💥Join UPSC 2027,2028 Mentorship (August Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Subject: Economics

  • What it will take to fulfill India’s Solar Power Dream?

    From less than 10 MW in 2010, India has added significant PV capacity over the past decade, achieving over 50 GW by 2022.

    Solar energy in India

    • Solar photovoltaics (PV) has driven India’s push towards the adoption of cleaner energy generation technologies.
    • India is targeting about 500 GW by 2030, of renewable energy deployment, out of which ~280 GW is expected from solar PV.
    • This necessitates the deployment of nearly 30 GW of solar capacity every year until 2030.

    Key components

    • A typical solar PV value chain consists of first fabricating polysilicon ingots which need to be transformed into thin Silicon wafers that are needed to manufacture the PV mini-modules.
    • The mini-modules are then assembled into market-ready and field-deployable modules.

    Various challenges

    There are challenges that need to be overcome for the sustainability of the PV economy.

    (1) PV Modules

    • Indian solar deployment or installation companies depend heavily on imports.
    • It currently imports 100% of silicon wafers and around 80% of cells even at the current deployment levels.
    • India currently does not have enough module and cell manufacturing capacity.
    • India’s current solar module manufacturing capacity is limited to ~15 GW per year.
    • The demand-supply gap widens as we move up the value chain — for example, India only produces ~3.5 GW of cells currently.
    • India has no manufacturing capacity for solar wafers and polysilicon ingots.

    (2) Field deployment

    • Also, out of the 15 GW of module manufacturing capacity, only 3-4 GW of modules are technologically competitive and worthy of deployment in grid-based projects.
    • India remains dependent on the import of solar modules for field deployment.

    (3) Size and technology

    • Most of the Indian industry is currently tuned to handling M2 wafer size, which is roughly 156 x 156 mm2, while the global industry is already moving towards M10 and M12 sizes, which are 182 x 182 mm2 and 210 x 210 mm2 respectively.
    • The bigger size has an advantage in terms of silicon cost per wafer, as this effectively means lower loss of silicon during ingot to wafer processing.
    • In terms of cell technology, most of the manufacturing still uses Al-BSF technology, which can typically give efficiencies of ~18-19% at the cell level and ~16-17% at the module level.
    • By contrast, cell manufacturing worldwide has moved to PERC (22-23%), HJT(~24%), TOPCON (23-24%) and other newer technologies, yielding module efficiency of >21%.

    (4) Land issue

    • Producing more solar power for the same module size means more solar power from the same land area.
    • Land, the most expensive part of solar projects, is scarce in India — and Indian industry has no choice but to move towards newer and superior technologies as part of expansion plans.

    (5) Raw materials supply

    • There is a huge gap on the raw material supply chain side as well.
    • Silicon wafer, the most expensive raw material, is not manufactured in India.
    • India will have to work on technology tie-ups to make the right grade of silicon for solar cell manufacturing — and since >90% of the world’s solar wafer manufacturing currently happens in China.
    • It is not clear how and where India will get the technology.
    • Other key raw materials such as metallic pastes of silver and aluminium to form the electrical contacts too, are almost 100% imported.
    • Thus, India is more of an assembly hub than a manufacturing

    (6) Lack of investment

    • India has hardly invested in this sector which can help the industry to try and test the technologies in a cost-effective manner.

    Current govt policy

    • The government has identified this gap, and is rolling out various policy initiatives to push and motivate the industry to work towards self-reliance in solar manufacturing, both for cells and modules.
    • Key initiatives include:
    1. 40% duty on the import of modules and
    2. 25% duty on the import of cells, and
    3. Production Linked Incentive (PLI) scheme to support manufacturing capex
    4. Compulsion to procure modules only from an approved list of manufacturers (ALMM) for projects that are connected to state/ central government grids
    5. Only India-based manufacturers have been approved

    Way forward

    • India’s path to become a manufacturing hub for the same requires more than just putting some tax barriers and commercial incentives in the form of PLI schemes, etc.
    • It will warrant strong industry-academia collaboration in an innovative manner to start developing home-grown technologies which could, in the short-term.
    • It needs to work with the industry to provide them with trained human resource, process learnings, root-cause analysis through right testing and, in the long term, develop India’s own technologies.
    • High-end technology development requires substantial investment in several clusters which operate in industry-like working and management conditions, appropriate emoluments, and clear deliverables.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is a Windfall Tax?

    windfall

    Finance Minister has defended the windfall tax imposed by the Centre on domestic crude oil producers, saying that it was not an ad hoc move but was done after full consultation with the industry.

    What is a Windfall Tax?

    • Windfall taxes are designed to tax the profits a company derives from an external, sometimes unprecedented event — for instance, the energy price-rise as a result of the Russia-Ukraine conflict.
    • These are profits that cannot be attributed to something the firm actively did, like an investment strategy or an expansion of business.
    • The US Congressional Research Service (CRS) defines a windfall as an “unearned, unanticipated gain in income through no additional effort or expense”.
    • One area where such taxes have routinely been discussed is oil markets, where price fluctuation leads to volatile or erratic profits for the industry.

    When did India introduce this?

    • In July this year, India announced a windfall tax on domestic crude oil producers who it believed were reaping the benefits of the high oil prices.
    • It also imposed an additional excise levy on diesel, petrol and air turbine fuel (ATF) exports.
    • Also, India’s case was different from other countries, as it was still importing discounted Russian oil.

    How is it levied?

    • Governments typically levy this as a one-off tax retrospectively over and above the normal rates of tax.
    • The Central government has introduced a windfall profit tax of ₹23,250 per tonne on domestic crude oil production, which was subsequently revised fortnightly four times so far.
    • The latest revision was on August 31, when it was hiked to ₹13,300 per tonne from ₹13,000.

    Why govt. introduced windfall tax?

    • There have been varying rationales for governments worldwide to introduce windfall taxes like:
    1. Redistribution of unexpected gains when high prices benefit producers at the expense of consumers,
    2. Funding social welfare schemes, and
    3. Supplementary revenue stream for the government

    Why are countries levying windfall taxes now?

    • Prices of oil, gas, and coal have seen sharp increases since last year and in the first two quarters of the current year, although they have reduced recently.
    • Pandemic recovery and supply issues resulting from the Russia-Ukraine conflict shored up energy demands, which in turn have driven up global prices.
    • The rising prices meant huge and record profits for energy companies while resulting in hefty gas and electricity bills for households in major and smaller economies.
    • Since the gains stemmed partly from external change, multiple analysts have called them windfall profits.

    Issues with imposing such taxes

    • Companies are confident in investing in a sector if there is certainty and stability in a tax regime.
    • Since windfall taxes are imposed retrospectively and are often influenced by unexpected events, they can brew uncertainty in the market about future taxes.
    • IMF says that taxes in response to price surges may suffer from design problems—given their expedient and political nature.
    • It added that introducing a temporary windfall profit tax reduces future investment because prospective investors will internalise the likelihood of potential taxes when making investment decisions.
    • There is another argument about what exactly constitutes true windfall profits; how can it be determined and what level of profit is normal or excessive.
    • Another issue is who should be taxed — only the big companies responsible for the bulk of high-priced sales or smaller companies as well— raising the question of whether producers with revenues or profits below a certain threshold should be exempt.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • GST Council

    The Union Finance Minister has heaped praises on Goods and Services Tax (GST) Council.

    Why in news?

    • FM was reacting to a case made by Fifteenth Finance Commission chief N.K. Singh to set up a Fiscal Council with the Centre and States.
    • This is another such recommended body to act as a bridge between the GST Council and the Finance Commission.

    What is the GST Council?

    • The GST regime came into force after the 101st Constitutional Amendment was passed by both Houses of Parliament in 2016.
    • The GST Council – a joint forum of the Centre and the states — was set up by the President as per Article 279A (1) of the amended Constitution.
    • The members of the Council include the Union Finance Minister (chairperson), the Union Minister of State (Finance) from the Centre.
    • Each state can nominate a minister in-charge of finance or taxation or any other minister as a member.

    Why was the Council set up?

    • The Council, according to Article 279, is meant to “make recommendations to the Union and the states on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws”.
    • It also decides on various rate slabs of GST.
    • For instance, an interim report by a panel of ministers has suggested imposing 28 per cent GST on casinos, online gaming and horse racing.
    • A decision on this will be taken at the Council meeting.

    Recent reforms

    • The ongoing meeting is the first since a decision of the Supreme Court in May this year, which stated recommendations of the GST Council are not binding.
    • The court said Article 246A of the Constitution gives both Parliament and state legislatures “simultaneous” power to legislate on GST .
    • Recommendations of the Council are the product of a collaborative dialogue involving the Union and States.
    • This was hailed by some states, such as Kerala and Tamil Nadu, who believe states can be more flexible in accepting the recommendations as suited to them.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • GPS-based toll system to replace FASTag

    The government plans to start a GPS-based toll system in place of FASTag to ensure seamless payment and vehicle movement on national highways.

    Why in news?

    • The move would end the role of toll plazas across the country.

    How will a GPS-based tolling system work?

    • Vehicles will be fitted with an electronic device that can track their movement.
    • Highways will be geo-fenced, creating virtual boundaries. The system will use GPS or radio frequency identification technologies.
    • The software will recognize when a mobile device enters or leaves a particular area, and toll will be charged based on the distance travelled at the highway’s exit point.
    • As the system is based on sensors, there will be no need to stop at toll plazas.
    • Vehicles and users must be registered with the GPS toll system, linked to bank accounts that will be used to transfer toll payments.

    What are FASTags?

    • FASTags are stickers that are affixed to the windscreen of vehicles and use Radio Frequency Identification (RFID) technology to enable digital, contactless payment of tolls without having to stop at toll gates.
    • RFID uses electromagnetic fields to automatically identify and track tags attached to objects.
    • The tags are linked to bank accounts and other payment methods.
    • As a car crosses a toll plaza, the amount is automatically deducted, and a notification is sent to the registered mobile phone number.

    Issues with FASTags

    • Since the card is affixed to the windscreen, it can be easily misplaced, damaged or stolen.
    • The existing FASTag system, though faster than cash payments, still requires vehicles to stop at toll booths to enable reading of tags.
    • Also, the vehicle must wait till the gate is opened.
    • It has been observed that sometimes the toll fee is deducted twice from user account. Mostly, this happens due to a technical glitch.
    • Some card readers take longer time to read and register. Hence the purpose of saving time is itself defied.
    • Still, the wait time at toll booths is much more than the 30 seconds that was promised earlier.
    • Also, it has not helped reduce the number of toll booths.

    Hence the benefits of using FASTag far outweigh the challenges.

    Is FASTags a total failure?

    • Usage has increased since FASTag was made mandatory in 2021 after its launch in 2015.
    • Penetration has grown from nearly 16% in FY18 to 96.3% in FY22.
    • Total toll collection in FY18 was ₹21,948 crore, including ₹3,532 crore collected through FASTags.
    • In FY22, toll collection through FASTags increased sharply to ₹33,274 crore out of total toll collection of ₹34,535 crore.

    How will GPS benefit highway users?

    • GPS tolling uses satellite-based navigation and requires no halting.
    • Also, vehicles can be charged only for their actual travel on a highway stretch.
    • Currently, toll is paid at toll booths which is fixed between two points of tolling and a user does not get any concession even if he/she exits before completing the full run between two toll plazas.
    • The new system should reduce the toll amount charged for travel on highways.

    What is the progress so far on GPS tolling?

    • The Union road ministry has amended the National Highways Fee (Determination of Rates and Collection) Rules, 2008, allowing for the collection of toll based on distance travelled on national highways.
    • This will facilitate the introduction of GPS tolling.
    • First trials may be done on the under-construction Mumbai-Delhi expressway which will be geo-fenced.
    • Also the cost of GPS devices needs to be considered at very beginning.

    Way forward

    • The system needs a proper legislative framework, and a full launch is still years away. The government intends to introduce it in phases.
    • The road ministry is expected to amend the Motor Vehicles Act and create rules to facilitate GPS tolling as well as to penalize offenders.
    • Moreover, GPS will come with its own set of complications on calculating differential tolls.
    • Regulations and framework for these need to be developed first.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • IIP gives us true health of our economy

    IIPContext

    • India’s statistics ministry generates only one high-frequency gauge of economic activity. And that lone barometer, the index of industrial production (IIP), is completely broken.

    What is IIP?

    • The Index of Industrial Production (IIP) is an index that indicates the performance of various industrial sectors of the Indian economy. It is a composite indicator of the general level of industrial activity in the economy.

    IIPHow is IIP calculated?

    • IIP is calculated as the weighted average of production relatives of all the industrial activities. In the mathematical calculation Laspeyre’s fixed base formula is used.

    What are the Core Industries in India?

    • The main or the key industries constitute the core sectors of an economy.
    • In India, there are eight sectors that are considered the core sectors.
    • They are electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilizers.

    Which has highest weightage in IIP?

    • The eight core sector industries in decreasing order of their weightage: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.

    IIPWhy is IIP important?

    • IIP is the only measure on the physical volume of production. It is used by government agencies including the Ministry of Finance, the Reserve Bank of India, etc. for policy-making purposes. IIP remains extremely relevant for the calculation of the quarterly and advance GDP estimates.

    Who releases IIP data?

    How useful are monthly IIP figures to draw a conclusion about India’s growth?

    • IIP figures are monthly data and as such it keeps going up and down.
    • In fact, the release calls them “quick estimates” because they tend to get revised after a month or two.

    IIP Index Components

    • Mining, manufacturing, and electricity are the three broad sectors in which IIP constituents fall.
    • The relative weights of these three sectors are 77.6% (manufacturing), 14.4% (mining) and 8% (electricity).
    • Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilizers are the eight core industries that comprise about 40 per cent of the weight of items included in the IIP.

    Basket of products

    • Primary Goods (consisting of mining, electricity, fuels and fertilisers)
    • Capital Goods (e.g. machinery items)
    • Intermediate Goods (e.g. yarns, chemicals, semi-finished steel items, etc)
    • Infrastructure Goods (e.g. paints, cement, cables, bricks and tiles, rail materials, etc)
    • Consumer Durables (e.g. garments, telephones, passenger vehicles, etc)
    • Consumer Non-durables (e.g. food items, medicines, toiletries, etc)

    IIP base year change

    • The base year was changed to 2011-12 from 2004-05 in the year 2017.

    Way ahead

    • IIP remains extremely relevant for the calculation of the quarterly and advance GDP (Gross Domestic Product) estimates.

    Mains question

    Q. What do you understand by IIP? How it helps us to understand economic health?

     

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Sustainable Tourism in India

    TourismContext

    • Ministry of Tourism identified Tourism Industry’s potential as a Sunrise Industry.
    • There is a need for tourism analysts to hold tourism planners accountable.

    What is tourism?

    • Tourism is travel for pleasure or business; also the theory and practice of touring, the business of attracting, accommodating, and entertaining tourists, and the business of operating tours.

    Types of tourism

    • Domestic tourism: Refers to activities of a visitor within their country of residence and outside of their home (e.g. a Indian visiting other parts of India)
    • Inbound tourism: Refers to the activities of a visitor from outside of country of residence (e.g. a Spaniard visiting Britain).
    • Outbound tourism: Refers to the activities of a resident visitor outside of their country of residence (e.g. an Indian visiting an overseas country).

    What does sustainable tourism mean?

    • Sustainable tourism is defined by the UN Environment Program and UN World Tourism Organization as “tourism that takes full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities.”

    TourismWhat is the main importance of tourism?

    • Tourism boosts the revenue of the economy, creates thousands of jobs, develops the infrastructures of a country, and plants a sense of cultural exchange between foreigners and citizens.

    Why tourism is needed?

    • Tourism is not a fad. It is a compulsion driven by the urge to discover new places. Because we have this compulsion to venture into the unknown, we need each other. When humans travel, meet and exchange ideas, civilisation flourishes.

    What should be done to promote tourism?

    • National Tourism Authority: A separate National Tourism Authority (NTA) should be established for executing and operationalizing various tourism related initiatives. Simple, flexible and elegant processes will be laid down to allow for nimbleness.
    • National Tourism Advisory Board: A National Tourism Advisory Board (NTAB) should be set up to provide overall vision, guidance and direction to the Development of Tourism Sector in the country.
    • Creating Synergy in Tourism Eco System: In order to ensure synergy at various levels of Government and with the Private Sector, it is important to have a well-defined framework in place.
    • Quality Tourism Framework: A robust framework for quality certification of products and services across all segments like accommodation providers, tour operators, adventure tour operators, service providers like spa and wellness, guides, restaurants etc. should be laid down.
    • Enhancing the existing luxury tourism products: The existing tourism products such as Nilgiri Mountain Railway, Palace on Wheels etc. should be enhanced and their numbers will also be increased. Haulage charges will be rationalised to make luxury trains viable.
    • Railways can be a game changer: For tourism Railways have presence in most parts of the country. Most of the tourist destinations in the country are connected by rail. Railways is also in the process of connecting more places especially the strategic locations that also are tourist places with limited connectivity at present. Indian Railways is working towards promoting tourism in the country by operating more trains connecting tourists’ destinations and also by providing an array of products starting from luxury tourist trains to budget catering tourist trains

    TourismWhat is MICE tourism of Gujarat?

    • The acronym “MICE” stands for “Meetings, Incentives, Conferences and Exhibitions”, and is essentially a version of business tourism that draws domestic and international tourists to a destination.
    • The policy aims to make Gujarat one of the top five MICE tourism destinations in the country.

    Way forward

    • Enhance the contribution of tourism in Indian economy by increasing the visitation, stay and spend
    • Create jobs and entrepreneurial opportunities in tourism sector and ensure supply of skilled work force
    • Enhance the competitiveness of tourism sector and attract private sector investment
    • Preserve and enhance the cultural and natural resources of the country
    • To ensure sustainable, responsible and inclusive development of tourism in the country

    Conclusion

    • We know that India has the highest tourism potential of any country. That is because we have every terrain and climate zone, and a range of customs, traditions, cuisines, crafts, art forms and festivals unmatched by any other nation. We should monetize our potential through putting comprehensive National tourism policy in place.

    Mains question

    Q. What should be done to transform our tourist destinations to provide world class visitor experience making India one of the topmost destinations for sustainable and responsible tourism?

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Apple Farming in India

    apple farmersContext

    • The increasing cost of production and the increase in GST on apple cartons has triggered protests in Himachal Pradesh’s apple farmers.

    What is the issue?

    • The cost of production of agricultural items increased substantially, denying remunerative prices to the poor and marginal apple farmers.

    Reason for crisis in apple farming

    • Increase in cost of production: The input cost of fertilizers, insecticides, and fungicides has risen in the last decade by 300%, as per some estimates. The cost of apple cartons and trays and packaging has also seen a dramatic rise. In the last decade, the cost of a carton, for instance, has risen from about ₹30 to ₹ The cost borne to market the Produce has also risen.
    • High taxation: The increase in the Goods and Services Tax on cartons from 12% to 18%. This was done to ensure that farmers are forced to sell their produce to big buyers instead of selling it in the open market. Just as the three farm laws were designed on the pretext of getting rid of the middlemen, the argument here was that commission agents, who fleece the apple farmers, will be forced to exit the picture. But this leaves the apple growers at the mercy of large giants in procurement, who have precedence of even deciding the procurement price.
    • No MSP in Himachal: Unlike in Jammu and Kashmir, where there is a minimum rate for procurement, there is no such law in Himachal. The government also does not seem prepared to bring in such a law. The farmers are demanding that legally guaranteed procurement at a Minimum Support Price (C2+50%) should be ensured to improve apple farmers condition.

    apple farmersHow to address this issue?

    • Need for a regulator: What is required is an independent body that is duly supported and trusted by the farmers. Such a body should have representatives of apple growers, market players, commission agents and the government. This must be a statutory body that is also given the task of conducting research in the apple economy.
    • Directional efforts: Issues such as high input cost, lack of fair price and unavailability of infrastructure such as cold chains should be addressed.
    • Required research to support improvements in apple farming systems: Over the past few decades, the priorities in research projects and government policies on apple production were focused on the improvement of tree productivity and product quality. This was important to enhance the net incomes and living standards of apple producers in India. This research should be further enhanced by introducing European varieties in India.
    • Focussing on Alternative Market Channels: The alternative market channel works on the principles of decentralisation and direct-to-home delivery. The idea is to create smaller, less congested markets in urban areas with the participation of farmers’ groups and Farmer Producer Companies (FPCs) so that farmers have direct access to consumers.
    • Logistics transformation: To sustain the demand for agricultural commodities, investments in key logistics must be enhanced. Moreover, e-commerce and delivery companies and start-ups need to be encouraged with suitable policies and incentives. The small and medium enterprises, running with raw materials from the agriculture and allied sector or otherwise, also need special attention so that the rural economy doesn’t collapse.

    apple farmersConclusion

    • Agriculture is dying, not as in the production of food but as a desirable profession. One bad yield, whether due to errant rains, pests, etc., and most farmers have no buffer available. The last point worth considering is that food and agriculture are not the same. Expenditures on food span the value-add, including processing, preparation, service in restaurants, etc. Farmers in India merely get paid for their product and not for the food we eat.

     

    Mains question

    Q. Do you think there is urgent need to extend MSP to horticulture sector also? Discuss what can be done to solve the apple farmer crisis in Himachal Pradesh.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

     

  • Vande Bharat production to begin in October: Minister

    vande bharat

    Indian Railways had successfully completed trials of the second generation Vande Bharat train that will come with enhanced passenger comfort and safety features.

    What is Vande Bharat Express?

    • The Vande Bharat Express is a semi-high-speed train designed, developed, and built by the Integral Coach Factory (ICF).
    • Presently there are only two Vande Bharat trains that are running — Delhi to Varanasi and Delhi to Katra.

    Key Features

    • The current Vande Bharat trains have seating only in two classes — chair car and executive chair car. But Railways is planning to upgrade it.
    • The trains have fully sealed gangways for a dust-free environment, modular bio-vacuum toilets, rotating seats in Executive Class, personalized reading lights, automatic entry/exit doors with sliding footsteps, diffused LED lighting, mini pantry, and sensor-based interconnecting doors in each coach.
    • They are self-propelled trains that do not require an engine. This feature is called a distributed traction power system.

    Benefits of Vande Bharat Trains

    • Cuts Travel Time Drastically
    • Energy Efficient
    • Reduce Turnaround Time
    • Faster Acceleration and Deceleration among others.

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • India ranks 132 in HDI as score drops

    hdi
    hdi

    India ranks 132 out of 191 countries in the Human Development Index (HDI) 2021, after registering a decline in its score over two consecutive years for the first time in three decades.

    What is Human Development Index (HDI)?

    • The HDI combines indicators of life expectancy, education or access to knowledge and income or standard of living, and captures the level and changes to the quality of life.
    • The index initially launched as an alternative measure to the gross domestic product, is the making of two acclaimed economists from Pakistan and India, namely Mahbub ul Haq and Amartya Sen.
    • It stresses the centrality of human deve­lop­ment in the growth process and was first rolled out by the United Nations Development Programme in 1990.

    Dimensions of the Human Development Index – HDI

    • The idea that progress should be conceived as a process of enlarging people’s choices and enhancing their capabilities is the central premise of the HDI.
    • Since its launch, the HDI has been an important marker of attempts to broaden measures of progress.
    • The HDI considers three main dimensions to evaluate the development of a country:
    1. Long and healthy life
    2. Education
    3. Standard of living

    Limitations of HDI

    HDR has been always disputable and has caught the public-eye, whenever it was published. It has many reasons.

    One of them is that the concept of human development is much deeper and richer than what can be caught in any index or set of indicators. Another argument is that its concept has not changed since 1990 when it was also defined in the first.

    (1) An incomplete indicator

    • Human development is incomplete without human freedom and that while the need for qualities judgement is clear; there is no simple quantitative measure available yet to capture the many aspects of human freedom.
    • HDI also does not specifically reflect quality of life factors, such as empowerment movements or overall feelings of security or happiness.

    (2) Limited idea of development

    • The HDI is not reflecting the human development idea accurately.
    • It is an index restricted to the socio-economic sphere of life; the political and civil spheres are in the most part kept separate.
    • Hence there is a sub-estimation of inequality among countries, which means that this dimension is not being taken into consideration appropriately.

    (3) A vague concept

    • Concerning data quality and the exact construction of the index HDI is conceptually weak and empirically unsound.
    • This strong critic comes from the idea that both components of HDI are problematic. The GNP in developing countries suffers from incomplete coverage, measurement errors and biases.
    • The definition and measurement of literacy are different among countries and also, this data has not been available since 1970 in a significant number of countries.

    (4) Data quality issues

    • The HDI, as a combination of only four relatively simple indicators, doesn’t only raise a questions what other indicators should be included, but also how to ensure quality and comparable input data.
    • It is logical that the UNDP try to collect their data from international organizations concentrating in collecting data in specific fields.
    • Quality and trustworthiness of those data is disputable, especially when we get the information from UN non-democratic members, as for example Cuba or China.

    (5) A tool for mere comparison

    • The concept of HDI was set up mainly for relative comparison of countries in one particular time.
    • HDI is much better when distinguishing between countries with low and middle human development, instead of countries at the top of the ranking.
    • Therefore, the original notion was not to set up an absolute ranking, but let’s quite free hands in comparison of the results.

    (6) Development has to be greener

    • The human development approach has not adequately incorporated environmental conditions which may threaten long-term achievements on human development. The most pervasive failure was on environmental sustainability.
    • However, for the first time in 2020, the UNDP introduced a new metric to reflect the impact caused by each country’s per-capita carbon emissions and its material footprint.
    • This is Planetary Pressures-adjusted HDI or PHDI. It measured the amount of fossil fuels, metals and other resources used to make the goods and services it consumes.

    (7) Wealth can never equate welfare

    • Higher national wealth does not indicate welfare. GNI may not necessarily increase economic welfare; it depends on how it is spent.
    • For example, if a country spends more on military spending – this is reflected in higher GNI, but welfare could actually be lower.

    Significance of HDI

    • It is one of the few multidimensional indices as it includes indicators such as literacy rate, enrollment ratio, life expectancy rate, infant mortality rate, etc.
    • It acts as a true yardstick to measure development in real sense.
    • Unlike per capital income, which only indicates that a rise in per capital income implies economic development; HDI considers many other vital social indicators and helps in measuring a nation’s well-being.
    • It helps as a differentiating factor to distinguish and classify different nations on the basis of their HDI ranks.

    Way forward

    • Both sustainable development and poverty eradication are both long-term and urgent endeavours, requiring not only the gradual and substantial redirection of country policies but a rapid response to pressing problems.
    • Ideally, sustainable development could provide an overarching framework within which all sub-goals (eg poverty eradication, social equality, ecosystem maintenance, climate compatibility) are framed.
    • It is not a subset of development; it is development (in a modern world of resource limits).
    • Environmental issues are not one factor among many but the meta-context within which poverty and other goals are sought.
    • Investing more in public research could lead to technological solutions to poverty and sustainability problems becoming more rapidly and openly available.

     

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • Mandatory requirements for Packaged Commodities

    The Department of Consumer Affairs, Legal Metrology Division has notified a draft amendment to the Legal Metrology (Packaged Commodities) Rules 2011 making some compulsions.

    Discrepancies over Packaged Commodities

    • The Division has observed that many manufacturers/packagers/importers do not clearly label necessary declarations or prime constituents on the front of packaged commodities.
    • It is common for consumers to assume that brands’ claims are accurate, but such claims are usually misleading.
    • Such disclosure are deemed essential in order to protect consumer rights.

    What are the mandatory provisions under the Legal Metrology (Packaged Commodities) Rules, 2011?

    • It is mandatory under the Rules, to ensure a number of declarations, such as the:
    1. Name and address of the manufacturer/packer/importer,
    2. Country of origin,
    3. Common or generic name of the commodity,
    4. Net quantity,
    5. Month and year of manufacture
    6. Maximum Retail Price (MRP) and
    7. Consumer care information.
    • As a consumer-oriented policy, all pre-packaged commodities should also be inspected.
    • Rule 9(1)(a) provides that the declaration on the package must be legible and prominent.
    • The consumers’ ‘right to be informed’ is violated when important declarations are not prominently displayed on the package.

    What are the proposed amendments?

    • As many blended food and cosmetic products are sold on the market, the key constituents need to be mentioned on the product packaging.
    • Additionally, the front side of the package must contain the percentage of the composition of the unique selling proposition (USP).
    • Also, packages displaying key constituents must display a percentage of the content used to make the product.
    • The new amendments has suggested that at least two prime components should be declared on the package’s front side along with the brand name.
    • Currently, manufacturers list the ingredients and nutritional information only on the back of the packaging.
    • This declaration must also include the percentage/quantity of the USPs of the product in the same font size as the declaration of the USPs. However, mechanical or electrical commodities are excluded from this sub-rule.

    Back2Basics: Consumer Rights

    Consumer right is an insight into what rights consumer holds when it comes to the seller who provides the goods.

    In general, the consumer rights in India are listed below:

    (1) Right to Safety

    • Means right to be protected against the marketing of goods and services, which are hazardous to life and property.
    • The purchased goods and services should not only meet their immediate needs, but also fulfil long term interests.
    • Before purchasing, consumers should insist on the quality of the products as well as on the guarantee of the products and services. They should preferably purchase quality marked products such as ISI, AGMARK, etc.

    (2) Right to be Informed

    • Means right to be informed about the quality, quantity, potency, purity, standard and price of goods so as to protect the consumer against unfair trade practices.
    • Consumer should insist on getting all the information about the product or service before making a choice or a decision.
    • This will enable him to act wisely and responsibly and also enable him to desist from falling prey to high pressure selling techniques.

    (3) Right to Choose

    • Means right to be assured, wherever possible of access to variety of goods and services at competitive price. In case of monopolies, it means right to be assured of satisfactory quality and service at a fair price.
    • It also includes right to basic goods and services. This is because unrestricted right of the minority to choose can mean a denial for the majority of its fair share.

    (4) Right to be Heard

    • Means that consumer’s interests will receive due consideration at appropriate forums. It also includes right to be represented in various forums formed to consider the consumer’s welfare.

    (5) Right to Seek redressal

    • Means right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers. It also includes right to fair settlement of the genuine grievances of the consumer.
    • Consumers must make complaint for their genuine grievances. Many a times their complaint may be of small value but its impact on the society as a whole may be very large.

    (6) Right to Consumer Education

    • Means the right to acquire the knowledge and skill to be an informed consumer throughout life.
    • Ignorance of consumers, particularly of rural consumers, is mainly responsible for their exploitation.

     

     

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)