NATO grandly commemorates its 75th anniversary on April 4, 2024.
Present Concerns about NATO:
Changed Objective: NATO was established to defend its member states from aggression but has engaged in offensive military actions.
Cause of Military conflicts worldwide: Over the last seven decades, NATO has initiated or participated in more than 200 military conflicts worldwide, including major ones. Examples of NATO’s military interventions include the bombing of Yugoslavia, invasion of Iraq, disruption of statehood in Libya, military interference in Syria, and combating terrorism in Afghanistan.
Role in the creation of ISIS: Critics argue that instead of bringing peace and stability, NATO’s actions have led to damage, casualties, destruction, and alienation. There is a perception that the US, NATO’s leader, played a role in the creation of ISIS.
Provoking Russia-Ukraine War: Its expansion since 1991, despite assurances to the contrary, and its actions in Ukraine are seen as provocative moves against Russia. Russia has shown restraint in response to NATO’s actions, but NATO’s behavior remains unchanged.
Maintaining Western Hegemony: In stark contrast to its professed peaceful ideals, NATO engages in warfare or issues threats of attack against any state that rejects the established liberal “rules-based order.” for example invasion of Iraq and execution of Saddam Hussein
Increase presence in Indo-Pacific: The US has been actively establishing smaller multilateral arrangements, like AUKUS, the US-Japan-South Korea trio, and the Tokyo-Seoul-Canberra-Wellington quartet, to involve them in practical collaboration with NATO.
BACK2BASICS
What is NATO?
NATO, founded in 1949, is an intergovernmental military alliance initially aimed at collective defense against potential aggression, notably from the Soviet Union during the Cold War. However, its role has expanded over time to address various security challenges beyond its original purpose.
Membership:
Starting Members: In starting only 12 founding members of NATO were Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States.
Expansion: NATO has expanded since its founding, with new member countries joining in multiple rounds. The alliance currently consists of 32 member countries.
Objectives:
Core mission: NATO’s core mission is collective defense, as articulated in Article 5 of the North Atlantic Treaty. This article specifies that an attack on any member nation will be regarded as an attack on all, triggering a collective response from the members.
Role in crisis management: Besides its core function of collective defense, NATO also participates in crisis management activities. These include conflict prevention, peacekeeping, and stabilization efforts in diverse regions globally.
Conclusion: NATO, founded in 1949 for collective defense, faces criticisms for engaging in offensive actions, causing global conflicts, and perceived roles in creating ISIS and provoking tensions with Russia. It has expanded and diversified its roles beyond its original purpose.
Mains Question for practice
Q Examine the key concerns raised about NATO’s actions and their implications for global security.
Recently, the National Pharmaceutical Pricing Authority (NPPA) implemented a 0.00551% increase in the Maximum Retail Price (MRP) for scheduled formulations of drugs starting from the commencement of the fiscal year 2024–25.
Context:
The Department of Pharmaceuticals has released its yearly update of revised ceiling prices for 923 scheduled drug formulations and adjusted retail prices for 65 formulations.
These revised ceiling rates took effect on April 1. The Central Government attributes the price adjustments to fluctuations in the Wholesale Price Index (WPI).
What is the National List of Essential Medicines?
As per the World Health Organisation (WHO), Essential Medicines are those that satisfy the priority healthcare needs of the population.
Ministry of Health and Family Welfare hence prepared and released the first National List of Essential Medicines of India in 1996 consisting of 279 medicines.
Currently, India has approximately 400 molecules and 960 formulations covered under the National List of Essential Medicines.
The prices of non-essential drugs are also monitored by the government to ensure that the manufacturers of these drugs don’t increase MRP by more than 10% annually.
The issue of the present Current Price Increase:
Manufacturers are allowed to increase the Maximum Retail Price (MRP) of scheduled formulations based on the Wholesale Price Index (WPI) without prior government approval.
Pharmaceutical companies argue that a rational increase in the cost of drugs is necessary for quality control.
Government’s Stance on Current Hike: Despite the recent increase, the government suggests that it will only marginally impact the cost of essential drugs such as antibiotics and painkillers.
The National Pharmaceutical Pricing Authority (NPPA) follows the Drug Price Control Order (DPCO) of 2013, allowing price hikes in line with changes in the WPI index.
Medicine prices were raised by 12% last year and 10% in 2022.
BACK2BASICS:
National Pharmaceutical Pricing Authority (NPPA):
The National Pharmaceutical Pricing Authority was set up as an attached office of the Department of Chemicals and Petrochemicals (now Department of Pharmaceuticals since July 2008) on 29th August 1997. It has been entrusted inter-alia, with the following functions
Enforce the provision: To implement and enforce the provisions of the Drugs Price Control Order (DPCO), 1995/2013 under the powers delegated to it and to undertake and/or sponsor relevant studies concerning the pricing of drugs/formulations.
Monitor Demand and supply: To monitor the availability of drugs, identify shortages, if any, and take remedial steps. To collect/maintain data on production, exports and imports, market share of individual companies, profitability of companies, etc. for bulk drugs and formulations.
Manage legal matters: To deal with all legal matters arising out of the decisions of the Authority. To render advice to the Central Government on changes/revisions in the drug policy.
Assist Government: To help the Central Government in the parliamentary matters relating to drug pricing.
Drugs (Prices Control) Order (DPCO):
The Drugs Prices Control Order, issued by the Government of India under Section 3 of the Essential Commodities Act, 1955, aims to govern and regulate drug prices.
Provides the list of price-controlled drugs: The Order interalia provides the list of price-controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by Govt., penalties for contravention of provisions, etc.
Regulate only listed drugs: According to the regulations outlined in DPCO 2013, the National Pharmaceutical Pricing Authority oversees and regulates only the prices of drugs listed in the National List of Essential Medicines (NLEM).
Achievements of India’s Pharmaceutical Industry:
Advanced Industries: India boasts one of the most advanced pharmaceutical industries among developing nations, ranking third globally in terms of volume and 13th in terms of value.
Export Destinations: The United States serves as the largest export destination for bulk drugs from India. This is noteworthy considering the stringent regulatory standards in the US.
Other significant export destinations include Brazil, Bangladesh, Turkey, China, the Netherlands, Nigeria, Vietnam, and Egypt.
India’s Role as a Supplier for Global South (developing countries): India ranks among the top five suppliers of bulk drugs to several developing countries, including Bangladesh, Nigeria, Vietnam, Egypt, Iran, and Pakistan.
Despite China’s dominance as a larger supplier, India remains a substantial exporter in this regard.
The challenge is Dependency on China: Despite India’s robust pharmaceutical sector, it heavily relies on China for the supply of bulk drugs and drug intermediates. Approximately two-thirds of India’s total imports in this category originate from China.
Conclusion: The recent price increase by the NPPA aligns with fluctuations in the Wholesale Price Index, aiming to regulate drug costs. India’s pharmaceutical industry faces challenges of import dependency on China, despite its global presence.
Mains PYQ
Q What do you understand by Fixed Dose Drug Combinations (FDCs)? Discuss their merits and demerits. (UPSC IAS/2013)
The US Federal Reserve recently announced stricter bank capital requirements known as the “Basel III endgame” proposal.
What is Bank Capital?
Bank capital is a measure of bank shareholders’ investment in the business.
In contrast to deposits or money a bank has borrowed, capital does not have to be paid back.
In other words, it is a cushion or buffer that protects a bank from insolvency—and, thus, reduces the risk that a bank failure triggers system-wide financial instability.
A bank that has sufficient capital can cover customers’ deposits even if the loans it has made aren’t repaid or if its investments drop in value.
What are Basel Norms?
Basel, Switzerland, hosts the Bureau of International Settlement (BIS), fostering collaboration among central banks to establish global banking standards.
The Basel Committee on Banking Supervision (BCBS), established in 1974 formulates broad supervisory guidelines known as the Basel framework.
Its purpose is to ensure banks maintain adequate capital to meet obligations and absorb losses.
India has adopted Basel standards to align its banking practices with global norms.
Description
Basel I
Introduced in 1988.
Known as the Basel Capital Accord.
Focused on credit risk.
Set a minimum capital requirement of 8% of risk-weighted assets (RWA).
Assets were assigned risk weights based on their risk profile.
Adopted by India in 1999.
Basel II
Published in June 2004.
Aimed to refine and reform Basel I.
Introduced three pillars:
Capital Adequacy Requirements
Supervisory Review
Market Discipline
Increased focus on risk management and disclosure.
Designed to promote a more resilient banking system.
*Basel IV
In 2017, the Basel Committee agreed on changes to the global capital requirements as part of finalising Basel III.
The changes are so comprehensive that they are increasingly seen as an entirely new framework, commonly referred to as “Basel IV”.
Set to take effect under transition rules from 2025.*
Proposed Changes under Basel III Endgame
Expansion of Scope: The proposal aims to extend the strictest risk-based capital approach to more banks, lowering the asset threshold from $700 billion to $100 billion. This would encompass around 37 large banks in the U.S.
Standardized Measure for Capital Requirements: Regulators propose curtailing banks’ use of internal models to calculate capital requirements for loans, advocating for a standardized measure for all banks to ensure uniform risk assessment.
Increased Capital for Trading and Operational Risks: The proposal mandates higher capital reserves for risks linked to trading activities and operational challenges, requiring banks to utilize standard models for risk assessment instead of internal ones.
Changes to Capital Calculations for Portfolios: Banks with assets exceeding $100 billion must reflect gains and losses in portfolios categorized as “available for sale” in their capital calculations, aiming for a more precise depiction of a bank’s risk exposure.
Challenges created by the new Norms
Operational Risks: A substantial portion of the proposed capital increment targets banks’ operational risks, encompassing potential losses arising from internal processes, people, systems, or external events.
Non-Traditional Banking Activities: Entities engaged in trading, market-making, wealth management, and investment banking, will face more pronounced capital requirements due to altered risk assessment and operational risk calculations.
Industry-specific Concerns: Additionally, specific industries, like renewable energy, anticipate repercussions, fearing that increased capital requirements could undermine the effectiveness of tax incentives for projects targeting climate change.
Arguments in Favor of Increasing Capital
Financial Stability: Proponents argue that heightened capital requirements are imperative for safeguarding financial stability, averting bank failures, and minimizing the need for government bailouts.
Prudent Banking Practices: They contend that current standards inadequately address bank risks and that increased capital incentivizes prudent banking practices.
Resilient Banking System: Economists suggests that the social costs of higher capital requirements are minimal compared to the benefits of a more resilient financial system.
PYQ:
2015:
‘Basel III Accord’ or simply ‘Basel III’, often seen in the news, seeks to:
(a) Develop national strategies for the conservation and sustainable use of biological diversity
(b) Improve banking sector’s ability to deal with financial and economic stress and improve risk management
(c) Reduce the greenhouse gas emissions but places a heavier burden on developed countries
(d) Transfer technology from developed countries to poor countries to enable them to replace the use of chlorofluorocarbons in refrigeration with harmless chemicals
Practice MCQ:
What is the primary objective of “Basel III Endgame” in the banking sector?
(a) To encourage speculative investments by banks to boost short-term profits.
(b) To ensure the stability of the global financial system by strengthening the regulation, supervision, and risk management practices of banks.
(c) To encourage banks to invest more in less-risky assets to stimulate economic growth.
(d) To limit the role of central banks in regulating commercial banks and promote market-driven banking practices.
President Droupadi Murmu has unveiled ‘NexCAR19’ India’s first indigenously-developed CAR T-cell therapy for cancer treatment.
What is CAR-T Cell Therapy?
What is it?
CAR-T cell therapy stands for Chimeric Antigen Receptor T cell therapy.
It is a type of cancer immunotherapy that uses the patient’s own T cells, genetically modified in a laboratory to enhance their ability to locate and destroy cancer cells.
How does it work?
T cells are white blood cells responsible for identifying and fighting illness and infection.
Each T cell has a receptor that can recognize antigens (proteins or molecules recognized by the immune system).
Cancer cells may have antigens that the immune system does not recognize as abnormal, allowing cancer to evade the immune response.
CAR-T cells are genetically engineered in the lab to express a new receptor that can bind to cancer cells and effectively kill them.
Therapy Process
The process involves several steps, including:
1. Collecting T Cells: Blood is drawn from the patient’s arm, and T cells are separated from the blood using an apheresis machine.
2. Engineering T Cells: In a laboratory, the T cells are modified by adding a manufactured CAR, and they are allowed to multiply and grow.
3. Infusing CAR-T Cells: Once enough CAR-T cells are prepared, they are injected back into the patient’s arm.
Chemotherapy may be recommended before CAR-T cell infusion to enhance treatment effectiveness.
The process can take place in an outpatient infusion center or a hospital setting.
Cancers Treated
CAR-T cell therapy is effective against certain types of cancer, especially when other treatments are ineffective.
It is currently FDA-approved for treating haematological malignancies, including leukemia, lymphoma, and multiple myeloma.
NexCAR19: India’s Indigenously Developed CAR-T Therapy
NexCAR19 is designed to target cancer cells carrying the CD19 protein, a marker on cancer cells, enhancing precision in treatment.
It has been developed jointly by IIT Bombay and the Tata Memorial Centre.
Initially approved for patients aged 15 and above with B-cell lymphomas who did not respond to standard treatments, leading to relapse or recurrence.
Effectiveness and Unique Features
Approximately 70% of patients respondto NexCAR19 treatment, with some achieving complete remission.
Lab and animal studies indicate lower drug-related toxicities, including reduced neurotoxicity and Cytokine Release Syndrome (CRS).
Trials for paediatric patients are underway at Tata Memorial Hospital, ensuring broader applicability.
Availability and Affordability
ImmunoACT is in the process of securing licenses and partnering with hospitals, including Tata Memorial, Nanavati, Fortis, and Jaslok, across multiple cities.
Initially priced at Rs 30-40 lakh, ImmunoACT aims to eventually reduce the cost to Rs 10-20 lakh, making the therapy more accessible.
PYQ:
2017:
Stem cell therapy is gaining popularity in India to treat a wide variety of medical conditions including leukaemia, Thalassemia, damaged cornea and several burns. Describe briefly what stem cell therapy is and what advantages it has over other treatments?
Practice MCQ:
With reference to the CAR-T Cell Therapy, consider the following statements:
1. T cells are Red Blood Cells responsible for identifying and fighting illness and infection.
2. Each T cell has a receptor that can recognize antigens (proteins or molecules recognized by the immune system).
Forest Department officials’ examination of an Indian laurel tree (Terminalia tomentosa) in Papikonda National Park has showcased its remarkable water storage capability.
This discovery sheds light on the indigenous knowledge shared by the Konda Reddi tribe regarding the tree’s unique attributes.
Konda Reddi Tribe
The Konda Reddis are a Particularly Vulnerable Tribal Group (PVTG) residing in the Godavari riverbanks and the hilly forest areas of Godavari and Khammam districts in Andhra Pradesh.
The family structure is patriarchal and patrilocal, with monogamy as the norm with some exceptions.
The Konda Reddis are primarily Hindus with folk customs, which involves local traditions and worship of community-level deities.
They have their own social control institution called ‘Kula Panchayat’.
Each village has a traditional headman known as ‘Pedda Kapu’, whose role is hereditary.
Their primary occupation is shifting cultivation, relying on forest flora and fauna for sustenance.
Jowar cultivation is prevalent, serving as their staple food.
They collect and sell non-timber forest products like tamarind, adda leaves, myrobolan, and broomsticks to supplement their income.
About Papikonda NP
Papikonda NP is located in the East Godavari and West Godavari districts of Andhra Pradesh.
It was established as a national park in the year 2008.
It is characterized by hilly landscapes, dense moist deciduous forest.
The presence of the Godavari River cuts through the Papikonda hill range of Eastern Ghats.
AboutIndian Laurel Tree
Description
Scientific Name
Terminalia tomentosa
Common Names
Indian Laurel Tree, Crocodile Bark Tree, Anjan Tree
Habitat
Found in Deciduous forests
Bark
Scissored and cracked bark, resembling crocodile skin (From November to February)
Water Storage Ability
Only 5-10% of trees observed to store water in the stem
Water Storage Mechanism
Development of lateral ridge, known as a wing, on trunk, indicating water presence
Water Collection
4-6 litres of potable water can be collected from a fully grown tree by making a small hole in the wing
Traditional Use
Used by tribal communities, such as the Konda Reddi Tribe, as a water source during dry seasons
Adaptability
Thrives in various conditions, including harsh weather and drought
PYQ:
2015:
In India, in which one of the following types of forests is teak a dominant tree species?
(a) Tropical moist deciduous forest
(b) Tropical rain forest
(c) Tropical thorn scrub forest
(d) Temperate forest with grasslands
Practice MCQ:
The Indian Laurel Tree (Terminalia tomentosa) recently seen in news is famous for its:
It is a 14-digit id employed to uniquely identify individuals, verify their identity, and connect their health records (with their consent) across various systems and stakeholders.
Features of ABHA
Cashless Transactions: ABHA enables cashless transactions for eligible beneficiaries, reducing the financial burden during medical emergencies.
Electronic Health Records (EHR): It integrates electronic health records, facilitating storage, and retrieval of patient information for streamlined healthcare delivery.
Portability: ABHA accounts are portable across various healthcare providers under the Ayushman Bharat scheme, ensuring seamless access to services.
Real-time Monitoring: Incorporating real-time monitoring mechanisms to track fund utilization, ABHA ensures efficient allocation and prevents misuse.
Various Components
Beneficiary Identification: ABHA involves the identification and registration of eligible beneficiaries under the Ayushman Bharat scheme, assigning a unique health identification number (UHID).
Funds Management: It manages the allocation and disbursement of funds for healthcare services, ensuring prompt and secure transfers.
Claim Settlement: ABHA processes and settles claims submitted by healthcare providers, verifying authenticity, and disbursing payments.
Audit and Oversight: Incorporating audit mechanisms to monitor fund utilization, ABHA ensures compliance with regulations and maintains system integrity.
Back2Basics: Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)
Details
Umbrella Scheme
Ayushman Bharat
Incepted in National Health Policy 2017, to achieve the vision of Universal Health Coverage (UHC)
Launch Year
2018
Components
Health and Wellness Centres (HWCs)
Pradhan Mantri Jan Arogya Yojana (PM-JAY)
Pradhan Mantri Jan Arogya Yojana (PM-JAY)
Offers a sum insured of Rs. 5 lakh per family for secondary and tertiary care
Provides cashless and paperless access to services at any empanelled hospital across India
Portable scheme, allowing beneficiaries to avail treatment at any PM-JAY empanelled hospital
Coverage
3 days pre-hospitalisation and 15 days post-hospitalisation
Includes diagnostic care and expenses on medicines
No restriction on family size, age, or gender
Covers all pre-existing conditions from day one
Beneficiaries
Identified through Socio-Economic Caste Census (SECC) data
Funding
Shared funding: 60:40 for states and UTs with legislature, 90:10 in Northeast states and J&K,
Himachal Pradesh, and Uttarakhand, 100% central funding for UTs without legislature
Nodal Agency
National Health Authority (NHA)
Autonomous entity under the Society Registration Act, 1860
Responsible for effective implementation of PM-JAY in alliance with state governments
State Health Agency (SHA)
Apex body of the State Government responsible for the implementation of AB PM-JAY in the State
PYQ:
2021:
“Besides being a moral imperative of a Welfare State, primary health structure is a necessary precondition for sustainable development.” Analyse.
Practice MCQ:
Consider the following statements about the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY):
1. 3 days pre-hospitalisation and 15 days post-hospitalisation.
2. Includes diagnostic care and expenses on medicines.
3. No restriction on family size, age, or gender.
4. Beneficiaries are identified from national family health survey.
How many of the above discussed features is/are correct?
Irish researchers discovered that Criollo cattle are well-adapted to Climate Change due to their ability to thrive in hot and humid conditions, which they have developed over many years.
About Criollo Cattle Breed
Details
Origin
Latin America, particularly in regions such as Mexico, Central America, and parts of South America
Historical Context
Criollo cattle trace their roots back to the arrival of Spanish cattle in the Americas during the 15th and 16th centuries.
Initially brought from La Gomera in the Spanish Canary Islands, adapted to diverse environments.
Physical Appearance
Small to medium-sized cattle with a compact body structure
Adapted to various climates, including tropical and subtropical regions
Short, sleek coat, often in various colors such as black, brown, or red
Adaptability
Known for their resilience and ability to thrive in harsh environments
Well-suited to extensive grazing systems and low-input management practices
Disease Resistance
Developed natural resistance to various diseases prevalent in their native regions, such as tick-borne illnesses and parasites
Economic Importance
Valued for their ability to utilize low-quality forages and adaptability to diverse environments
Serve as a sustainable source of meat and dairy products for local communities
PYQ:
2016:
What is/are unique about ‘Kharai camel’, a breed found in India?
1. It is capable of swimming up to three kilometres in seawater.
2. It survives by grazing on mangroves.
3. It lives in the wild and cannot be domesticated.
Select the correct answer using the codes given below:
(a) 1 and 2 only
(b) 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Practice MCQ:
The Criollo cattle breed has recently found mention in the news for its:
Mains: Q. Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (UPSC CSE 2023)
Prelims:
Q. Disguised unemployment generally means (UPSC CSE 2013)
(a) large number of people remain unemployed (b) alternative employment is not available (c) marginal productivity of labour is zero (d) productivity of workers is low
Note4Students:
Mains: Social Issues; Population; Unemployment;
Mentor comments: Unemployment/Underemployment is the most contentious issue that continues to be a challenge for the Socioeconomic landscape of India. As one of the world’s most populous nations with a diverse workforce, fluctuations in the unemployment rate have far-reaching implications for the country’s growth and development. So, we need to analyze the current status of India’s Dynamic Population. The recently published, India Employment Report 2024 is the third in a series of regular publications by the ILO on labor and employment issues. This report on Youth Employment, Education, and Skills examines the challenge of youth employment in the context of the emerging economic, labor market, educational, and skills scenario in India and changes over the past two decades.
Let’s learn.
—
Why in the News?
The recent India Employment Report (IER) 2024 Report by the Institute for Human Development and International Labour Organization (ILO) poses questions on the trickle-down effect of employment.
Key highlights of the IER 2024 Report:
Poor Employment Conditions:
The overall labor force participation and employment rates are reflecting issues such as stagnant or declining wages, increased self-employment among women, and a higher proportion of unpaid family work among youth.
The share of the young population with secondary or higher education in the total unemployed has almost doubled from 35.2% in 2000 to 65.7% in 2022.
Youth Employment Challenges:
Youth employment and underemployment surged between 2000 and 2019, with educated youths experiencing significantly higher levels of joblessness.
The Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and the Unemployment Rate (UR) showed a long-term deterioration between 2000 and 2018 but witnessed an improvement after 2019.
Widening Regional Gaps: Significant states consistently rank lower in employment indicators. For example, states like Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, Jharkhand, and Chhattisgarh have struggled with poor employment outcomes over the years, reflecting the influence of regional policies.
Case Study from Kolkata:
A study conducted in 37 slums across Kolkata in 2012 and revisited in 2022-23 found that the major occupations in slums have remained the same over the decade, with a significant proportion of the working population engaged in unskilled labor. The share of employment in skilled and semi-skilled labor and private organizations decreased between 2012-19, while employment in petty businesses or small shops increased by 9%. The study also found that employment in truck driving and cleaning, and construction and related work gained momentum in the last 10 years.
Widening Gender Gaps:
India is facing low rates of female labor force participation.
Although educational attainment has improved across all groups, social inequalities persist despite affirmative action and targeted policies, with Scheduled Castes and Scheduled Tribes facing barriers to accessing better job opportunities.
Informal Employment challenges: Although non-farm employment growing faster than farm employment before 2018, it has not grown sufficiently to absorb workers from agriculture. Around 90% are engaged in informal work, especially after 2018 it is increased.
Lack of necessary skills: 75% of workers are unable to send emails with attachments, 60% are unable to copy and paste files, and 90% are unable to perform basic spreadsheet tasks like putting a mathematical formula.
Declining Wages of Casual Workers:
While wages of skilled laborers maintained a modest upward trend during 2012–22, wages have remained low for unskilled workers.
As much as 62% of the unskilled casual agricultural workers and 70% of such workers in the construction sector at the all-India level did not receive the prescribed daily minimum wages in 2022.
No Security to Industrial Workers: Recently, online platforms and gig workers have been expanding, but it is, to a large extent, the extension of informal work, with hardly any social security provisions.
Trends in Regional Migration:
India is expected to have a migration rate of around 40% in 2030 and will have an urban population of around 607 million.
The present pattern of migration also shows regional imbalance in the labor markets.
Usually, migration in India is seen from the eastern, north-eastern, and central regions to southern, western, and northern regions.
What are the suggestive measures given by ILO?
To address labour market disparities:
Enhance women’s participation.
Integrate high-quality skills training to uplift economically disadvantaged groups.
Promote a fair labour market.
To enhance our focus on enhancing Employment:
Working on macroeconomic policies especially manufacturing sector.
Supporting MSMEs through a decentralized approach.
Increase agricultural productivity.
Building a sustainable economy.
To enhance job quality and build strategies:
Building robust labor Policy.
Promote Digital economy.
Focusing on sustained urban culture and migration policy.
Recently, the SC rejected Kerala’s plea for immediate relief in its case urging the Union government to ease borrowing constraints, allowing the state to secure extra funds in the ongoing fiscal year.
State governments receive funds from three sources:
Own revenues (tax and non-tax)
Transfers from the Union government as shares of taxes and as grants
Market borrowings
Fiscal Demands for Extra Funds:
Increased Expenditure: In 2020-21, the Kerala government sharply increased its spending to 18% of its GSDP, to provide economic relief in the wake of the COVID-19 pandemic, aided by the relaxation in borrowing norms then
Central Gov transfers to Kerala declined: As ratios of GSDP, the Union government’s transfers to Kerala declined to 2.8% in 2023-24, significantly lower than previous years, even as the State’s revenues remained at around 8.0%.
This meant that, in 2023-24, the State government could meet its modest budget expenditure, equivalent to 14.2% of GSDP, only by raising the borrowing to 3.4% of the GSDP
Socio-Economic for Extra Funds:
Aging Population: Kerala, like many other states, faces the challenge of an aging population, which puts pressure on pension funds and healthcare systems, necessitating long-term financial planning and investment.
Pension Liabilities: The substantial outgo for pensions poses a financial burden on the state’s budget, requiring strategies for sustainable pension management to ensure fiscal stability.
Youth Outmigration: Kerala experiences significant outmigration of its youth, leading to a loss of productive workforce and potential tax revenues, highlighting the need for policies to retain skilled workers and stimulate economic growth
About Net Borrowing Ceiling (NBC):
The net borrowing ceiling for states in India denotes the maximum threshold set on the funds that state governments can borrow within a fiscal year.
Significance: Ensuring fiscal discipline and preventing states from accumulating excessive debt, the net borrowing ceiling plays a pivotal role.
Factors: The criteria for setting these limits are shaped by various factors such as inputs from the Finance Commission, the Fiscal Responsibility and Budget Management (FRBM) Act, and specific directives from the central government, notably the Ministry of Finance.
Basis of the Net Borrowing Ceiling:
Fiscal Responsibility Legislation: Both the central and state governments in India adhere to the FRBM Act, which establishes fiscal deficit goals to uphold fiscal discipline. Under the FRBM, states are required to maintain a fiscal deficit limit of 3% of the Gross State Domestic Product (GSDP).
Central Government Guidelines: The central government, through the Department of Expenditure in the Ministry of Finance, sets the annual borrowing limits for each state based on a formula that considers the state’s GSDP, existing debt levels, fiscal discipline, and other relevant factors. These limits can be revised in response to special circumstances, such as natural disasters or significant economic downturns.
Finance Commission Recommendations: The Finance Commission, which is constituted every five years, recommends how the central taxes are to be divided between the centre and the states and suggests measures to maintain fiscal stability. It also provides recommendations regarding the borrowing limits of states.
Conclusion: States need to put in place an effective forecasting and monitoring mechanism for cash inflows and outflows so that a need-based approach is followed for market borrowings and the interest cost of cash surpluses is minimized.
Mains PYQ
Q What were the reasons for the introduction of Fiscal Responsibility and Budget Management (FRBM) Act, 2013? Discuss critically its salient features and their effectiveness. (UPSC IAS/2013)
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