s GDP was $2.75 trillion.
      • India’s latest official growth rate happens to be 5 per cent.
      • Target will be reached in 2032-33: Continue in the same fashion to compute the size of the GDP and it becomes clear that the target of $5 trillion will be reached not in 2024-25, but in 2032-33.
    • What is the required rate? Set the target as $5 trillion dollars for 2024-25 the required rate turns out to be 10.48 per cent or, approximately, 10.5 per cent.

    Why 10.5 rate is an ambitious target?

    • The only example of any nation growing for six consecutive years at an average annual rate of over 10.5 per cent was China from 2003 to 2009.
    • Can India achieve this rate?
      • From 1947 till now, India’s economy grew at over 10 per cent only twice — in 1988-89 and 2007-8.
      • Of these, the first may be dismissed because the previous year the economy had grown very slowly, by 3.5 per cent.
    • What we can learn from the past growth rate?
      • The only example to learn from: The only example from which we can learn is the remarkable growth in 2007-8, made all the more remarkable by the fact that India had been growing well for several years, starting from 2003.
      • And from 2005, India was actually growing over 9 per cent.
      • What factors played the role in high growth?
      • This was a period of professional fiscal policy and steady effort at building infrastructure.
      • India’s economy was making big news in the international media and investment poured in.
      • India’s investment-to-GDP rate climbed to an all-time record of 39 per cent.
    • Current investment-to-GDP ratio: Our investment-to-GDP ratio has crashed to 30 per cent and this takes time to re-build.
      • If we can get back to a growth rate of 7 per cent we will be lucky.

    Can inflation make the target achievable?

    • Combination of real growth and inflation can make it possible: Virtually all serious commentators agree that in purely real terms, the $5-trillion target is unreachable.
      • But maybe we can make it by a combination of real growth and inflation.
      • How the combination will work? One way India can get to the target is if alongside say 7 per cent growth, India has inflation of say 3.5 per cent.
      • Then India’s nominal GDP growth rate will be 10.5 per cent.
    • Why the inflation argument is flawed?
      • The five trillion target is in dollar terms.
      • Inflation will lead to depreciation: Typically, if India has higher inflation than the US, the rupee would depreciate vis-à-vis the dollar to account for that.
      • For the sake of pure arithmetic, assume US inflation is zero, India’s inflation is 10 per cent, and India’s real growth rate is 0.
      • In that case, in rupee terms, India’s economy will grow by 10 per cent. But how much will India’s economy grow in dollar terms?
      • The answer is zero.
      • Why is it so? This is because the rupee will typically depreciate by 10 per cent to match the inflation differential, and so the larger GDP of India in rupee terms, when converted to dollars will show no growth.
    • The other possibility of achieving the target?
      • What if the dollar loses value? But this should immediately make it clear that there is another way of getting to the target.
      • This can happen if the US dollar loses value.
      • We can then get to the target of $5 trillion because that will mean less in real terms.

    Conclusion

    There are two routes to achieve the target of $5 trillion: A huge policy initiative to boost real growth or the luck of dollar depreciation. The luck of dollar would mean nothing for us in the real term so the best course of action for the government is to seek the first option and try to achieve it.

  • Permanent Commission to Women in Indian Army

     

    • The Supreme Court brought women officers in 10 streams of the Army on a par with their male counterparts in all respects, setting aside longstanding objections of the government.
    • The case was first filed in the Delhi High Court by women officers in 2003 and had received a favourable order in 2010. But the order was never implemented and was challenged by the government.

    Women in Army: Background of the case

    • The induction of women officers in the Army started in 1992.
    • They were commissioned for a period of five years in certain chosen streams such as Army Education Corps, Corps of Signals, Intelligence Corps, and Corps of Engineers.
    • Recruits under the Women Special Entry Scheme (WSES) had a shorter pre-commission training period than their male counterparts who were commissioned under the Short Service Commission (SSC) scheme.
    • In 2006, the WSES scheme was replaced with the SSC scheme, which was extended to women officers. They were commissioned for a period of 10 years, extendable up to 14 years.
    • Serving WSES officers were given the option to move to the new SSC scheme or to continue under the erstwhile WSES.
    • They were to be, however, restricted to roles in streams specified earlier — which excluded combat arms such as infantry and armoured corps.

    2 key arguments shot down

    • The Supreme Court rejected arguments against a greater role for women officers, saying this violated equality under the law.
    • They were being kept out of command posts on the reasoning that the largely rural rank and a file will have problems with women as commanding officers. The biological argument was also rejected as disturbing.
    • While male SSC officers could opt for permanent commission at the end of 10 years of service, this option was not available to women officers.
    • They were, thus, kept out of any command appointment, and could not qualify for government pension, which starts only after 20 years of service as an officer.
    • The first batch of women officers under the new scheme entered the Army in 2008.

    Arguments by the govt.

    • The government put forth other arguments before the Supreme Court to justify the proposal on the grounds of permanent commission, grants of pensionary benefits, limitations of judicial review on policy issues, occupational hazards, reasons for discrimination against women and rationalization on physiological limitations for employment in staff appointments.
    • The apex court has rejected these arguments, saying they are “based on sex stereotypes premised on assumptions about socially ascribed roles of gender which discriminate against women”.
    • It has also said that it only shows the need “to emphasise the need for change in mindsets to bring about true equality in the Army”.

    Implications of the judgement

    • The SC has done away with all discrimination on the basis of years of service for grant of PC in 10 streams of combat support arms and services, bringing them on a par with male officers.
    • It has also removed the restriction of women officers only being allowed to serve in staff appointments, which is the most significant and far-reaching aspect of the judgment.
    • It means that women officers will be eligible to tenant all the command appointments, at par with male officers, which would open avenues for further promotions to higher ranks for them.
    • It also means that in junior ranks and career courses, women officers would be attending the same training courses and tenanting critical appointments, which are necessary for higher promotions.

    Way Forward

    • The implications of the judgment will have to be borne by the human resources management department of the Army, which will need to change policy in order to comply.
    • But the bigger shift will have to take place in the culture, norms, and values of the rank and file of the Army, which will be the responsibility of the senior military and political leadership.
    • After the Supreme Court’s progressive decision, they have no choice but to bite the proverbial bullet.

  • RBI’s accounting year

    The Reserve Bank of India (RBI) is aligning its July-June accounting year with the government’s April-March fiscal year in order to ensure more effective management of the country’s finances.

    • Accordingly, the next accounting year will be a nine-month period which starts from July 2020 and ends on March 31, 2021. Thereafter, all the financial years will start from April every year, the RBI said.
    • The Bimal Jalan Committee on Economic Capital Framework (ECF) of the RBI had proposed a more transparent presentation of the RBI’s annual accounts and change in its accounting year from July to June to April to March from the financial year 2020-21.

    How did the RBI’s July-June accounting year come to be?

    • When it commenced operations on April 1, 1935, with Sir Osborne Smith as its first Governor, the RBI followed a January-December accounting year.
    • On March 11, 1940, however, the bank changed its accounting year to July-June.
    • Now, after nearly eight decades, the RBI is making another switch: the next accounting year will be a nine-month period from July 2020 to March 31, 2021, and thereafter, all financial years will start from April, as it happens with the central and state governments.

  • State of India’s Birds 2020 (SoIB) Assessment

     

    State of India’s Birds 2020 (SoIB) assessment was recently released.

    Highlights of the report

     

     

    • The SoIB was produced using a base of 867 species (among 1,333 birds ever recorded in India), and analysed with the help of data uploaded by birdwatchers to the online platform, eBird.
    • Adequate data on how birds fared over a period of over 25 years (long-term trend) are available only for 261 species.
    • Current annual trends are calculated over a five-year period.

    Alarming declines

    • The SoIB assessment raises the alarm that several spectacular birds, many of them endemic to the sub-continent, face a growing threat from loss of habitat due to human activity, widespread presence of toxins including pesticides, hunting and trapping for the pet trade.
    • Diminishing population sizes of many birds because of one factor brings them closer to extinction because of the accelerated effects of others, the report warned.
    • Over a fifth of India’s bird diversity, ranging from the Short-toed Snake Eagle to the Sirkeer Malkoha, has suffered strong long-term declines over a 25-year period.
    • More recent annual trends point to a drastic 80% loss among several common birds.

    Various species mentioned

    • Of 101 species categorised as being of High Conservation Concern — 59 based on range and abundance and the rest included from high-risk birds on the IUCN Red List.
    • Endemics such as the Rufous-fronted Prinia, Nilgiri Thrush, Nilgiri Pipit and Indian vulture were confirmed as suffering current decline.
    • And all except 13 had a restricted or highly restricted range, indicating greater vulnerability to man-made threats.
    • Peafowl, on the other hand, are rising in numbers, expanding their range into places such as Kerala, which is drying overall, and areas in the Thar desert where canals and irrigation have been introduced. Stricter protection for peacocks under law also could be at work.

  • SUTRA PIC India Programme

     

    The government has unveiled SUTRA PIC programme to research on ‘indigenous’ cows.

    SUTRA PIC

    • SUTRA PIC stands for Scientific Utilization Through Research Augmentation-Prime Products from Indigenous Cows.
    • To be funded by multiple scientific ministries, the initiative, SUTRA PIC, is led by the Department of Science and Technology (DST).
    • It has the Department of Biotechnology, the CSIR, the Ministry for AYUSH (Ayurveda, Unani, Siddha, Homoeopathy) among others and the Indian Council of Medical Research as partners.
    • It has five themes:
    1. Uniqueness of Indigenous Cows,
    2. Prime-products from Indigenous Cows for Medicine and Health,
    3. Prime-products from Indigenous Cows for Agricultural Applications,
    4. Prime-products from Indigenous Cows for Food and Nutrition,
    5. Prime-products from indigenous cows-based utility items

    Aims and objectives

    The proposals under this theme aim to:

    • perform scientific research on the complete characterization of milk and milk products derived from Indian indigenous cows;
    • scientific research on nutritional and therapeutic properties of curd and ghee prepared from indigenous breeds of cows by traditional methods;
    • development of standards for traditionally processed dairy products of Indian-origin cow

    Other facts

    • In 2017, SEED constituted a National Steering Committee (NSC) for ‘Scientific Validation and Research on Panchgavya (SVAROP)’.
    • Panchgavya is an Ayurvedic panacea and is a mixture of five (pancha) products of the cow (gavya) — milk, curd, ghee, dung and urine.
    • Its proponents believe it can cure, or treat a wide range of ailments.

  • Battle of Çanakkale/Gallipoli

    India issued a strong demarche to Turkey over its outspoken President Erdogan’s comments in Pakistan. Erdogan has criticised India’s policy in Jammu and Kashmir and compared it with that of Turkey during World War I.

    Gallipoli campaign

    • The Battle of Çanakkale, also known as the Gallipoli campaign or the Dardanelles campaign, is considered to be one of the bloodiest of World War I, during which the Ottoman army faced off against the Allied forces, leading to the slaughter of tens of thousands of soldiers on both sides.
    • In March 1915, with the war in Europe stalemated in the trenches, Winston Churchill, then Britain’s First Lord of the Admiralty, devised a plan to take control of the Dardanelles.
    • The plan was to capture strategic strait connecting the Sea of Marmara to the Aegean Sea and the Mediterranean Sea, and thus reach Constantinople (today’s Istanbul) at the mouth of the Bosporus.
    • By taking Constantinople, the Allies hoped to break the Turks, who had recently entered the war on the side of Germany.

    The massacre

    • The Allies carried out a heavy naval bombardment of Turkish forts along the shores of the Dardanelles, and when that failed, followed up with what was the biggest amphibious landing in military history at the time.
    • However, what the British and their allies had hoped would be the turning point in the war ended up as a catastrophe.
    • In the nine months upto January 1916, when the Allies called off the campaign and evacuated, more than 40,000 British soldiers had been killed, along with 8,000 Australians. On the Turkish side, some 60,000 had perished.

    Legacy of the battle

    • The battle resulted in a demotion for Churchill and the emergence on the Turkish side of the young military hero, Mustafa Kemal Ataturk.
    • But the legacy of Gallipoli goes far beyond its military aspects — the event is today one of the central pillars of the modern Turkish identity.
    • The campaign is also seen to have seeded Australian and New Zealand national consciousness — April 25, the anniversary of the Gallipoli landings, is observed as ANZAC Day, the day of national remembrance for the war dead.

  • Erstwhile State of Rampur

    Erstwhile royals of the state of Rampur in Uttar Pradesh are fighting over the assets and legacy of Nawab Raza Ali Khan, who acceded to the Indian Union at the time of Independence.  The Supreme Court ended India’s longest-running civil dispute last year, and the process of evaluating the inheritance is currently ongoing.

    The state of Rampur

    • The state of Rampur was founded by Nawab Ali Muhammad Khan, the adopted son of Sardar Daud Khan, the chief of the Rohillas in Northern India.
    • The Rohillas were Afghans who entered India in the 18th century as the Mughal Empire was in decline, and took control of Rohilkhand, at the time known as Katehr.
    • In 1737, Nawab Muhammad Khan received the territory of Katehr from Emperor Muhammad Shah, only to lose everything to Nawab Wazir of Oudh in 1746.
    • Two years later, he assisted Ahmad Shah Durrani in his conquest of India, recovering all his former possessions.
    • Over the next two centuries the Rampur royals, earlier a warring clan, struck deep roots, and with the blessings of the British, began to build one of the richest principalities in the country.

    Patrons of the arts, culture

    • The Rampur royals have played an important role in the socio-cultural history of the Ganga-Yamuna belt.
    • They run the Amir Raza library in Rampur, once known as the official darbar of the Nawab, which is home to some 15,000 manuscripts in Arabic, Urdu, Persian and Turkish, as well as a seventh-century Quran.
    • The library also houses 2,500 specimens of Islamic calligraphy, 5,000 miniature paintings, and 60,000 printed books, besides the extremely rare Persian translation of Valmiki’s Ramayana, which is believed to have been Emperor Aurangzeb’s personal copy.
    • In the 19th century, the royals established courts of law and a standing army, and built irrigation works. In the 20th century, they set up sugar and textile mills.
    • Many Hindus were employed in senior administrative positions in the state. Nawab Raza Ali Khan was known to have written poetry in Bhojpuri for Holi.
    • The Rampur court was also a great patron of the arts, and is known to have patronised Ghalib and Begum Akhtar, as well as the tabla player Ahmad Jan Thirakwa, sarangi player Bundu Khan, sarod player Fida Hussein Khan, been player Wazir Khan, and the kathak dancers Acchan Maharaj and Kalka Prasad.

    After Independence

    • Rampur, under Nawab Raza Ali, was the first kingdom to accede to India in 1949, becoming the only Muslim-majority district in Uttar Pradesh.
    • Soon after accession, the Nawab handed over the official royal residence, the Rampur Qila or Fort, built in 1775, to the Indian government, along with several other properties.
    • In return, the Indian government bestowed two key rights to the Nawab — he was granted full ownership of the properties, and guaranteed succession to the gaddi or rulership of the state based on customary law, which gave exclusive property rights to the eldest son.
    • When Raza Ali Khan died in 1966, he had three wives, three sons, and six daughters.
    • His eldest son Murtaza Ali Khan succeeded him as head of the state, as per custom.
    • The government recognised him as the sole inheritor of all his father’s private properties and issued a certificate to this effect. But his brother challenged this in the civil court.

  • [pib] Soil Health Card Scheme

     

    The Soil Health Card Scheme has completed 5 years since its launch.

    Soil Health Card Scheme

    • Soil Health Card (SHC) is a Government of India’s scheme promoted by the Department of Agriculture & Co-operation under the Ministry of Agriculture and Farmers’ Welfare.
    • It is being implemented through the Department of Agriculture of all the State and Union Territory Governments.
    • A SHC is meant to give each farmer soil nutrient status of his/her holding and advice him/her on the dosage of fertilizers and also the needed soil amendments, that s/he should apply to maintain soil health in the long run.
    • The scheme was launched by PM on 19.02.2015 at Suratgarh, Rajasthan.

    Details on the SHC

    • SHC is a printed report that a farmer will be handed over for each of his holdings.
    • It contains the status of his soil with respect to 12 parameters, namely N,P,K (Macro-nutrients) ; S (Secondary- nutrient) ; Zn, Fe, Cu, Mn, Bo (Micro – nutrients) ; and pH, EC, OC (Physical parameters).
    • Based on this, the SHC also indicate fertilizer recommendations and soil amendment required for the farm.
    • It provides two sets of fertilizer recommendations for six crops including recommendations of organic manures. Farmers can also get recommendations for additional crops on demand.

    Other details

    • The State Government will collect samples through the staff of their Department of Agriculture or through the staff of an outsourced agency.
    • The State Government may also involve the students of local Agriculture / Science Colleges.
    • It will be made available once in a cycle of 3 years, which will indicate the status of soil health of a farmer’s holding for that particular period.
    • The SHC given in the next cycle of 3 years will be able to record the changes in the soil health for that subsequent period.
    • Soil samples will be drawn in a grid of 2.5 ha in irrigated area and 10 ha in rain- fed area with the help of GPS tools and revenue maps.

     Why needed such scheme?

    • Soil testing is developed to promote soil test based on nutrient management.
    • Soil testing reduces cultivation cost by application of right quantity of fertilizer.
    • It ensures additional income to farmers by increase in yields and it also promotes sustainable farming.

  • National Groundwater Management Improvement Programme

    The Government of India and the World Bank have signed a $450 million loan agreement to support the national programme to arrest the country’s depleting groundwater levels and strengthen groundwater institutions.

    About the Programme

    • The World Bank-supported programme will be implemented in the states of Gujarat, Maharashtra, Haryana, Karnataka, Rajasthan, Madhya Pradesh, and Uttar Pradesh and cover 78 districts.
    • These states span both the hard rock aquifers of peninsular India and the alluvial aquifers of the Indo-Gangetic plains.
    • They were selected based on several criteria, including degree of groundwater exploitation and degradation, established legal and regulatory instruments, institutional readiness, and experience in implementing initiatives related to groundwater management.
    • This programme will contribute to rural livelihoods and in the context of climatic shifts, build resilience of the rural economy.

    Objectives

    The programme will, among others, enhance the recharge of aquifers and introduce water conservation practices; promote activities related to water harvesting, water management, and crop alignment; create an institutional structure for sustainable groundwater management; and equip communities and stakeholders to sustainably manage groundwater.

    Particulars of the programme

    • The programme will introduce a bottom-up planning process for community-driven development of water budgets and Water Security Plans (WSPs).
    • Water budgets will assess surface and groundwater conditions (both quantity and quality) and identify current and future needs.
    • The WSP, on the other hand, will focus on improving groundwater quantity and incentivize selected states to implement the actions proposed.
    • Such community-led management measures will make users aware of consumption patterns and pave the way for economic measures that reduce groundwater consumption.
    • Crop management and diversification will be the other focus areas.

  • [Burning Issue] 15th Finance Commission and its recommendations (Part I)

     

    Context

    • The Finance Commission is a constitutional body formed by the President of India to give suggestions on centre-state financial relations.
    • The 15th Finance Commission was required to submit two reports. The commission’s chairman is N. K. Singh, with its full-time members being Ajay Narayan Jha, Ashok Lahiri and Anoop Singh.
    • The first report, consisting of recommendations for the financial year 2020-21, was tabled in Parliament on February 1, 2020.
    • The final report with recommendations for the 2021-26 period will be submitted by October 30, 2020.

    Background

    What is Finance Commission?

    • The Finance Commission (FC) was established by the President of India in 1951 under Article 280 of the Indian Constitution.
    • It was formed to define the financial relations between the central government of India and the individual state governments.
    • The Finance Commission (Miscellaneous Provisions) Act, 1951 additionally defines the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
    • As per the Constitution, the FC is appointed every five years and consists of a chairman and four other members.
    • Since the institution of the First FC, stark changes in the macroeconomic situation of the Indian economy have led to major changes in the FC’s recommendations over the years.

    Constitutional Provisions

    Several provisions to bridge the fiscal gap between the Centre and the States were already enshrined in the Constitution of India, including Article 268, which facilitates levy of duties by the Centre but equips the States to collect and retain the same.

    Article 280 of the Indian Constitution defines the scope of the commission:

    1. The President will constitute a finance commission within two years from the commencement of the Constitution and thereafter at the end of every fifth year or earlier, as the deemed necessary by him/her, which shall include a chairman and four other members.
    2. Parliament may by law determine the requisite qualifications for appointment as members of the commission and the procedure of selection.
    3. The commission is constituted to make recommendations to the president about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves. It is also under the ambit of the finance commission to define the financial relations between the Union and the States. They also deal with the devolution of unplanned revenue resources.

    Why need Finance Commission?

    • As a federal nation, India suffers from both vertical and horizontal fiscal imbalances.
    • Vertical imbalances between the central and state governments result from states incurring expenditures disproportionate to their sources of revenue, in the process of fulfilling their responsibilities.
    • However, states are better able to gauge the needs and concerns of their inhabitants and therefore more efficient at addressing them.
    • Horizontal imbalances among state governments result from differing historical backgrounds or resource endowments, and can widen over time.
    • The first FC was established in 1951 by Dr. B.R. Ambedkar, the then-incumbent law minister, to address these imbalances.

    Important functions

    • Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.
    • Determine factors governing Grants-in-Aid to the states and the magnitude of the same.
    • To make recommendations to the president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the finance commission of the state.
    • Any other matter related to it by the president in the interest of sound finance.

    Members of the Finance Commission

    • The Finance Commission (Miscellaneous Provisions) Act, 1951 was passed to give a structured format to the finance commission and to bring it to par with world standards.
    • It laid down rules for the qualification and disqualification of members of the commission, and for their appointment, term, eligibility and powers.
    • The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who:
    1. Are, or have been, or are qualified, as judges of a high court,
    2. Have knowledge of government finances or accounts, or
    3. Have had experience in administration and financial expertise; or
    4. Have special knowledge of economics

    Finance Commission versus Planning Commission

    • It is alleged that Planning Commission (PC) which is neither a constitutional nor a statutory body had usurped the role of FC.
    • PC had restricted FC’s role to mere recommend grants to states on revenue account only under article 275 of Indian constitution.
    • However, after the formation of NITI Aayog which replaced the PC, the government seeked to empower FC with the originally envisaged task of distribution of revenue to the states.

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