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Subject: Economics

  • Moving Beyond Vande Bharat: Performance of Indian Railways

    Vande Bharat

    Central Idea

    • The Indian Railways has been in the news lately, with the launch of Vande Bharat trains and their successive introduction in different parts of the country. However, amid the publicity surrounding these new trains, the larger picture and serious issues confronting the Indian Railways are being overlooked. This article aims to evaluate the performance of the Indian Railways, especially in the freight and passenger sectors, and highlights the need for more relevant metrics.

    Facts for prelims: Vande Bharat Express

    Vande Bharat Express

    • Vande Bharat Express, also known as Train 18, is a semi-high-speed, fully air-conditioned train in India that runs on electric traction. It is named after the country’s national slogan “Vande Mataram” and was designed and manufactured by the Integral Coach Factory in Chennai, India.
    • The train is equipped with modern amenities such as Wi-Fi, an infotainment system, and a GPS-based passenger information system, among others.
    • It has a maximum speed of 180 km/h and is considered to be one of the fastest trains in India.
    • It is designed to be an energy-efficient and eco-friendly train, and is expected to provide a comfortable and safe travel experience to passengers.

    Performance and prospect of the Indian Railways, especially in the freight and passenger sectors

    1. Investment in Indian Railways: Since the merger of the Railway Budget with the General Budget in 2017, there has been a shift towards ramping up investments in the Indian Railways. The Annual Plan outlay for the Railways has increased from ₹1,09,935 crore in 2016-17 to ₹2,60,200 crore in the Budget for 2023-24, an increase of 137%. While this unprecedented level of investment is welcome, it must translate into concrete progress towards capacity building, and not just be limited to inputs.
    2. Freight Sector:
    • Rail share of freight traffic: The National Rail Plan 2030 (NRP) aims to raise the rail share in freight traffic vis-à-vis roadways from 27% to 45% by 2050. However, the rail share of freight carried reduced from 51.5% in 2008-09 to 32.4% in 2018-19 for leads over 300 km.
    • Commodity diversification: Almost the entire increase in volume of traffic carried by rail over the decade 2008-09 to 2018-19 has been in short lead traffic (leads up to 300 km) and 55% of the increase was through the transport of just one commodity, viz. coal. As yet, there is no evidence of higher levels of traffic being achieved concurrently with diversification of commodities carried or an increase in rail share vis-à-vis road transport.
    • Average speed of goods trains: The NRP aims to raise the average speed of goods trains to 50 kilometres per hour from the present 25 kmph, which is expected to increase efficiency and reduce transportation costs.
    • Tariff rates for freight: The NRP also calls for a concurrent reduction in tariff rates for freight by up to 30%.
    1. Passenger Sector: Punctuality is a crucial operational index for passenger trains. While published statistics of punctuality usually are above 90%, these figures are arrived at with a dose of adjustment and only the destination arrival time is considered irrespective of the fact that a train might have been off schedule en route at all the important intermediate stations. The Indian Railways should aim to be at least within five minutes (without any adjustment) of the scheduled time.

    Vande Bharat

    Facts for prelims (Conceptual): Why freight trains are switching to aluminium wagons?

    • Consume less energy and reduce carbon emissions: Aluminium trains consume less energy and the metal is recyclable. It is estimated that switching to aluminium will save 1,500 tonnes of carbon emissions a year.
    • Lighter as compared to steel: They are lighter by up to 30% compared to stainless steel coaches. These coaches, being lighter than stainless steel ones, are preferred for higher speed systems.
    • Less time to manufacture: Aluminium trains take less time to manufacture and thus can help speed up capacity for production.
    • Low haulage cost and high payload capacity: They offer low haulage cost and higher payload, better fuel efficiency and lower pollution levels.
    • Expected to improve freight transportation: The new metal trains will help the Railways hike its share in overall freight transportation from the current 18%.

     Need for an annual report

    • Report on the lines of the annual Economic Survey: Government should consider tabling an annual report on the performance of the Railways in Parliament on the lines of the annual Economic Survey prepared by the Finance Ministry ahead of the General Budget.
    • Not just for publicity pamphlet but a resource for policymakers: This report, unlike a publicity pamphlet like the Indian Railways Year Book, should be an internal performance audit that should serve as a valuable resource for policymakers, serious students and also researchers in the field of rail transport.

    Way ahead

    • International standards in punctuality: If stations in the Indian Railways network can be remodelled to international standards, perhaps it is time to aim for international standards in punctuality of trains as well.
    • Evolve an index of punctuality: It is high time to move away from the traditional concept of destination punctuality and evolve an index of punctuality that will also reflect the punctuality at select intermediate stations, at least for all mail/express trains.
    • Passenger experience: The focus should be to improve overall passenger experience, not merely statistics.
    • Other areas for assessment: There are several other areas that need critical analysis, such as financial performance, physical performance, safety, organizational/human resource issues, project execution, customer relations, and the effect of the dedicated freight corridors on the Indian Railways system capacity.

    Indian Railways

    Conclusion

    • The Indian Railways is the prime transporter and the largest public undertaking in the country, and it is crucial that its performance is evaluated using relevant metrics. While the introduction of Vande Bharat trains is a success story, it must not be the only focus. The focus should be on improving overall passenger experience and performance in the freight sector, and not merely on statistics.

    Mains Question

    Q. The consecutive introduction of Vande Bharat trains is a success story so far. In this backdrop Evaluate the performance of Indian railways and suggest measures to further improve the passenger experience.

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  • [pib] Cabinet approves the Policy for the Medical Devices Sector

    medical device

    Central idea: The Union Cabinet, chaired by Hon’ble Prime Minister, approved the National Medical Devices Policy, 2023.

    National Medical Devices Policy, 2023

    • The Policy, 2023 aims to facilitate an orderly growth of the medical device sector to meet the public health objectives of access, affordability, quality, and innovation.
    • The policy lays down a roadmap for accelerated growth of the medical devices sector to achieve various missions.

    Objectives

    • The policy aims to make the industry competitive, self-reliant, resilient, and innovative.
    • It focuses on meeting the healthcare needs of not only India but also the world.
    • It aims to accelerate the growth of the medical devices sector.
    • It takes a patient-centric approach to meet the evolving healthcare needs of patients.
    • It provides support and directions to the medical devices industry to achieve these goals.

    Strategies to Promote Medical Device Sector

    The medical devices sector will be facilitated and guided through a set of strategies that cover six broad areas of policy interventions:

    Key measures and actions
    1. Regulatory Streamlining Enhance ease of doing research and business, balance patient safety with product innovation, create a Single Window Clearance System for licensing of medical devices, enhance the role of Indian Standards like BIS, and design a coherent pricing regulation.
    2. Enabling Infrastructure Establish and strengthen large medical device parks and clusters equipped with world-class common infrastructure facilities in proximity to economic zones with requisite logistics connectivity.
    3. Facilitating R&D and Innovation Promote research and development in India, establish centres of excellence in academic and research institutions, innovation hubs, and support for startups.
    4. Attracting Investments in the Sector Encourage private investments, funding from venture capitalists, and public-private partnerships, in addition to existing schemes and interventions like Make in India, Ayushman Bharat program, Heal-in-India, and Start-up mission.
    5. Human Resources Development Ensure a steady supply of skilled workforce across the value chain by leveraging available resources in the Ministry of Skill Development and Entrepreneurship, supporting dedicated multidisciplinary courses for medical devices in existing institutions, and developing partnerships with foreign academic/industry organizations to develop medical technologies.
    6. Brand Positioning and Awareness Creation Create a dedicated Export Promotion Council for the sector under the Department, initiate studies and projects for learning from best global practices of manufacturing and skilling system, promote more forums to bring together various stakeholders for sharing knowledge, and build strong networks across the sector.

     

    Medical devices sector in India: A quick recap

    • The medical devices sector in India is an essential and integral part of the Indian healthcare sector.
    • The sector has contributed significantly to the domestic and global battle against the COVID-19 pandemic through the large-scale production of medical devices & diagnostic kits.

    Growth potential in India

    • The market size of the medical devices sector in India is estimated to be $11 billion (approximately, ₹ 90,000 Cr) in 2020, and its share in the global medical device market is estimated to be 1.5%.
    • The Indian medical devices sector has enormous potential to become self-reliant and contribute towards the goal of universal health care.

    Current initiatives in this sector

    • The Government of India has initiated the implementation of the PLI Scheme for medical devices.
    • It supports for setting up of four Medical devices Parks in the States of Himachal Pradesh, Madhya Pradesh, Tamil Nadu, and Uttar Pradesh.

     

     

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  • India’s sustainable jet fuel may get ASTM certified in 2023

    fuel

    Central idea

    • The Indian Institute of Petroleum (IIP) has developed sustainable aviation fuel (SAF) using home-grown technology from cooking oil and oil-bearing plants.
      • SAF is also being produced from non-petroleum-based renewable feedstocks, municipal solid waste, woody biomass, fats/greases/oils, and other feedstocks.

    About ASTM certification

    • ASTM International is an international standards organization that develops and publishes technical standards for a wide range of materials, products, systems, and services.
    • It was formerly known as the American Society for Testing and Materials and is based in the United States.
    • The organization has over 30,000 members from more than 140 countries, including scientists, engineers, and industry professionals.
    • The standards cover industries such as construction, petroleum, medical devices, and consumer products.

    SAF under ASTM Certification

    • Two of ASTM standards related to aviation fuel are ASTM D4054 and ASTM D7566.
    • ASTM D4054 sets the requirements for qualifying aviation turbine fuels.
    • ASTM D7566 sets the requirements for certifying fuels for use in commercial aviation.

    Present use of SAF

    • The Indian Air Force received provisional certification in November 2021 to use SAF on their test flights, subject to case-by-case approval by the aircraft manufacturer concerned.
    • However, it is yet to be internationally certified for use in commercial airlines in India.

    SAF production in India

    • The Mangalore Refinery and Petrochemicals Ltd is setting up the first SAF plant, which is expected to come online by early 2025.
    • However, two more SAF plants are expected to be set up by other refineries, probably by 2025-26.
    • The Mangalore Refinery can produce 20 tonnes of SAF per day, meaning about 7,000 tonnes per year.
    • However, to achieve even a per cent of blending of SAF in India, around 60,000 tonnes per year are required.

    Way forward

    • Demand for bio-jet fuel must be increased through a national policy, along the lines of the National Biofuel Policy, for it to be commercially scaled and to accelerate production.
    • A nodal agency to implement this policy should be formed to bring together energy, transportation and agriculture sectors together under one roof.
    • Mapping the sources of the various feedstock could aid this policy.

     

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  • Virtual Digital Assets Regulation: India’s progressive Approach

    Central Idea

    • The regulation of new technologies can be a challenging task, as their rapid and constant change can create unintended consequences. History is full of examples where innovations were curtailed, such as the infamous Red Flag Act of the UK that ended up strengthening the motorcar industry in Europe. Today, India’s recent notification on anti-money laundering provisions for virtual digital assets businesses and service providers is a step in the right direction.

    What is mean by Virtual Digital Assets?

    • Digital representations of value: Virtual Digital Assets refer to digital representations of value that can be transferred, stored, or traded electronically. These assets may include cryptocurrencies, tokens, or other forms of digital assets that are secured using cryptography and blockchain technology.
    • Intangible: Virtual digital assets are intangible and exist only in the digital realm, but they can be used as a medium of exchange, store of value, or investment.
    • Decentralized nature: Virtual digital assets are typically decentralized and operate independently of central authorities, making them appealing to many users. However, their decentralized nature also makes them susceptible to illicit activities such as money laundering and terrorism financing, which has led to the need for regulations and oversight.

    How Virtual digital assets are linked with money laundering?

    • Anonymity: Virtual digital assets offer a degree of anonymity, which can be exploited by criminals to conceal their identities and activities.
    • Lack of regulations: The lack of comprehensive regulations in the virtual digital asset space makes it easier for criminals to launder money using these assets.
    • Cross-border transactions: Virtual digital assets can be used to conduct cross-border transactions with ease, making it easier for criminals to move money across jurisdictions and avoid detection.
    • Decentralized nature: The decentralized nature of virtual digital assets means that there is no central authority regulating the transactions, making it difficult to track and monitor illicit activities.
    • High liquidity: Virtual digital assets are highly liquid and can be easily converted into other forms of currency, making it easier for criminals to move money around and launder their proceeds.
    • Complex transactions: Some virtual digital asset transactions can be highly complex, making it difficult to trace the source of the funds and detect money laundering activities.

    India’s approach to regulate virtual digital assets

    • Prevention of Money Laundering Act (PMLA) Act of 2002: PMLA enacted in 2002 to prevent and combat money laundering and related crimes. The act provides for the confiscation of property derived from, or involved in, money laundering, and also imposes penalties on individuals and entities involved in money laundering activities.
    • Extension of anti-money laundering provisions: India’s Union Finance Ministry, in a gazette notification, extended anti-money laundering provisions to virtual digital assets businesses and service providers, under the Prevention of Money Laundering Act (PMLA) Act of 2002.
    • Mandatory registration: Virtual digital assets platforms carrying out activities such as exchange between virtual digital assets and fiat currencies, exchange between one or more forms of virtual digital assets, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, and participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset, must register as a reporting entity with the Financial Intelligence Unit-India.
    • Implementation of know your customer and record-keeping measures: Reporting entity platforms such as CoinSwitch are now mandated to implement know your customer, record and monitor all transactions, and report to the Financial Intelligence Unit-India as and when any suspicious activity is detected.
    • Standardisation of norms: By extending anti-money laundering provisions to virtual digital assets, a framework has been created for virtual digital assets platforms to diligently monitor and take actions against malpractices, making the Indian virtual digital assets sector more transparent.
    • Compliance with global guidelines: The anti-money laundering provisions in India are in line with global guidelines put forward by the International Monetary Fund and the Financial Action Task Force.
    • Reconsideration of tax rates: With the mitigation of money laundering and terror financing risks through the PMLA notification, there is an opportunity for India to reconsider its tax treatment of virtual digital assets, which is currently an outlier both domestically and internationally.

    How India can leverage G20 presidency?

    • Spearheading critical discussions on establishing a global regulatory framework for virtual digital assets.
    • Sharing its leadership and experience on this issue with other G20 nations.
    • Considering the steps taken by other G20 nations, such as Japan and South Korea’s establishment of a framework to license Virtual Asset Service Providers (VASPs), and Europe’s passing of the Markets in Crypto-Assets (MiCA) regulation by the European Parliament.
    • Using the G20 platform to coordinate and provide greater oversight on the domestic virtual digital assets ecosystem, which could provide much-needed assurance to everyday users as well as regulators.

    Conclusion

    • India’s measured approach to regulating virtual digital assets is a step in the right direction. With India’s presidency of the G-20, it is an opportunity to establish a global regulatory framework for virtual digital assets. A progressive regulatory framework will establish India’s virtual digital assets leadership and instill the animal spirit in India’s innovation economy.

    Mains Question

    Q. What do you understand by mean by Virtual Digital Assets? Establish a link between virtual digital assets and money laundering. Discuss how India is taking measures to regulate virtual assets?

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  • Ambiguities in India’s Nuclear Liability Law

    nuclear

    Central idea: The article discusses how the issues regarding India’s nuclear liability law are holding up the plan to build six nuclear power reactors in Maharashtra’s Jaitapur, which is the world’s biggest nuclear power generation site under consideration at present.

    Law governing nuclear liability in India

    Ans. Civil Liability for Nuclear Damage Act (CLNDA), 2010

    Provision Description
    Purpose of CLNDA To provide a speedy compensation mechanism for victims of a nuclear accident
    Liability on operator Strict and no-fault liability on the operator of the nuclear plant, where the operator will be held liable for damage regardless of any fault on its part
    Amount of liability In case of damage caused by an accident, the operator will have to pay ₹1,500 crore
    Insurance or financial security for liability The operator is required to cover liability through insurance or other financial security
    Government liability in case of excessive claims If the damage claims exceed ₹1,500 crore, the CLNDA expects the government to step in and has limited the government liability amount to the rupee equivalent of 300 million Special Drawing Rights (SDRs) or about ₹2,100 to ₹2,300 crore

     

    The concept of Supplier Liability

    • The CLNDA introduced the concept of supplier liability in addition to operator liability in India’s civil nuclear liability law.
    • The international legal framework on civil nuclear liability, including the annex of the CSC, is based on the exclusive liability of the operator of a nuclear installation.
    • CLNDA Section 17(b) allows the operator of the nuclear plant to exercise the right of recourse against the supplier in case of a nuclear incident resulting from an act of the supplier or their employee, including the supply of defective equipment or materials.

    Why is it the issue in Nuclear Deals?

    • Undue liability: Foreign and domestic suppliers have been hesitant to enter into nuclear deals with India due to the country’s unique liability law, which allows suppliers to be held liable for damages.
    • Lack of clarity: on how much insurance needs to be set aside in case of damage claims and the potential for unlimited liability have been major concerns for suppliers.
    • Unlimited liability: Suppliers have taken issue with two specific provisions in the law – Section 17(b) and Section 46 – which expose them to liability beyond that of the operator of the nuclear plant. Section 46 potentially allows civil liability claims to be brought against both the operator and suppliers through other civil laws such as the law of tort, further exposing suppliers to unlimited amounts of liability.

    Existing projects in India

    • The Jaitapur nuclear project has been delayed for over a decade.
    • India has signed civil nuclear deals with the US, France, and Japan, but the only foreign presence in India is that of Russia in Kudankulam, which predates the nuclear liability law.
    • The government has stated that the Indian law is in line with the Convention on Supplementary Compensation (CSC).

    Government’s stand

    • The Indian law is in line with the Convention on Supplementary Compensation (CSC).
    • However, legal experts have pointed out that suppliers can be sued if defective equipment is provided or if it can be established that the damage resulted from an act of intent.
    • It would not be sound public policy if the Nuclear Power Corporation of India Limited (NPCIL) waived its right to recourse in the contract, despite the law providing for such recourse.

    Conclusion

    • The issues regarding the liability law would be resolved before French President Emmanuel Macron’s visit to India, which was first scheduled for March but has been pushed to September.

     

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  • Only half PMJDY insurance claims settled in 2 years

    pmjdy

    Central idea: In an RTI reply, it is revealed that only 329 claims out of 647 filed were settled in the last two financial years under the Pradhan Mantri Jan Dhan Yojana (PMJDY).

    What is PM Jan Dhan Yojana (PMJDY)?

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

    Benefits under PMJDY

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

    Why in news?

    • In the financial year 2021-22, 341 claims were received for accident insurance cover under the PMJDY scheme.
    • Out of these, 182 claims were settled and 48 were rejected.
    • No information was provided on the status of the remaining 111 claims.

    Is PMJDY a success?

    • Dormancy of accounts: The PMJDY scheme has led to an increase in the number of bank accounts in rural areas, but this has not necessarily led to a corresponding increase in transactions due to limited transaction history of many account holders.
    • Low or no transactions: Insurance coverage for the account holder is linked to their transaction history, and many accounts remain frozen due to lack of transactions, taking several weeks or months to reactivate.
    • False promise of overdraft: The promised overdraft facility of Rs 5000 for new account holders has not been provided as promised, leading to scepticism about the scheme’s success.
    • Payments bottleneck: The lack of proper connectivity, electricity, internet, and ATM facilities in rural areas has hindered the activation of RuPay cards and PIN numbers, which should have been considered before implementing such a large-scale program.

     

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  • Tamil Nadu’s Manamadurai Pottery gets GI Tag

    pot

    The Manamadurai pottery recently earned a Geographical Indication (GI) tag.

    Manamadurai Pottery

    • The Vaigai river enriches the clay used for the Manamadurai pottery. Pot making requires expertise as the bottom has to be perfectly round.
    • The right proportion of mud, clay and heating makes this product very strong. The main raw materials for making these pots are soil and water.
    • The sand, collected from different places of the district, is used for making pottery and dried for two days. The particles of the mud get separated by sieving.
    • The slurry is mixed with the sand and lead and graphite are added to the mixture to improve the quality.
    • This mixture is now rich in calcium lime, ash, red lead, sodium silicate, manganese, iron, and plasticizing. The pot is also painted in different colours.

    What makes these pots unique?

    • A unique type of clay is sourced from water bodies like Nedunkulam, Nathapurakki, Sundaranadappu, Seikalathur to make these pots.
    • While making these pots, the five elements of nature namely earth, water, fire, sun and air are used.
    • The basic material for pottery is mud, which represents the earth. Mud is mixed with water, another element of nature.
    • This is followed by baking in fire, adding the third element.
    • The air percolates through the pores in the clay, marking the fourth element.
    • And finally, the cavity enclosed by the pot or any related article represents space.

    Back2Basics: Geographical Indication (GI)

    • A GI is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
    • Nodal Agency: Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry
    • India, as a member of the World Trade Organization (WTO), enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 w.e.f. September 2003.
    • GIs have been defined under Article 22 (1) of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
    • The tag stands valid for 10 years.

     

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  • The Brain Economy: Navigating a New World

    Brain Economy

    Central Idea

    • The nature of labor has changed drastically in the last century, moving from physical labor to skill-based labor to brain-based labor. Technology is driving this change and reshaping industries, and we must adapt to this new reality to stay globally relevant. We need to move away from outdated stereotypes of evil corporations and embrace technology to facilitate meaningful dialogue around the trade-offs in the brain economy.

    Brain Economy

    What is mean by Brain Economy?

    • Knowledge-based economy: The Brain Economy refers to the shift towards a knowledge-based economy where the primary source of economic growth is driven by innovation and creativity, and the ability to generate, process, and use knowledge effectively.
    • In contrast with labour intensive economy: It is often contrasted with previous economies, such as the Industrial Economy and the Agricultural Economy, which were based on physical labor and the production of tangible goods

    “Every successful innovation is built on a graveyard of failures”

    Unlimited Capacity of Technology

    • The technology will continue to advance and develop beyond just the fields of software, artificial intelligence, and data analytics.
    • It will also spread rapidly across other fields such as brain sciences, which includes the study of the brain and its functions; quantum computing, which involves the use of quantum mechanics to perform calculations; genetic engineering, which involves the manipulation of DNA to create new organisms or modify existing ones; 3D printing, which is the process of creating physical objects from digital models; nanotechnology, which involves the manipulation of matter on a molecular or atomic scale.
    • The combination of these technologies will lead to new and innovative solutions in various industries.

    Potential benefits of the brain economy

    • Increased Innovation: Brain-based work is about rapid innovation and creation, driven by technology. This can lead to new products, services, and technologies that can enhance people’s lives.
    • Higher Productivity: With advancements in technology and automation, the brain economy has the potential to significantly increase productivity and efficiency.
    • Improved Quality of Life: Brain-based work can create jobs that are less physically demanding and more intellectually stimulating. This can lead to an improved quality of life for those who work in the brain economy.
    • Economic Growth: The brain economy has the potential to fuel economic growth by creating new industries and opportunities for businesses and entrepreneurs.
    • Increased Collaboration: The brain economy requires collaboration across different fields, disciplines, and cultures. This can lead to increased cooperation and understanding among people from diverse backgrounds.
    • Social Progress: Technology and brain power can be used to address social and environmental challenges, such as poverty, inequality, climate change, and healthcare.
    • Flexibility: With technology, brain-based work can be done from anywhere, at any time, providing greater flexibility for workers and businesses.
    • Access to Information: Technology has made it easier than ever to access information and knowledge, which can help to create a more informed and educated society.
    • Personal Development: Brain-based work requires continuous learning and personal development, which can lead to increased self-awareness, creativity, and adaptability.

    Brain Economy

    Challenges for the brain economy

    • Inequality: The brain economy has the potential to exacerbate inequality by assigning exponentially differential values to body, skill, and brain. This can lead to a widening gap between those who have access to education and training in advanced technology and those who do not.
    • Job displacement: The rise of the brain economy may result in the displacement of jobs that require physical labor or lower levels of skill, leading to job losses in certain sectors. This may also require significant retraining and upskilling of workers in order to adapt to the new demands of the economy.
    • Ethical dilemmas: As technology continues to evolve and become more integrated into the brain economy, ethical dilemmas around privacy, inclusivity, fairness, and the impact on social issues such as gender parity and wealth sharing may arise.
    • Regulatory challenges: The fast-paced nature of technology development in the brain economy may pose regulatory challenges for policymakers and regulators. There may be a need for more agile and responsive regulatory frameworks to keep pace with technological developments.
    • Access to technology: Not everyone may have access to the technology required to participate in the brain economy, leading to a digital divide and further exacerbating inequality.
    • Societal impacts: The widespread adoption of technology in the brain economy may have significant societal impacts, such as changes to the nature of work, social relationships, and human behavior. It will be important to monitor these impacts and take steps to mitigate any negative effects.
    • Environmental impact: The growth of the brain economy may lead to increased energy consumption and environmental impact, particularly as new technologies such as quantum computing and genetic engineering become more prevalent. It will be important to consider the environmental impact of these technologies and take steps to mitigate any negative effects.

    How India can balance Brain economy and concerns associated with it?

    • Encourage innovation: The government should encourage innovation and research in emerging technologies, such as artificial intelligence, quantum computing, and biotechnology, by providing funding and incentives to startups, universities, and research institutions.
    • Promote digital literacy: The government should promote digital literacy and technology education at all levels of education to equip citizens with the necessary skills to participate in the brain economy.
    • Ensure regulatory compliance: The government should ensure that emerging technologies are developed and deployed in compliance with ethical, legal, and social norms. This includes establishing regulatory frameworks, guidelines, and standards for emerging technologies.
    • Invest in infrastructure: The government should invest in physical and digital infrastructure, such as broadband networks, data centers, and cloud computing, to support the growth of the brain economy.
    • Foster collaboration: The government should foster collaboration between academia, industry, and government to accelerate innovation and create new opportunities for economic growth.
    • Protect workers’ rights: The government should ensure that workers in the brain economy are protected by labor laws, including social security benefits, health insurance, and fair wages.
    • Address inequality: The government should address the growing inequality in the brain economy by investing in education, training, and social safety nets to ensure that all citizens can participate in the new economy. This includes measures to bridge the urban-rural divide, gender gap, and socio-economic disparities.

    Conclusion

    • In a country the size of India, it’s impossible to transition everyone to the brain economy overnight. The biggest component of the body economy in India is agriculture. We need our agriculture to be technology-enabled, not body driven. The bigger issue of inequality is the inequality between nations. In the brain economy, the alternative to technology and innovation is total irrelevance. To be a globally relevant player, India needs to embrace the concept of this new world of the brain economy, adapt its mindset and appropriate its resources accordingly.

    Mains Question

    Q. What do you understand by mean Brain Economy? Discuss the potential advantages and challenges of Brain economy in India and suggest a way ahead.

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  • Rs 2,913 Cr from PSEs to PM CARES Fund

    pm cares

    Government-run listed firms have contributed at least Rs 2,913.6 crore between 2019-20 and 2021-22 to the controversial Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM CARES) Fund.

    About PM CARES Fund

    • The PM CARES Fund was created on 28 March 2020 following the COVID-19 pandemic in India.
    • The fund will be used for combat, containment and relief efforts against the coronavirus outbreak and similar pandemic like situations in the future.
    • The PM is the chairman of the trust. Members will include the defence, home and finance ministers.
    • The fund will also enable micro-donations. The minimum donation accepted is ₹10.

    Issues over PM-CARES Fund

    • No defined purpose: It is deliberately ignored while a new, controversial, unanswerable, and ‘non-accountable vehicle is created; its character is not spelt out till today.
    • Non-accountable: The government seems to consider statutory provisions for enquiry and information seeking to be embarrassing obstacles.
    • Centralization of donations: It centralises the collection of donations and its utility, which is not only against the federal character but also practically inconvenient. The issue is seeming, the trusteeship of the fund.

    Questions and gaps

    • Law/statute: The PM CARES Fund was neither created by the Constitution of India nor by any statute.
    • Authority: If that is the case, under what authority does it use the designation of the Prime Minister, designated symbols of the nation, the tricolour and the official (gov.in) website of the PMO, and grant tax concessions through an ordinance.
    • Collection and dispensation: The amount received by the Fund does not go to the Consolidated Fund of India. If it goes to the CFI, it could have been audited by the CAG.
    • Uncontrolled: The This Trust is neither intended to be or is in fact owned, controlled or substantially financed by any instrumentality of the any govt even being chaired by the PM.

    Issue over tax benefits

    • Income tax: An ordinance was promulgated to amend Income Tax Act, 1961 and declare that the donations to the PM CARES Fund “would qualify for 80G benefits for 100% exemption”.
    • CSR Funds: It will also qualify to be counted as Corporate Social Responsibility (CSR) expenditure under the Companies Act, 2013.
    • Foreign donations: It has also got exemption under the FCRA [Foreign Contribution Regulation Act] and a separate account for receiving foreign donations has been opened.

    What can be inferred from all these?

    • The Centre now considers it as another obstacle and has created a new trust with the Prime Minister and his Ministers only.
    • The manner in which the PM CARES Fund was set up — with its acronym created to publicise the point that the PM cares for people — shows a bypassing of the statutory obligations of a public authority.

    Query and response: Again ironical

    • After initial denials, the Government has conceded it to be a public charitable trust, but still maintains that it is not a ‘public authority’.
    • The point is that the PMO operates the Fund, but says it cannot supply any information about the PM CARES Fund because it is not a public authority.

    Severe interpretations: Is it an Office of Profit?

    • If the PM CARES Fund is unconnected with the Government, then the Fund could become an office of profit.
    • And that could disqualify him and the three Ministers from holding those constitutional offices.

    Conclusion

    • In order to uphold transparency, the PM CARES Fund should be declared as a Public Authority under the RTI Act, and all RTI queries answered truthfully.
    • The fund should be designated as a “public authority” under Section 2(h) of the RTI Act.

     

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  • Rural Real Wage Growth In India: The Importance of Accurate Data analysis

    Central Idea

    • Rural real wage growth is a crucial indicator of the well-being of individuals, particularly the poor, in India. Jean Dreze, a respected economist claims that rural real wage growth in India has been sluggish despite rapid economic growth. However as per Surjit Bhalla another economist, Dreze’s findings are based on weak statistical analysis and incomplete data. Surjit Bhalla’s and presents his own findings, which suggest higher wage growth rates for construction workers, non-agricultural laborers, and agricultural laborers.

    Contrast results for instance

    • For construction workers, Dreze obtains a rate of growth (CAGR) of just 0.2 per cent (actually 0.15 per cent); However, CAGR stands at eight times larger at 1.2 per cent.
    • For non-agricultural labourers (porters and loaders) the same yawning divergence: Dreze obtains 0.3 per cent, whereas it stands 1.2 per cent, and for agricultural labourers, 0.9 per cent vs 1.5 per cent.

    What is CAGR?

    • CAGR stands for Compound Annual Growth Rate. It is a measure used to calculate the average growth rate of an investment over a certain period of time, assuming that the investment has grown at a steady rate each year.
    • It takes into account the effect of compounding, which means that the investment’s growth in one year is added to the base value of the investment, and the total amount is then used to calculate growth for the next year.
    • CAGR is often used in finance to compare the performance of different investments or to forecast future growth.

    Why are the two results so different?

    • Differences in Method of Estimation: Dreze uses semi-log regression on eight observations to estimate the compound annual growth rate (CAGR) for each of three male occupations. His estimate of CAGR is not even significant at the 11 per cent level of confidence for two of these occupations – construction and non-agricultural laborers. Dreze does not uses a population-weighted average of year-on-year growth for each of the 38 sex-occupation categories to estimate CAGR accurately.
    • Differences in Time Period of Analysis: Surjit Bhalla also criticizes Dreze’s chosen time period of analysis, 2014-2021. As per Surjit Bhalla, that no study combines pre-Covid and Covid years without even a mention of the difference. Surjit Bhalla presents data for three time periods, including the normal 2014-2018, Covid 2019-2021, and all years 2014-2021.

    Why accurate rural wage data is important?

    • Poverty alleviation: Rural wage data is used to determine the poverty levels in a country, and accurate data is essential for effective poverty alleviation policies.
    • Income inequality: Accurate rural wage data can help policymakers understand the level of income inequality in rural areas and design policies to reduce it.
    • Agricultural productivity: Rural wage data is used to assess the productivity of the agricultural sector, which is a key source of income for rural households.
    • Labor market trends: Accurate rural wage data helps policymakers understand the trends in the rural labor market, such as changes in demand for different types of labor, and design policies to support employment growth.
    • Minimum wage determination: Accurate rural wage data is necessary for determining minimum wages for rural workers, which is important for protecting the rights of workers and reducing labor exploitation.
    • Social protection: Rural wage data is used to design social protection programs such as cash transfers, food subsidies, and public works programs to support the poorest households in rural areas.
    • Macro-economic policy: Rural wage data is used to inform macro-economic policies such as inflation targeting and monetary policy, as well as to evaluate the effectiveness of such policies on rural households.

    Conclusion

    • The issue of rural real wage growth in India is complex and requires a nuanced understanding of data selection, treatment, intensity, and estimation. There is need for a more comprehensive set of data and a different method of estimation.

    Mains Question

    Q. What is Compound Annual Growth Rate (CAGR). Why do you think, accurate rural wage data is so important?

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