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

Civilsdaily

Login

Subject: Economics

  • Inclusive growth, social justice and income inequality

    Context

    • Key findings of the World Inequality Report 2022 related to India: National Income: In India, the top 10% and top 1% hold respectively 57% and 22% of total national income.

    What is inclusive growth?

    • Organization for Economic Co-operation and Development (OECD) defines Inclusive growth as the economic growth that is distributed fairly across society and creates opportunities for all. It refers to ‘broad-based’, ‘shared’, and ‘pro-poor growth’.

    What is social justice?

    • Social justice is the view that everyone deserves equal economic, political and social rights and opportunities. Social workers aim to open the doors of access and opportunity for everyone, particularly those in greatest need.

    Meaning of Inclusiveness

    • Inclusiveness is a concept that encompasses equity, equality of opportunity, and protection in market and employment transitions and is, therefore, an essential ingredient of any successful growth strategy.

    Need of inclusive growth

    • Complete development: India is the 7th largest by area and 2nd by population and 12th largest economy at market exchange rate. Yet, India is away from the development.
    • Income inequality: Low agriculture growth, low quality employment growth, low human development, rural-urban divides, gender and social inequalities, and regional disparities etc. are the problems for the nation.
    • Human development: Reducing poverty and inequality and increasing economic growth are the main aim of the country through inclusive growth.

    Need of social justice

    • Equality: We should shift from equality of outcomes to equality of opportunities.
    • Peace and Order: If the majority disregards smaller sections in the community, it drives them to rebellion.
    • Dignity: To ensure life to be meaningful and liveable with human dignity.
    • Mitigate Sufferings: It is a dynamic device to mitigate the sufferings of the poor, weak Dalits, tribal and deprived sections of the society.
    • Human Resources: It will help in the conservation of human resource by provision of health and education facilities.
    • Freedom to form political, economic or religious institutions: It will help to eradicate the challenges of caste system, untouchability and other discrimination in the society.

    Challenges before inclusive growth and social justice

    • Wage Gap: When it comes to wages in the workplace, there is a noticeable differentiation between men and women. According to the American Association of University Women (AAUW), in 2018, the gender pay gap from men and women for the same job was 82 percent. Stated simply, women make 82 percent of what men make doing the same work. This can be further broken down into a pay gap for minority men and women.
    • LGBTQ Oppression: When it comes to oppression and human rights, individuals of the Lesbian, Gay, Bisexual, Transsexual and Queer (LGBTQ) community face several forms of social injustice and oppression. For example, same sex marriages are outlawed in some states and countries. Additionally, transsexual students often face discrimination and bullying within school settings.
    • Education System: Globally, steps are being made to close the education gap between male and female students. However, there are still several areas around the world where girls may never set foot into a classroom at all. UNESCO notes that more than nine million girls never go to school, compared to only six million boys in areas of Africa.
    • Child Welfare: Social workers and human rights activists are working tirelessly to combat issues relating to children and their welfare. Despite their efforts, there are still several problems children face that are harmful to their health and mental wellbeing.
    • Forced Child Labour: Laws are in place around the world to ensure a safe work environment for children. These laws were drafted from historically harsh and dangerous working conditions for children. While many would like to believe that child labour is a thing of the past, it persists in some areas around the globe.
    • Child Abuse and Neglect: Thousands of children globally are being neglected. They’re also being physically, sexually and emotionally abused. The World Health Organization (WHO) reports that as many as a quarter of adults have been abused as children. This abuse has both social and economic impacts that include mental health problems.

    Government measures to address this challenge

    • SETU(Self Employment and Talent Utilization)
    • Skill India
    • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
    • Pradhan Mantri Jan Dhan Yojana
    • MUDRA (Micro Units Development and Refinance Agency)Bank

    Way forward

    • Equality of opportunity is the core of inclusive growth, and the inclusive growth emphasises to create employment and other development opportunities through rapid and sustained economic growth, and to promote social justice and the equality of sharing of growth results by reducing and eliminating inequality of opportunity.

    Mains question

    Explain the term inclusive growth in brief. How we can achieve social justice through inclusive growth?

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

  • What is Essential Commodities Act?

    The Centre has invoked the Essential Commodities Act of 1955 to ask States to monitor and verify the stocks of Arhar/Tur Dal available with traders.

    Essential Commodities Act

    • The ECA, 1955 was established to ensure the delivery of certain commodities or products, the supply of which, if obstructed due to hoarding or black marketing, would affect the normal life of the people.
    • The list of items under the Act includes drugs, fertilizers, pulses, and edible oils, as well as petroleum and petroleum products.
    • The Centre can include new commodities as and when the need arises, and takes them off the list once the situation improves.
    • Additionally, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.

    How ECA works?

    (1) Centre notifying stock limit holding

    • If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
    • The States act on this notification to specify limits and take steps to ensure that these are adhered to.
    • Anybody trading or dealing in the commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.

    (2) States can opt-out

    • A State can, however, choose not to impose any restrictions.
    • But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.

    What happens for non-compliance?

    • As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished.
    • The excess stocks are auctioned or sold through fair price shops.
    • This improves supplies and brings down prices.

    Ex: The Union Government has brought masks and hand-sanitizers under the ECA to make sure that these products, key for preventing the spread of Covid-19 infection, are available to people at the right price and in the right quality. Later this move was reverted.

    What about Food Items?

    (1) Items covered:

    Rice, wheat, atta, gram dal, arhar dal, moong dal, urad dal, masoor, dal, tea, sugar, salt, Vanaspati, groundnut oil, mustard oil, milk, soya oil, palm oil, sunflower oil, gur, potato, onion and tomato.

    (2) Price Stabilization Fund (PSF):

    The government utilizes the buffer of agri-horticultural commodities like pulses, onion, etc. built under Price Stabilization Fund (PSF) to help moderate the volatility in prices.

    Recent amendments to the ECA

    In 2020, the EC Act was amended for the stock limit to be imposed only under exceptional circumstances such as famine or other calamities.

    • Exceptional circumstances: It allowed the centre to delist certain commodities as essential, allowing the government to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities.
    • Commodities de-regulated: The commodities that have been deregulated are food items, including cereals, pulses, potatoes, onion, edible oilseeds, and oils.

    Exceptions provided

    • The government regulation of stocks will be based on rising prices, and can only be imposed if there is
    1. A 100% increase in retail price in the case of horticultural produce and
    2. A 50% increase in retail price in the case of non-perishable agricultural food items
    • These restrictions will not apply to stocks of food held for public distribution in India.

     

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

  • In news: Ongole Cattle Breed

    Ongole breed of cattle had remained indispensable for all farm operations for centuries in Prakasam district of Andhra Pradesh in view of their draught power.

    Ongole Cattle

    • Ongole cattle are an indigenous cattle breed that originates from Prakasam District in the state of Andhra Pradesh.
    • The breed derives its name from the place the breed originates from, Ongole.
    • The Ongole breed of cattle Bos Indicus, has a great demand as it is said to possess resistance to both foot and mouth disease and mad cow disease.

    What’s so special about this breed?

    • Cattle breeders use the fighting ability of the bulls to choose the right stock for breeding in terms of purity and strength.
    • Ongole cattle are known for their toughness, rapid growth rate, and natural tolerance to tropical heat and disease resistance.
    • It was perhaps the first Indian breed of cattle to gain worldwide recognition.
    • Ongole milk is rich in A2 (allele of Beta Casein).
    • They fetches a premium price of over ₹150 per litre as it enables consumers build immunity against viral and other diseases.

    Global Prominence

    • Ongole bulls have gone as far as America, the Netherlands, Malaysia, Brazil, Argentina, Colombia, Mexico, Paraguay, Indonesia, West Indies, Australia, Fiji, Mauritius, Indo-China and Philippines.
    • The Brahmana bull in America is an off-breed of the Ongole.
    • The population of Ongole off-breed in Brazil is said to number several million.
    • The famous Santa Gertrudis breed developed in Texas, USA have Ongole blood.
    • It has gained global prominence, particularly in Brazil which imported barely hundred animals and produced multiple superior breeds like the world famous Zebu.

     

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

  • What happens after a Cooperative Bank to shuts down?

    The Reserve Bank of India (RBI) announced it had cancelled the banking licence of a Pune-based Rupee Cooperative Bank, and directed the Registrar of Cooperative Societies to liquidate the bank.

    What is a Banking Licence?

    • Financial institutions wishing to carry out banking operations such as accepting deposits or lending have to obtain a licence from India’s central bank.
    • The RBI issues the licence under the Banking Regulation Act of 1949 after carrying out a series of checks about the financial suitability of the applicant institution.
    • Parameters like capital adequacy ratio (CAR) — the ratio of a bank’s available capital to its risk weighted credit exposure — and loan to deposit ratio (LDR) — the ratio of a bank’s total loans to total deposits in the same period — are checked before the licence is granted.
    • The 1949 Act in particular stresses on adequate capital and protection of the public interest before the licence is granted.
    • No company other than one that has been issued a banking licence is allowed to use the word bank in its name while doing business.

    Cancelling the licence of a Bank

    • RBI, which issues the licence, has the power to cancel it as well, in case the bank fails to satisfy laid-down conditions.
    • This could mean an increase in bad debts — and if the RBI feels a bank does not have enough capital to cover its exposure and pay its depositors, its licence can be suspended or cancelled.

    Why did RBI cancel the licence of Rupee Cooperative Bank?

    • The RBI audits banks every year, and can take action if it notes an increase in bad debts or other suspicious activities in their books.
    • In its press release, the RBI gave the reasons for the cancellation of the bank’s licence:
    1. The bank does not have adequate capital and earning prospects.
    2. The bank has failed to comply with the requirements of certain sections of the Banking Regulation Act, 1949;
    3. The continuance of the bank is prejudicial to the interests of its positions;
    4. The bank with its present financial position would be unable to pay its present depositors in full; and
    5. Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

    Section 22 of the Act deals with “licensing of banking companies”, section 11 is about “requirement as to minimum paid-up capital and reserves”, and section 56 is about the applicability of the Act to cooperative societies, subject to modifications.

    Was cancellation of the licence the only option left for RBI?

    • RBI had issued notice to that Cooperative Bank in 2013, and issued directions under the Banking Regulation Act before cancelling its licence.
    • All banking activities like withdrawal were suspended, the then board of directors was superseded.
    • The banker took a number of steps to revive the bank, including filing of criminal cases against defaulting directors, employees, and seizing of their properties.
    • The RBI extended the licence of the bank every three months as these steps were being taken.
    • The administrator also tried to merge the bank with a financially stable bank. But the bad debts scared away most suitors.

    What will happen to the depositors’ money in Rupee Cooperative Bank?

    • The limiting of withdrawals by RBI had made things difficult for depositors, especially because cooperative banks are preferred by those from the lower income group.
    • The big question before the over 5.5 lakh depositors now is about the fate of their money.
    • The RBI has said that depositors with Rs 5 lakh or less in the bank, would get back all of their money through the Deposit Insurance and Credit Guarantee Corporation (DICGC).
    • Those who have larger deposits in the bank will not get back their money beyond Rs 5 lakh.
    • In this group are about 4,600 depositors with a total Rs 340 crore in deposits in the bank.
    • These people stand to suffer major losses.

    Back2Basics: Deposit Insurance Programme

    • The bank savings are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act providing full coverage to around 98 per cent of bank accounts.
    • Earlier, account holders had to wait for years till the liquidation or restructuring of a distressed lender to get their deposits that are insured against default.
    • Last year, the government raised the insurance amount to Rs 5 lakh from Rs 1 lakh.
    • Prior to that, the DICGC had revised the deposit insurance cover to Rs 1 lakh on May 1, 1993 — raising it from Rs 30,000, which had been the cover from 1980 onward.

    What are new changes?

    • Earlier, out of the amount deposited in the bank, only Rs 50,000 was guaranteed, which was then raised to Rs 1 lakh.
    • Understanding the concern of the poor, understanding the concern of the middle class, we increased this amount to Rs 5 lakh.
    • If a bank is weak or is even about to go bankrupt, depositors will get their money of up to Rs five lakhs within 90 days.

     

     

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

  • Electricity (Amendment) Bill

    The government has tabled the Electricity (Amendment) Bill 2022 in the Lok Sabha. This has drawn huge protests across the country, in states like Tamil Nadu, Telangana, Rajasthan, and others.

    Electricity (Amendment) Bill

    • This Bill amends the Electricity Act, 2003. The Act regulates the electricity sector in India.
    • It sets up the Central and State Electricity Regulatory Commissions (CERC and SERCs) to regulate inter-state and intra-state matters, respectively.

    Key provisions under the Bill are:

    • Multiple discoms in the same area:  The Act provides for multiple distribution licensees (discoms) to operate in the same area of supply. The Bill removes this requirement.  It adds that a discom must provide non-discriminatory open access to its network to all other discoms operating in the same area, on payment of certain charges.
    • Power procurement and tariff:  Upon grant of multiple licenses for the same area, the power and associated costs as per the existing power purchase agreements (PPAs) of the existing discoms will be shared between all discoms.
    • Cross-subsidy Balancing Fund:  The Bill adds that upon grant of multiple licenses for the same area, the state government will set up a Cross-subsidy Balancing Fund.  Cross-subsidy refers to the arrangement of one consumer category subsidising the consumption of another consumer category.  Any surplus with a distribution licensee on account of cross-subsidy will be deposited into the fund.
    • Rules of Centre: The Bill specifies that the above matters related to the operation of multiple discoms in the same area will be regulated in accordance with the rules made by the central government under the Act.
    • License for distribution in multiple states:  As per the Bill, the CERC will grant licenses for distribution of electricity in more than one state.
    • Payment security:  The Bill provides that electricity will not be scheduled or despatched if adequate payment security is not provided by the discom.   The central government may prescribe rules regarding payment security.
    • Contract enforcement:  The Bill empowers the CERC and SERCs to adjudicate disputes related to the performance of contracts.  These refer to contracts related to the sale, purchase, or transmission of electricity.  Further, the Commissions will have powers of a Civil Court.
    • Renewable purchase obligation:  The Act empowers SERCs to specify renewable purchase obligations (RPO) for discoms.  RPO refers to the mandate to procure a certain percentage of electricity from renewable sources.  The Bill adds that RPO should not be below a minimum percentage prescribed by the central government.  Failure to meet RPO will be punishable with a penalty between 25 paise and 50 paise per kilowatt of the shortfall.
    • Selection committee for SERCs:  Under the Act, the Chairperson of the Central Electricity Authority or the Chairperson of the CERC is one of the members of the selection committee to recommend appointments to the SERCs.  Under the Bill, instead of this person, the central government will nominate a member to the selection committee.  The nominee should not be below the rank of Additional Secretary to the central government.

    Other key provisions

    • Tariff Ceilings: The Bill makes provision for “mandatory” fixing of minimum as well as maximum tariff ceilings by the “appropriate commission” to avoid predatory pricing by power distribution companies and to protect consumers.
    • Tariff revisions: The amendment has several provisions to ensure graded and timely tariff revisions that will help provide state power utilities enough cash to be able to make timely payments to power producers. This move is aimed at addressing the recurrent problem of default by distribution companies in payment to generation companies.
    • Payment security mechanism: The bill through amendments in Section 166 of the Act also seeks to strengthen payment security mechanisms and give more powers to regulators. It has become necessary to strengthen the regulatory mechanism, adjudicatory mechanism in the Act and to bring administrative reforms through improved corporate governance of distribution licensees.

    Why is it being opposed?

    • Provisions of the Bill are being opposed by a number of opposition-ruled states.
    • It is being termed anti-federal in spirit.
    • Power as a subject comes under the Concurrent List and it was the “the bounden duty or the mandatory obligation” of the Centre to consult the states.

    Criticisms

    • If passed in its current form it will lead to a major loss for government distribution companies, eventually helping to establish the monopoly of a few private companies in the country’s power sector.
    • By bringing in more retailers or distribution licensees, the quality of service or price is not going to be any different.

    How will these amendments help?

    • Power freebie: The Bill comes at a time when there is a debate around freebies being offered by political parties.
    • Discom crisis: Various state power distribution companies (Discoms) have not been able to raise enough resources to make timely payments to power generating companies.
    • Empowering discoms: Empowering the regulator to be able to take calls on tariff revision and ensuring that the government freebies, even on electricity, should be through direct benefit transfer.

     

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

  • States holding up results of Economic Census: Centre

    The Centre has blamed the States for a prolonged delay in releasing the findings of the Seventh Economic Census, a critical compendium of formal and informal non-farm enterprises operating across the country, in a submission to the Parliament.

    What is National Economic Census?

    • In 1976, GoI launched a planning scheme called Economic Census and Surveys.
    • It is the census of the Indian economy through counting all entrepreneurial units in the country which involved in any economic activities of either agricultural or non-agricultural sector which are engaged in production and/or distribution of goods and/or services not for the sole purpose of own consumption.
    • It provides detailed information on operational and other characteristics such as number of establishments, number of persons employed, source of finance, type of ownership etc.
    • This information used for micro level/ decentralized planning and to assess contribution of various sectors of the economy in the GDP.

    Censuses till date

    • Total Six Economic Censuses (EC) has been conducted till date.
    • In 1977 CSO conducted First economic census in collaboration with the Directorate of Economics & Statistics (DES) in the States/UTs.
    • The Second EC was carried out in 1980 followed by the Third EC in 1990. The fourth edition took place in 1998 while the fifth EC was held in 2005.
    • The Sixth edition of the Economic Census was conducted in 2013.

     

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

  • India’s banking sector shows progress

    Context

    The RBI’s latest Financial Stability Report (FSR) has given the banking system a reasonably clean bill of health. It’s a significant achievement, considering the stress of the previous decade, the shock of the pandemic and the associated slowdown of the economy.

    Two indicators of banking system’s progress

    • 1] Reduced NPAs: Successive waves of recapitalisation have given banks enough resources to write off most of their bad loans.
    • As a result, they have been able to bring down their gross NPAs (non-performing loans) from 11 per cent of total advances in 2017-18 to 5.9 per cent in 2021-22.
    • Even after these large write-offs, most banks retain comfortable levels of capital.
    • 2] Credit growth doubled: During the decade when banks were under stress, non-food bank credit growth had been declining, reaching just 6 per cent in 2020, its lowest point in six decades.
    • Since then, credit growth has nearly doubled.

    Concerns

    • Role of credit in supporting GDP growth: The problem is that very little of this credit is going to large-scale industry or for financing investment.
    • Reluctance of banks to provide credit to industry: Over the last decade, banks have increasingly shifted away from providing credit to industry, favouring instead lending to consumers.
    • This trend is continuing — in the year ending March 2022, consumer loans grew at 13 per cent, whereas loans to industry grew at just 8 per cent.
    • Banks favoring MSMEs in industry loans: Bulk of the industry loans has been extended to the smaller firms (MSMEs), which benefitted from the credit guarantee scheme offered by the government in the wake of the pandemic.
    • Reduced lending to private sector investment: A related problem is that there has been little lending for private sector investment.
    • Over the last one year, bank lending to infrastructure has grown by 9 per cent, up from 3 per cent in 2020, but this was fuelled mainly by public sector capital expenditure.

    Why is there so little lending for investment by large firms?

    • Demand side reason: On the demand side, private sector investment has been sluggish for nearly a decade.
    • The boom-and-bust of the mid-2000s had saddled firms with excess capacity, giving them little reason to expand their production facilities.
    • In addition, the global financial crisis had shown the dangers of ambitious expansion supported by excessive borrowing, leading firms to conclude that it would be prudent to scale back their plans and instead focus on reducing their debts.
    • Supply side reason: On the supply side, banks have learned similar lessons.
    • During the period 2004-2009, rapid GDP growth in the Indian economy was fuelled by an unprecedented lending boom.
    •  Subsequently, many of those loans turned bad, leading to high levels of NPAs on bank balance sheets.
    •  As a result of these financial problems, banks for a decade were unable to extend much in the way of credit.

    Challenges

    • On the positive side, firms seem to have finally used up much of their spare capacity.
    • Fundamental problems not resolved: But on the negative side, the fundamental problems that led to the difficulties of the past decade still have not been resolved.
    • No framework for risk reduction: There is still no framework that will reduce the risk of private sector investment in infrastructure, certainly not in the critical and highly troubled power sector.
    • Nor is there any reassurance for the banks that if problems do develop, they can be resolved expeditiously, since the Insolvency and Bankruptcy Code has been plagued by delays and other problems.

    Way forward

    • We need deep structural reforms — to the infrastructure framework, the resolution process, and indeed, in the risk management processes at the banks themselves.
    • In the event that these reforms do not materialise, there may continue to be shortfalls in credit, investment, and ultimately in economic recovery and growth.

    Conclusion

    A healthy balance sheet of the banking sector is a necessary but not a sufficient condition for economic growth. The important question is whether banks and firms will once again be willing to take on the risk of investment in industry and infrastructure.

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

  • Ocean Thermal Energy Conversion Plant in Lakshadweep

    The National Institute of Ocean Technology is establishing an Ocean Thermal Energy Conversion (OTEC) plant with a capacity of 65 kilowatts (kW) in Kavaratti, the capital of Lakshadweep.

    What is OTEC Plant?

    • Ocean thermal energy conversion (OTEC) is a process or technology for producing energy by harnessing the temperature differences (thermal gradients) between ocean surface waters and deep ocean waters.
    • Energy from the sun heats the surface water of the ocean.
    • In tropical regions, surface water can be much warmer than deep water.
    • This temperature difference can be used to produce electricity and to desalinate ocean water.

    How do they work?

    • The OTEC technology uses the temperature difference between the cold water in the deep sea (5°C) and the warm surface seawater (25°C) to generate clean, renewable electricity.
    • The technology requires a minimum of 20°C difference between the surface and deep ocean temperatures.
    • Warm surface water is pumped through an evaporator containing a working fluid. The vaporized fluid drives a turbine/generator.
    • The vaporized fluid is turned back to a liquid in a condenser cooled with cold ocean water pumped from deeper in the ocean.
    • OTEC systems using seawater as the working fluid can use the condensed water to produce desalinated water.

     

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

  • Demographic dividend

    Context

    The UN report, World Population Prospects 2022, forecasts that the world’s population will touch eight billion this year and rise to 9.8 billion in 2050. What is of immediate interest to India is that its population will surpass China’s by 2023 and continue to surge.

    India’s potential workforce and growth as projected by consulting firms

    •  Deloitte’s Deloitte Insights (September 2017) expects “India’s potential workforce to rise from 885 million to “1.08 billion people over the next two decades from today”, and “remain above a billion people for half a century,” betting that “these new workers will be much better trained and educated,” than their existing counterparts.
    • McKinsey & Company’s report, ‘India at Turning Point’ (August 2020), believes the “trends such as digitisation and automation, shifting supply chains, urbanisation, rising incomes and demographic shifts, and a greater focus on sustainability, health, and safety are accelerating” to “create $2.5 trillion of economic value in 2030 and support 112 million jobs, or about 30% of the non-farm workforce in 2030.”
    • Four pillarsIn its May 14, 2022 issue, The Economist had this to say about India, “As the pandemic recedes, four pillars are clearly visible that will support growth in the next decade. The four pillars are:
    • 1) The forging of a single national market.
    • 2) An expansion of industry owing to the renewable-energy shift and a move in supply chains away from China,
    • 3) Continued pre-eminence in IT.
    •  4) High-tech welfare safety-net for the hundreds of millions left behind by all this.
    • The Financial Times in an article, ‘Demographics: Indian workers are not ready to seize the baton’, believes that India’s bad infrastructure and poorly skilled workforce will impede its growth.

    Comparing India’s preparedness with China’s in 1970s

    • China is enduring an ongoing population implosion, which by 2050, will leave it with only 1.3 billion people, of whom 500 million will be past the age of 60.
    • India’s population, by contrast, would have peaked at 1.7 billion, of whom only 330 million will be 60 years or older.
    • Simply put, India is getting a demographic dividend that will last nearly 30 years.
    • There is so much going on for India today compared to China, the only country it can be reasonably compared to.
    • It is still a young country and in a much better position to transform itself compared to China of the 1970s.
    • It is still an open society where mass protest matters and produces results.
    • Indians have not been traumatised as Chinese were at the time of Mao Zedong’s death.
    • IT backbone: The IT technologies now available in India, and most importantly the Internet they run on have matured exponentially.
    • Many things right from video conferencing to instantaneous payments and satellite imaging are getting better and cheaper by the day.
    • Better administrative system: Creaky and inadequate as they are, India’s administrative systems manage to deliver and its infrastructure is in far better shape today than it was for China at the start of its reforms.
    • No rural urban divide: India does not have a Hukou system which in China tethers rural folk to rural parts creating a deep divide between a small and prosperous urban China and a much larger, very deprived rural China.

    Way forward for India

    • To wring the best out of its demographic dividend, India needs to invest massively in quality school and higher education as well as healthcare across India on an unprecedented scale, literally in trillions of rupees between now and 2050 when it would have reached the apogee of its population growth.

    Conclusion

    India must seize the moment and not be incremental in its approach. Given the will it can initiate and see through a transformation that will stun the world, even more than China’s has so far.

  • Centre raises Fair Prices for Sugarcane Harvest

    The Cabinet Committee on Economic Affairs has approved Fair and Remunerative Price (FRP) of sugarcane for sugar season 2022-23 (October – September) at ₹305 per quintal.

    What is FRP?

    • FRP is fixed under a sugarcane control order, 1966.
    • It is the minimum price that sugar mills are supposed to pay to the farmers.
    • However, states determine their own State Agreed Price (SAP) which is generally higher than the FRP.

    Factors considered for FRP:

    • The amended provisions of the Sugarcane (Control) Order, 1966 provides for fixation of FRP of sugarcane having regard to the following factors:
    1. a) cost of production of sugarcane;
    2. b) return to the growers from alternative crops and the general trend of prices of agricultural commodities;
    3. c) availability of sugar to consumers at a fair price;
    4. d) price at which sugar produced from sugarcane is sold by sugar producers;
    5. e) recovery of sugar from sugarcane;
    6. f) the realization made from the sale of by-products viz. molasses, bagasse, and press mud or their imputed value;
    7. g) reasonable margins for the growers of sugarcane on account of risk and profits.

    Who determines Sugarcane prices?

    Sugarcane prices are determined by the Centre as well as States.

    1. The Centre announces Fair and Remunerative Prices which are determined on the recommendation of the Commission for Agricultural Costs and Prices (CACP) and are announced by the Cabinet Committee on Economic Affairs, which is chaired by Prime Minister.
    2. The State Advised Prices (SAP) are announced by key sugarcane producing states which are generally higher than FRP.

    Minimum Selling Price (MSP) for Sugar

    • The price of sugar is market-driven & depends on the demand & supply of sugar.
    • However, with a view to protecting the interests of farmers, the concept of MSP of sugar has been introduced since 2018.
    • MSP of sugar has been fixed taking into account the components of Fair & Remunerative Price (FRP) of sugarcane and minimum conversion cost of the most efficient mills.

    Basis of price determination

    • With the amendment of the Sugarcane (Control) Order, 1966, the concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the Fair and Remunerative Price (FRP)’ of sugarcane in 2009-10.
    • The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
    • This is done in consultation with the State Governments and after taking feedback from associations of the sugar industry.

    Try this PYQ:

     

    Q.The Fair and Remunerative Price (FRP) of sugarcane is approved by the:

    (a) Cabinet Committee on Economic Affairs

    (b) Commission for Agricultural Costs and Prices

    (c) Directorate of Marketing and Inspection, Ministry of Agriculture

    (d) Agricultural Produce Market Committee

     

    [wpdiscuz-feedback id=”uwa0gzukwy” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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