Note4Students
From UPSC perspective, the following things are important :
Prelims level: GSTAT
Mains level: Disputes resolution under GST regime
The Lok Sabha passed Finance Bill, 2023 with some amendments, including one that seeks to set up the much-awaited GST Appellate Tribunal (GSTAT), which will deal with tax disputes.
What is GST Appellate Tribunal?
- The GST Appellate Tribunal is a quasi-judicial body proposed to be established to resolve disputes related to the Goods and Services Tax (GST) in India.
- It will function as an independent body to hear appeals against orders passed by the GST authorities or the Appellate Authority.
- The tribunal will be composed of a national bench and various regional benches, headed by a chairperson appointed by the central government.
- The proposed tribunal is expected to help expedite the resolution of disputes related to GST and reduce the burden on the judiciary.
Under GST, if a person is not satisfied with the decision passed by any lower court, an appeal can be raised to a higher court, the hierarchy for the same is as follows (from low to high):
- Adjudicating Authority
- Appellate Authority
- Appellate Tribunal
- High Court
- Supreme Court
Composition of GSTAT
- GSTAT will have a “Principal Bench” in New Delhi.
- It would have the President (probably a former Supreme Court judge), a judicial member, a technical member (centre), and a technical member (state).
- It will also have state benches.
- Appeals pertaining to disputes of less than Rs. 50 lakh that don’t deal with a question of law could be decided by a single-member bench, as per the norms approved by the GST Council.
Why need such Tribunal?
- Unburden judiciary: GST Appellate Tribunal will help resolve the rising number of disputes under the 68-month old indirect tax regime that are now clogging High Courts and other judicial fora.
- Improve the efficiency of GST System: Overall, the establishment of the GST Appellate Tribunal is expected to improve the efficiency and effectiveness of the GST system in India.
- Independent mechanism: The proposed Tribunal will provide an independent and efficient mechanism for resolving disputes related to GST.
- Avoid tax evasion: It will help to expedite the resolution of disputes, reduce the burden on the judiciary, and promote greater certainty and predictability in the GST system.
Issues with present litigation
- Compliance issues: The GST system is relatively new in India, having been implemented in 2017, and there have been several issues with compliance and interpretation of rules and regulations.
- Complex adjudication hierarchy: The current dispute resolution mechanism involves multiple layers of adjudication, starting with the GST officer and as mentioned above.
- Time-consuming process: This process can be time-consuming, costly, and burdensome for taxpayers, especially small and medium-sized enterprises.
Back2Basics: Finance Bill
- A Finance Bill is a proposed legislation that is introduced by the government to implement the financial proposals of the Union Budget for the upcoming financial year in India.
- It is a comprehensive document that outlines the government’s revenue and expenditure for the year, including changes in tax laws, tariffs, customs duties, and other fiscal measures.
- Since the Union Budget deals with these things, it is passed as a Finance Bill.
Types of Finance Bills
- There are different kinds of Finance Bills — the most important of them is the Money Bill. The Money Bill is concretely defined in Article 110.
- In India, there are three types of Finance Bills that can be introduced in the Parliament:
- Annual Finance Bill: This is the most common type of Finance Bill and is introduced by the government every year to give effect to the tax proposals announced in the Union Budget. It contains provisions related to taxation, expenditure, and revenue collection for the upcoming financial year.
- Finance Bill (Money Bill): A Money Bill is a type of Finance Bill that contains only provisions related to taxation and expenditure, but does not include any other matter. Money Bills are deemed to be passed by the Lok Sabha, the lower house of Parliament, and do not require approval from the Rajya Sabha, the upper house of Parliament.
- Finance Bill (Non-Money Bill): This type of Finance Bill contains provisions related to taxation and other matters, such as changes in the structure of regulatory bodies or the introduction of new policies. Unlike Money Bills, Non-Money Bills must be passed by both the Lok Sabha and the Rajya Sabha to become law.
How is money bill different from Finance Bill?
- A Money Bill is certified by the Speaker as such — in other words, only those Financial Bills that carry the Speaker’s certification are Money Bills.
- Article 110 states that a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters:
(a) the imposition, abolition, remission, alteration or regulation of any tax;
(b) the regulation of the borrowing of money or any financial obligations undertaken
(c) the custody of the consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;
(d) the appropriation of moneys out of the consolidated Fund of India;
(e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
(f) the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or
(g) any matter incidental to any of the matters specified in sub clause (a) to (f)
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Social Progress Index (SPI)
Mains level: Read the attached story
Economic Advisory Council to Prime Minister (EAC-PM) will release the Social Progress Index (SPI) for states and districts of India on December 20, 2022.
Social Progress Index (SPI) Report
- SPI is a comprehensive tool intended to be a holistic measure of the Social Progress made by the country at the national and sub-national levels.
- The report has been prepared by Institute for Competitiveness, headed by Dr Amit Kapoor and the Social Progress Imperative, headed by Michael Green.
- It was mandated by Economic Advisory Council to the Prime Minister of India.
Objectives of the report
- With state and district-wise rankings and scorecards, the report aims to provide a systematic account of the social progress made at all levels in the country.
- The report also sheds light on the achievements of the districts that have performed well on the index and the role of the states in achieving social progress.
- A special section of the report provides an analysis of the Aspirational Districts of India, leading to a broader understanding of the social progress at the grassroots level.
- The report will act as a critical enabler and tool for policymakers in the coming years for achieving sustained socio-economic growth.
Components of SPI
SPI assesses the performance of states and districts on three dimensions of social progress:
- Basic Human Needs: It assesses the performance of states and districts in terms of Nutrition and Basic Medical Care, Water and Sanitation, Personal Safety and Shelter.
- Foundations of Wellbeing: It evaluates the progress made by the country across the components of Access to Basic Knowledge, Access to Information and Communication, Health and Wellness, and Environmental Quality.
- Opportunity: It focuses on aspects of Personal Rights, Personal Freedom and Choice, Inclusiveness, and Access to Advanced Education.
(This newscard will be updated once the report is published.)
Need for SPI
- GDP is not a holistic measure of a nation’s development: It would be incorrect to state that the economic progress is completely divorced from progress made in areas mentioned above.
- Social outcomes of developmental economics: The primary goal of the SPI is to provide a rigorous tool to benchmark progress and stimulate progress within countries.
- No single holistic parameter available: Several indicators, like GHI and HDI, go beyond GDP, but none captures social progress as finely as SPI.
- Doing away with biased reports: India does not display a respectable position in the index, as even the small neighbours like Nepal have a better rank. India is also the lowest rank holder in BRICS.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: MTSI
Mains level: Mother tounges as a medium of education
The Ministry of Home Affairs (MHA) has completed the Mother Tongue Survey of India (MTSI) with field videography of the country’s 576 languages.
What is the MTSI?
- The Mother Tongue Survey of India is a project that surveys the mother tongues, which are returned consistently across two and more Census decades.
- It also documents the linguistic features of the selected languages.
- The category “mother tongue” is a designation provided by the respondent, but it need not be identical with the actual linguistic medium.
- The NIC and the National Film Development Corporation (NFDC) will be documenting and preserving the linguistic data of the surveyed mother tongues in audio-video files.
- Video-graphed speech data of Mother Tongues will also be uploaded on the NIC survey for archiving purposes.
How many “mother tongues” does India have?
- As per an analysis of 2011 linguistic census data in 2018, more than 19,500 dialects are spoken in India as mother tongues.
- They are grouped into 121 mother tongues.
- According to the 2011 linguistic census, Hindi is the most widely spoken mother tongue, with 52.8 crore people or 43.6 per cent of the population declaring it as the mother tongue.
- The next highest is Bengali, mother tongue for 9.7 crore individuals, and accounting for 8 per cent of the population.
Where does the mother tongue feature in the education of children?
- The new National Curriculum Framework (NCF) has recommended that mother tongue should be the primary medium of instruction in schools for children up to eight years of age.
- The new NCF, which deals with pre-school and classes I-II, emphasises the virtues of the mother tongue as the primary medium of instruction.
- It says that by the time children join pre-school, they acquire significant competence in the “home language”.
- This push has come after repeated policy articulations in its favour from PM and Home Minister.
Why emphasize more on mother tongue?
- According to the NCF, evidence from research confirms the importance of teaching children in their mother tongue during the foundational years and beyond.
- Children learn concepts most rapidly and deeply in their home language.
- Hence the primary medium of instruction is optimally the child’s home language/ mother tongue/ familiar language in the Foundational Stage.
What is the status of the population census?
- The forthcoming decennial population census will be the 16th since the first exercise was conducted in 1872.
- It will be the eighth census since independence.
- The census was supposed to take place in 2021, but was postponed due to the outbreak of the Covid-19 pandemic.
Updates in the new census
- To ensure efficient processing and quick release of data, the Home Ministry has adopted some new initiatives, which include digital data processing and the use of geospatial technology.
- According to the report, pre-census mapping activities like preparation and updation of maps that show administrative units will be carried out.
- Census results will be disseminated via web-based interactive maps.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Manufacturing Purchasing Managers’ Index (PMI)
Mains level: India's manufacturing sector slowdown
India’s manufacturing sector experienced its slowest expansion in September since June, the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) indicated, with the index easing to 55.1 from August’s 56.2.
PMI improves
- A PMI reading above 50 indicates an increase in firms’ activity levels, and September marked the 15th straight month of growth in manufacturing activity.
Purchasing Managers’ Index (PMI)
- PMI is an indicator of business activity — both in the manufacturing and services sectors.
- It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
- The PMI is compiled by IHS Markit based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
How is the PMI derived?
- The PMI is derived from a series of qualitative questions.
- Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.
How does one read the PMI?
- A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
- Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
- If the figure is higher than the previous month’s then the economy is expanding at a faster rate.
- If it is lower than the previous month then it is growing at a lower rate.
What are its implications for the economy?
- The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
- It is, therefore, considered a good leading indicator of economic activity.
- Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.
- Central banks of many countries also use the index to help make decisions on interest rates.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: UAPA
Mains level: Terror financing and money laundering
The Union Home Ministry has declared the Popular Front of India (PFI) and its front organizations as an “unlawful association” under the Unlawful Activities (Prevention) Act (UAPA).
PFI under the Unlawful (Activities) Prevention Act (UAPA)
- The UAPA is aimed at the effective prevention of unlawful activity associations in India.
- Its main objective was to make powers available for dealing with activities directed against the integrity and sovereignty of India
- It is an upgrade on the Terrorist and Disruptive Activities (Prevention) Act TADA, which was allowed to lapse in 1995 and the Prevention of Terrorism Act (POTA) was repealed in 2004.
- It was originally passed in 1967 under the then Congress government led by former Prime Minister Indira Gandhi.
- Till 2004, “unlawful” activities referred to actions related to secession and cession of territory. Following the 2004 amendment, “terrorist act” was added to the list of offences.
What are Unlawful Activities and Associations?
- The UAPA lays down the definitions and rules for designating an organization as an “unlawful association” if it is engaged in certain types of activities.
- Under Section 3 of the UAPA Act, the government has powers to declare an association “unlawful”.
- The government can then issue a notification designating such an organization as a terrorist organization if it believes that the organization is part of “terrorist activities.”
(1) Unlawful Activites
- Under section 2(o) of the UAPA, an unlawful activity in relation to an individual or association means – Any action taken by such an individual or association (whether by committing an act or by words, either spoken or written, or by signs or by visible representation or otherwise), –
- Works for the Cession of a part of the territory of India or the secession of a part of the territory of India from the Union
- Disclaims, questions, disrupts or is intended to Disrupt the sovereignty and territorial integrity of India; or
- which causes or is intended to cause Disaffection against India;
- Related and ancillary acts, including financing, support or promotion of any such activities are also “unlawful activity”.
(2) Unlawful Association
The UAPA also defines an “Unlawful Association” under section 2(p) as meaning any association,–
- which has for its object any unlawful activity, or which encourages or aids persons to undertake any unlawful activity, or of which the members undertake such activity or
- which encourages or aids persons to undertake any such activity, or of which the members undertake any such activity
Reading the ban on PFI
- At present, the MHA notification published has said that the PFI and its affiliated organisations are being notified as “Unlawful Associations” with immediate effect.
- The charges against PFI are-
- Pursuing a secret agenda to radicalize a particular section of society
- Working towards undermining the concept of democracy and
- Showing sheer disrespect towards the constitutional authority and constitutional set up of the country
- Gathering funds and ideological support from outside the country
- Money laundering
Immediate trigger for PFI’s ban
- The PFI is accused of engaging in violent and barbaric acts.
- Criminal violent acts carried out by PFI include chopping off the limb of a college professor, cold-blooded killings of persons associated with organisations espousing other faiths.
- It has been allegedly involved in obtaining explosives to target prominent people and places and destruction of public property.
What does the ‘ban’ mean?
- The notification means that the membership of, support or financing to the PFI and the allied banned organizations, is now ILLEGAL.
- Any person who is a member of these organisations can face arrest, and joining membership of these organisations is a criminal offence.
- The government can also seize the properties, bank accounts and offices connected to these organisations.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NCRB
Mains level: Crime in India
A new edition of ‘Crime in India’, the annual report of the National Crime Records Bureau (NCRB), was released on August 29, for crime-related statistics in 2021.
Why in news?
- NCRB reports have been a valuable compilation of statistics over the years on offences ranging from crimes against women to economic and financial crimes.
- It has provided honest and credible sets of crime related data in India.
Crime in India: Key highlights
- Overall, 2021 saw a 6 per cent decline in the number of crimes registered, as compared to 2020.
- The crime rate per lakh population declined from 487.8 in 2020 to 445.9 in 2021.
- However, crime statistics do not always tell the full story, and lower crimes reported in an area do not necessarily mean it is safe.
- Crimes against women rose 15 per cent in India in 2021 and Delhi is the most unsafe metropolitan city.
- Rajasthan reported the highest number of rape cases and Maharashtra topped the list when it comes to most suicides.
- Around 1.73 lakh people died in traffic accidents. Uttar Pradesh saw the highest number of deaths (24,711) in traffic accidents.
- Jammu and Kashmir registered the most Unlawful Activities (Prevention) Act (UAPA) cases under the ‘special and local laws’ in 2021, as per NCRB data.
- Of the total 814 cases under the UAPA in India, J&K lodged 289 cases last year, followed by Manipur (157), Assam (95), Jharkhand (86) and Uttar Pradesh (83).
- Jharkhand and Maharashtra filed the highest cases of communal riots last year with 100 and 77 cases respectively.
Who publishes the NCRB report?
- The NCRB was established in January 1986 with the aim of establishing a body to compile and keep records of data on crime.
- It functions under the Union Home Ministry.
- Apart from publishing annual reports, its functions include “Collection, coordination and exchange of information on inter-state and international criminals to the respective states”.
- NCRB also acts as a “national warehouse” for the fingerprint records of Indian and foreign criminals, and assists in locating interstate criminals through fingerprint search.
How does the NCRB collect information for its report?
- The NCRB report contains data received from the 36 states and Union Territories across the country.
- Similar data is furnished for 53 metropolitan cities, or those having a population of more than 10 lakh as per the 2011 census, by respective state-level crime records bureaus.
- This information is entered by state/UT police at the police station/ district level, and is then validated further at the district level, then the state level, and finally by the NCRB.
Issues with NCRB data
- By its own admission, the NCRB says there are limitations to its data.
- Since the publication caters to the ‘Principal Offence Rule’ for classification of crime, the actual count of each crime head may go under-reporting.
- The Principal Offence Rule states that in a case where multiple offences are registered, only the “most heinous crime”, carrying the most stringent punishment, is considered when counting.
- For example, ‘Murder with Rape’ is accounted as ‘Murder’, leading to undercounting of the crime of rape.
- Vacancies or a shortage of police officers at the local level may hinder the collection of data.
- Also the data record the incidence of registered crime rather than of actual crime.
Antithesis to NCRB data
- Reported crimes against women in Delhi rose significantly in the aftermath of the 2012 Nirbhaya Gangrape case.
- This is not because the heinous crimes got trivialized.
- It may have been a reflection of increased awareness about the need for registering crimes, both among those affected and the police, rather than an actual increase in the incidence of crime against women.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PMI
Mains level: Not Much
India’s manufacturing sector rebounded in July, with sales and output growing at the fastest pace since November. The PMI quickened last month to 56.4, from June’s 9-month low of 53.9.
Purchasing Managers’ Index (PMI)
- PMI is an indicator of business activity — both in the manufacturing and services sectors.
- It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
- The PMI is compiled by IHS Markit based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
How is the PMI derived?
- The PMI is derived from a series of qualitative questions.
- Executives from a reasonably big sample, running into hundreds of firms, are asked whether key indicators such as output, new orders, business expectations and employment were stronger than the month before and are asked to rate them.
How does one read the PMI?
- A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
- Higher the difference from this mid-point greater the expansion or contraction. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.
- If the figure is higher than the previous month’s then the economy is expanding at a faster rate.
- If it is lower than the previous month then it is growing at a lower rate.
What are its implications for the economy?
- The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
- It is, therefore, considered a good leading indicator of economic activity.
- Economists consider the manufacturing growth measured by the PMI as a good indicator of industrial output, for which official statistics are released later.
- Central banks of many countries also use the index to help make decisions on interest rates.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Core Industries
Mains level: Read the attached story
India’s eight core sectors’ output growth moderated to 12.7% in June, from 18.1% in May, with all sectors except crude oil registering an uptick in production.
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.
Index of Eight Core Industries (ICI) vs Index of Industrial Production (IIP)
[A] Index of Eight Core Industries
- The monthly Index of Eight Core Industries (ICI) is a production volume index.
- ICI measures collective and individual performance of production in selected eight core industries viz. Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.
- Prior to the 2004-05 series six core industries namely Coal, Cement, Finished Steel, Electricity, Crude petroleum and Refinery products constituted the index basket.
- Two more industries i.e. Fertilizer and Natural Gas were added to the index basket in 2004-05 series. The ICI series with base 2011-12 will continue to have eight core industries.
Components covered in these eight industries for the purpose of compilation of index are as follows:
- Coal – Coal Production excluding Coking coal.
- Crude Oil – Total Crude Oil Production.
- Natural Gas – Total Natural Gas Production.
- Refinery Products – Total Refinery Production (in terms of Crude Throughput).
- Fertilizer – Urea, Ammonium Sulphate (A/S), Calcium Ammonium Nitrate (CAN), Ammonium chloride (A/C), Diammonium Phosphate (DAP), Complex Grade Fertilizer and Single superphosphate (SSP).
- Steel – Production of Alloy and Non-Alloy Steel only.
- Cement – Production of Large Plants and Mini Plants.
- Electricity – Actual Electricity Generation of Thermal, Nuclear, Hydro, imports from Bhutan.
[B] Index of Industrial Production
- The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
- The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.
Difference between the two
- IIP is compiled and published monthly by the National Statistics Office (NSO), Ministry of Statistics and Programme Implementation six weeks after the reference month ends.
- However, ICI is compiled and released by Office of the Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), and Ministry of Commerce & Industry.
- The Eight Core Industries comprise nearly 40.27% of the weight of items included in the Index of Industrial Production (IIP).
- These are Electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilisers.
Importance of Core Industries
- The core sectors have a major impact on the Indian economy and significantly affect most other industries as well.
- Their measures help account for the physical volume of production in India.
- Their analysis offers a clearer and more realistic assessment of what’s happening in the economy
- Their progress is used by government agencies for policy-making purposes.
- They remain extremely relevant for the calculation of the quarterly and advanced Gross Domestic Product (GDP) estimates.
- The core sector is also known as Infrastructure output as they represent the basic industries that form the base of the economy.
Do you know about the Strategic Sectors?
The government has identified four strategic sectors where the presence of state-run companies will be reduced to a minimum.
- Atomic energy, space and defence
- Transport and telecommunications
- Power, petroleum, coal and other minerals and
- Banking, insurance and financial services
Try this PYQ:
Q.In the ‘Index of Eight Core Industries’, which one of the following is given the highest weight?
(a) Coal production
(b) Electricity generation
(c) Fertilizer production
(d) Steel production
Post your answers here.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: HCES
Mains level: Not Much
The Centre has kicked off the process for conducting the quinquennial Household Consumption Expenditure Survey (HCES) this month.
What is the Household Consumer Expenditure Survey (CES)?
- The HCES is traditionally a quinquennial (recurring every five years) survey conducted by the government’s National Sample Survey Office (NSSO).
- It is designed to collect information on the consumer spending patterns of households across the country, both urban and rural.
- Typically, the Survey is conducted between July and June and this year’s exercise is expected to be completed by June 2023.
Why HCES?
- The HCES is used to arrive at estimates of poverty levels as well as review key economic indicators like Gross Domestic Product (GDP).
- The results of the survey are also utilised for updating the consumption basket and for base revision of the Consumer Price Index.
- It helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE) as well as the distribution of households and persons over the MPCE classes.
- It is used to arrive at estimates of poverty levels in different parts of the country and to review economic indicators such as the GDP, since 2011-12.
Why need this survey?
- India has not had any official estimates on per capita household spending.
- It provides separate data sets for rural and urban parts, and also splice spending patterns for each State and Union Territory, as well as different socio-economic groups.
What about the previous survey?
- The survey was last held in 2017-2018.
- The government announced that it had data quality issues.
- Hence the results were not released.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: India Innovation Index
Mains level: Not Much
Karnataka has bagged the top rank in NITI Aayog’s India Innovation Index, 2022, which determines innovation capacities and ecosystems at the sub-national level.
India Innovation Index (III)
- The release of the second edition of the index—the first was launched in October 2019—demonstrates the Government’s continued commitment to transforming the country into an innovation-driven economy.
- The index attempts to create an extensive framework for the continual evaluation of the innovation environment of all states and UTs in India.
- It intends to perform the following three functions-
- Ranking of states and UTs based on their index scores
- Recognizing opportunities and challenges, and
- Assisting in tailoring governmental policies to foster innovation
- The states have been bifurcated into three categories: major states, northeast and hill states, and union territories/city-states/small states.
Significance
- The study examines the innovation ecosystem of Indian states and union territories.
- The aim is to create a holistic tool that can be used by policymakers across the country to identify the challenges to be addressed and strengths to build on when designing policies.
Highlights of the 2022 index
- Karnataka has held this position, under the Major States category, in all three editions of the Index so far.
- It was followed by Telangana, Haryana, Maharashtra and Tamil Nadu. Chhattisgarh, Odisha, Bihar and Gujarat were at the bottom of the index.
- In the Index, Manipur secured the lead in the Northeast and Hill States category, while Chandigarh was the top performer in the Union Territories and City States category.
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From UPSC perspective, the following things are important :
Prelims level: Vice President of India
Mains level: Not Much
A major political party has declared that West Bengal Governor Jagdeep Dhankhar would be the candidate for the post of Vice-President.
About Vice President of India
- The VP is the deputy to the head of state of the Republic of India, the President of India.
- His/her office is the second-highest constitutional office after the president and ranks second in the order of precedence and first in the line of succession to the presidency.
- The vice president is also a member of the Parliament as the ex officio Chairman of the Rajya Sabha.
Qualifications
- As in the case of the president, to be qualified to be elected as vice president, a person must:
- Be a citizen of India
- Be at least 35 years of age
- Not hold any office of profit
- Unlike in the case of the president, where a person must be qualified for election as a member of the Lok Sabha, the vice president must be qualified for election as a member of the Rajya Sabha.
- This difference is because the vice president is to act as the ex officio Chairman of the Rajya Sabha.
Roles and responsibilities
- When a bill is introduced in the Rajya Sabha, the vice president decides whether it is a money bill or not.
- If he is of the opinion that a bill introduced in the Rajya Sabha is a money bill, he shall refer it to the Speaker of the Lok Sabha.
- The vice president also acts as the chancellor of the central universities of India.
Election procedure
- Article 66 of the Constitution of India states the manner of election of the vice president.
- The vice president is elected indirectly by members of an electoral college consisting of the members of both Houses of Parliament and NOT the members of state legislative assembly.
- The election is held as per the system of proportional representation using single transferable votes.
- The voting is conducted by Election Commission of India via secret ballot.
- The Electoral College for the poll will comprise 233 Rajya Sabha members, 12 nominated Rajya Sabha members and 543 Lok Sabha members.
- The Lok Sabha Secretary-General would be appointed the Returning Officer.
- Political parties CANNOT issue any whip to their MPs in the matter of voting in the Vice-Presidential election.
Removal
- The Constitution states that the vice president can be removed by a resolution of the Rajya Sabha passed by an Effective majority (majority of all the then members) and agreed by the Lok Sabha with a simple majority( Article 67(b)).
- But no such resolution may be moved unless at least 14 days’ notice in advance has been given.
- Notably, the Constitution does not list grounds for removal.
- No Vice President has ever faced removal or the deputy chairman in the Rajya Sabha cannot be challenged in any court of law per Article 122.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Mission Indradhanush
Mains level: Read the attached story
The number of children in India who were unvaccinated or missed their first dose of diphtheria-tetanus-pertussis (DTP) combined vaccine doubled due to the pandemic, rising from 1.4 million in 2019 to 2.7 million in 2021, according to official data published by the WHO and UNICEF.
Why in news?
- This data signifies that the world recorded the largest sustained decline in childhood vaccinations in approximately 30 years.
- There was an increase in zero dose.
- This is the first time ever there has been a decline in evaluated coverage in immunisation for India as a whole.
Vaccination measures in India
- Intensified Mission Indradhanush (IMI) 4.0: India started IMI 4.0 from February 2022, which is expected to further reduce the number of unvaccinated children.
- India’s Universal Immunisation Programme (UIP): It provide free vaccines to all children across the country to protect them against Tuberculosis, Diphtheria, Pertussis, Tetanus, Polio, Hepatitis B, Pneumonia and Meningitis due to Haemophilus Influenzae type b (Hib), Measles, Rubella, Japanese Encephalitis (JE) and Rotavirus diarrhoea. (Rubella, JE and Rotavirus vaccine in select states and districts).
About Intensified Mission Indhradhanush (IMI) 4.0
- IMI 4.0 aims to fill gaps in the routine immunisation coverage of infants and pregnant women hit by the Covid-19 pandemic and also aims to make lasting gains towards Universal Immunization.
- It will have three rounds and will be conducted in 416 districts across 33 states.
- Unlike the past, each round under IMI 4.0 will be conducted for seven days, including Routine Immunization (RI) days, Sundays, and public holidays.
Mission Indradhanush (MI)
- Mission Indradhanush (MI) was launched in 2014 with the goal to ensure full immunization with all available vaccines under Universal Immunization Programme (UIP) for children up to two years of age and pregnant women.
- It targets achieving 90% full immunization coverage in all districts.
- Under MI, all vaccines under the Universal Immunization Program (UIP) are provided as per National Immunization Schedule.
- UIP provides free vaccines against 12 life-threatening diseases, mentioned above.
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Back2Basics: Universal Immunisation Programme
- The Expanded Programme on Immunization was launched in 1978.
- It was renamed as UIP in 1985 when its reach was expanded beyond urban areas.
- UIP is one of the largest public health programmes targeting close to 2.67 crore newborns and 2.9 crore pregnant women annually.
- Under UIP, Immunization is provided free of cost against 12 vaccine-preventable diseases.
- The two major milestones of UIP have been the elimination of polio in 2014 and maternal and neonatal tetanus elimination in 2015.
- To speed up the coverage, Mission Indradhanush was planned and implemented to rapidly increase the full coverage to 90%.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFSA
Mains level: Food and nutrition security of India
Odisha has topped the list of 34 states and Union territories (UTs) in the first-ever NFSA State Ranking Index. Ladakh was ranked last on the index.
NFSA State Ranking Index
- The GoI has come up with a first-ever state ranking index to capture the implementation of the Targeted Public Distribution System (TPDS) under the National Food Security Act (NFSA).
- The states and UTs were ranked for 2022 on the basis of three parameters:
- NFSA coverage, rightful targeting and implementation of all provisions under the Act
- The delivery platform while considering the allocation of food grains, their movement and last-mile delivery to fair price shops
- Nutrition initiatives of the department
Why need such index?
- NFSA is a crucial policy instrument to ensure food security. It covers nearly 800 million people.
- However, NFSA’s implementation through TPDS has not been uniform in the country.
- While some states and Union territories lead, others are yet to pick up in terms of coverage, beneficiary satisfaction, digitisation and overall system efficiency.
- The index has been developed to create an environment of competition, cooperation and learning among states while addressing matters of food security and hunger.
Back2Basics: National Food Security (NFS) Act
- The NFS Act, 2013 aims to provide subsidized food grains to approximately two-thirds of India’s 1.2 billion people.
- It converts into legal entitlements for existing food security programs of the GoI.
- It includes the Midday Meal Scheme, Integrated Child Development Services (ICDS) scheme and the Public Distribution System (PDS).
- Further, the NFSA 2013 recognizes maternity entitlements.
- The Midday Meal Scheme and the ICDS are universal in nature whereas the PDS will reach about two-thirds of the population (75% in rural areas and 50% in urban areas).
- Pregnant women, lactating mothers, and certain categories of children are eligible for daily free cereals.
Key provisions of NFSA
- The NFSA provides a legal right to persons belonging to “eligible households” to receive foodgrains at a subsidised price.
- It includes rice at Rs 3/kg, wheat at Rs 2/kg and coarse grain at Rs 1/kg — under the Targeted Public Distribution System (TPDS). These are called central issue prices (CIPs).
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https://www.downtoearth.org.in/news/governance/odisha-tops-first-ever-nfsa-state-ranking-index-83549
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: New GST slabs
Mains level: Rationalization of GST
The Goods and Services Tax (GST) Council has decided to hike and lower GST on certain commodities.
What is the news?
- From July 18, tax hikes will kick in for over two dozen goods and services, ranging from unbranded food items, curd and buttermilk to low-cost hotels, cheques and maps.
- Tax rates will be lowered for about half-a-dozen goods and services, including ropeways and truck rentals where fuel costs are included.
- It scrapped GST for items imported by private vendors for use by defence forces.
What is GST?
- GST launched in India on 1 July 2017 is a comprehensive indirect tax for the entire country.
- It is charged at the time of supply and depends on the destination of consumption.
- For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).
- GST, being a consumption-based tax, resulted in loss of revenue for manufacturing-heavy states.
What are GST Slabs?
- In India, almost 500+ services and over 1300 products fall under the 4 major GST slabs.
- There are five broad tax rates of zero, 5%, 12%, 18% and 28%, plus a cess levied over and above the 28% on some ‘sin’ goods.
- The GST Council periodically revises the items under each slab rate to adjust them according to industry demands and market trends.
- The updated structure ensures that the essential items fall under lower tax brackets, while luxury products and services entail higher GST rates.
- The 28% rate is levied on demerit goods such as tobacco products, automobiles, and aerated drinks, along with an additional GST compensation cess.
Why rationalize GST slabs?
- From businesses’ viewpoint, there are just too many tax rate slabs, compounded by aberrations in the duty structure through their supply chains with some inputs are taxed more than the final product.
- These are far too many rates and do not necessarily constitute a Good and Simple Tax.
- Multiple rate changes since the introduction of the GST regime in July 2017 have brought the effective GST rate to 11.6% from the original revenue-neutral rate of 15.5%.
- Merging the 12% and 18% GST rates into any tax rate lower than 18% may result in revenue loss.
Haven’t GST revenues been hitting new records?
- Yes, they have – GST revenues have scaled fresh highs in three of the first four months of 2022, going past ₹1.67 lakh crore in April.
- But there is another key factor — the runaway pace of inflation.
- Wholesale price inflation, which captures producers’ costs, has been over 10% for over a year and peaked at 15.1% in April.
- Inflation faced by consumers on the ground has spiked to a near-eight year high of 7.8% in April.
- The rise in prices was the single most important factor for higher tax inflows along with higher imports.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PGI-D
Mains level: Not Much
The Ministry of Education has released the Performance Grading Index for Districts (PGI-D) for 2019 which studied 83 indicators grouped in six categories.
What is PGI-D?
- The 83-indicator-based PGI for District (PGI-D) has been designed to grade the performance of all districts in school education.
- The data is filled by districts through an online portal.
- The indicator-wise PGI score shows the areas where a district needs to improve.
- The PGI-D structure comprises a total weightage of 600 points across 83 indicators.
- They are grouped under 6 categories, viz., Outcomes, Effective Classroom Transaction, Infrastructure Facilities & Students’ Entitlements, School Safety & Child Protection, Digital Learning, and Governance Process.
- These categories are outcomes, effective classroom transaction, infrastructure facilities and student’s entitlements, school safety and child protection, digital learning and governance process.
How does the grading scale works?
- The PGI-D grades the districts into 10 grades with the highest achievable grade being ‘Daksh’, which is for districts scoring more than 90% of the total points in that category or overall.
- ‘Utkarsh’ category is for districts with score between 81-90%, followed by ‘Ati-Uttam’ (71-80%), ‘Uttam’ (61-70%), ‘Prachesta-I’ (51-60%), ‘Prachesta-II’ (41-50%) and ‘Pracheshta III’ (31-40%).
- The lowest grade in PGI-D is called ‘Akanshi-3’ which is for scores up to 10% of the total points.
Performance of the states
- Rajasthan’s Sikar is the top performer, followed by Jhunjhunu and Jaipur.
- The other States whose districts have performed best are Punjab with 14 districts in ‘Ati-uttam’ grade (scoring 71-80% on a scale of 100).
- It followed by Gujarat and Kerala with each having 13 districts in this category.
- However, there are 12 States and UTs which do not have even a single district in the ‘Ati-uttam’ and ‘Uttam’ categories and these include seven of the eight States from the North East region.
Significance
- The PGI-D will reflect the relative performance of all the districts on a uniform scale which encourages them to perform better.
- It is expected to help the state education departments to identify gaps at the district level and improve their performance in a decentralized manner.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: State Food Safety Index (SFSI)
Mains level: Food safety
Tamil Nadu topped the State Food Safety Index (SFSI) this year.
Food safety has been in news this year quite frequent. Do make a note of following – Recommended Dietary Allowance (RDA), Red Octagon, Eat Right Movement, Food Safety Mitra etc.
State Food Safety Index (SFSI)
- FSSAI has developed State Food Safety Index to measure the performance of states on various parameters of Food Safety.
- This index is based on the performance of State/ UT on five significant parameters set by the Health Ministry, namely
- Human Resources and Institutional Data
- Compliance
- Food Testing – Infrastructure and Surveillance
- Training & Capacity Building and
- Consumer Empowerment
- The Index is a dynamic quantitative and qualitative benchmarking model that provides an objective framework for evaluating food safety across all States/UTs.
Highlights of the 2022 Report
- Tamil Nadu is followed by Gujarat and Maharashtra. Among the smaller States, Goa stood first, followed by Manipur and Sikkim.
- Among the Union Territories, Jammu and Kashmir, Delhi and Chandigarh secured the first, second and third ranks.
Back2Basics: Food Safety and Standards Authority of India (FSSAI)
- The FSSAI is an autonomous body established under the Ministry of Health & Family Welfare, Government of India.
- It has been established under the Food Safety and Standards Act, 2006 which is a consolidating statute related to food safety and regulation in India.
- It is responsible for protecting and promoting public health through the regulation and supervision of food safety.
- It is headed by a non-executive Chairperson, appointed by the Central Government, either holding or has held the position of not below the rank of Secretary to the Government of India.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NFHS and other survey mentioned
Mains level: Read the attached story
The Total Fertility Rate (TFR), the average number of children per woman, has further declined from 2.2 to 2.0 at the national level between National Family Health Survey (NFHS) 4 and 5.
What is NFHS?
- The NFHS is a large-scale, multi-round survey conducted in a representative sample of households throughout India.
- The IIPS is the nodal agency, responsible for providing coordination and technical guidance for the NFHS.
- NFHS was funded by the United States Agency for International Development (USAID) with supplementary support from United Nations Children’s Fund (UNICEF).
- The First National Family Health Survey (NFHS-1) was conducted in 1992-93.
Objectives of the NFHS
The survey provides state and national information for India on:
- Fertility
- Infant and child mortality
- The practice of family planning
- Maternal and child health
- Reproductive health
- Nutrition
- Anaemia
- Utilization and quality of health and family planning services
Modifications in NFHS 5
NFHS-5 includes new focal areas that will give requisite input for strengthening existing programmes and evolving new strategies for policy intervention. The areas are:
- Expanded domains of child immunization
- Components of micro-nutrients to children
- Menstrual hygiene
- Frequency of alcohol and tobacco use
- Additional components of non-communicable diseases (NCDs)
- Expanded age ranges for measuring hypertension and diabetes among all aged 15 years and above.
Highlights of the NFHS 5 Part-II
(a) Fertility Rate
- There are only five States — Bihar (2.98), Meghalaya (2.91), Uttar Pradesh (2.35), Jharkhand (2.26) Manipur (2.17) —which are above replacement level of fertility of 2.1.
(b) Institutional Births
- The institutional births increased from 79% to 89% across India and in rural areas around 87% births being delivered in institutions and the same is 94% in urban areas.
- As per results of the NFHS-5, more than three-fourths (77%) children aged between 12 and 23 months were fully immunised, compared with 62% in NFHS-4.
- The level of stunting among children under five years has marginally declined from 38% to 36% in the country since the last four years.
- Stunting is higher among children in rural areas (37%) than urban areas (30%) in 2019-21.
(c) Decision making
- The extent to which married women usually participate in three household decisions (about health care for herself; making major household purchases; visit to her family or relatives) indicates that their participation in decision-making is high, ranging from 80% in Ladakh to 99% in Nagaland and Mizoram.
- Rural (77%) and urban (81%) differences are found to be marginal.
- The prevalence of women having a bank or savings account has increased from 53% to 79% in the last four years.
(d) Rise in obesity
- Compared with NFHS-4, the prevalence of overweight or obesity has increased in most States/UTs in NFHS-5.
- At the national level, it increased from 21% to 24% among women and 19% to 23% among men.
- More than a third of women in Kerala, Andaman and Nicobar Islands, AP, Goa, Sikkim, Manipur, Delhi, Tamil Nadu, Puducherry, Punjab, Chandigarh and Lakshadweep (34-46 %) are overweight or obese.
Also read
National Family Health Survey- 5 Part: I
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Repo Rate
Mains level: Inflation targetting by MPC
The Reserve Bank of India (RBI), in a sudden move, raised the repo rate by 40 basis points (bps) to 4.4% citing inflation that was globally rising alarmingly and spreading fast.
Why in news?
- The repo rate increase was the first since August 2018.
- The MPC retained its ‘accommodative’ policy stance even as it focuses on withdrawal of accommodation to keep inflation within the target range while supporting growth.
- Due to Ukraine War, persistent and spreading inflationary pressures are becoming more acute with every passing day.
Hues over the REPO spike
- The move — to have such a meeting and to raise the interest rates — is, at two different levels, both surprising and obvious.
- It is surprising because the RBI’s MPC meets once every two months — and the meeting this week was not scheduled.
What is Repo Rate?
- Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds.
- It is used by monetary authorities to control inflation.
- In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank.
- This ultimately reduces the money supply in the economy and thus helps in arresting inflation.
How does the repo dynamics work?
- When there is a shortage of funds, commercial banks borrow money from the central bank which is repaid according to the repo rate applicable.
- The central bank provides these short terms loans against securities such as treasury bills or government bonds.
- This monetary policy is used by the central bank to control inflation or increase the liquidity of banks.
- The government increases the repo rate when they need to control prices and restrict borrowings.
- An increase in repo rate means commercial banks have to pay more interest for the money lent to them and therefore, a change in repo rate eventually affects public borrowings such as home loan, EMIs, etc.
- From interest charged by commercial banks on loans to the returns from deposits, various financial and investment instruments are indirectly dependent on the repo rate.
What is accommodative stance of policy?
- Accommodative monetary policy is when central banks expand the money supply to boost the economy. Monetary policies that are considered accommodative include lowering the Federal funds rate.
- These measures are meant to make money less expensive to borrow and encourage more spending.
What triggered the RBI to take sudden decision?
- Inflation has been rising for over two years: By law, the RBI is supposed to target retail inflation at 4%. Inflation constantly above 4% since last year.
- Inflation has not been “transitory”: The reasons for high inflation have tended to change over the months due to wide range of reasons like war, crude oil prices rise, taxes on fuels etc.
- Spike in crude oil prices is not new: The RBI has pointed to high crude oil prices in the wake of the Ukraine war, as one of the key reasons for high inflation in India.
- High core inflation: The core inflation which is essentially the inflation rate stripped of the effect of fuel and food prices has been rising up. This is more worrisome for RBI since it cannot be altered overnight.
- Monetary policy has lags. RBI waited too long: If the RBI wanted to contain inflation in May, it should have acted in February or at least in April. Raising rates right now may not bring down the inflation rate immediately.
Try this PYQ from CSP 2020:
Q.If the RBI decides to adopt an expansionist monetary policy, which of the following it would NOT do?
- Cut and optimize the statutory liquidity ratio
- Increase the Marginal Standing Facility Rate
- Cut the Bank Rate and Repo Rate
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Post your answers here:
Back2Basics: Monetary Policy Committee (MPC)
- The Monetary Policy Committee (MPC) is a committee of the RBI, which is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation within the specified target level.
- The RBI Act, 1934 was amended by Finance Act (India), 2016 to constitute MPC to bring more transparency and accountability in fixing India’s Monetary Policy.
- The policy is published after every meeting with each member explaining his opinions.
- The committee is answerable to the Government of India if the inflation exceeds the range prescribed for three consecutive months.
- Suggestions for setting up a MPC is not new and goes back to 2002 when YV Reddy committee proposed to establish an MPC, then Tarapore committee in 2006, Percy Mistry committee in 2007, Raghuram Rajan committee in 2009 and then Urjit Patel Committee in 2013.
Composition and Working
- The committee comprises six members – three officials of the RBI and three external members nominated by the Government of India.
- The meetings of the Monetary Policy Committee are held at least 4 times a year and it publishes its decisions after each such meeting.
- The Governor of RBI is the chairperson ex officio of the committee.
- Decisions are taken by a majority with the Governor having the casting vote in case of a tie.
- They need to observe a “silent period” seven days before and after the rate decision for “utmost confidentiality”.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Civil Registration System (CRS)
Mains level: Total covid related fatality in India
The Civil Registration System (CRS) report 2020 was released at least a month before its schedule.
What is Civil Registration System (CRS)?
- The CRS collates data on all births and deaths registered with local authorities across India.
- The CRS report is released by the Registrar-General of India.
- It releases its report around 18 months after a year ends.
Significance of the 2020 Report
- The 2020 report was released at least a month before schedule.
- Such data can be of significance during a pandemic as possible covid-19 deaths may not have been categorized as such in official records.
- The CRS can help us reach an estimate by using the “excess deaths” approach.
- It is the difference between the total number of deaths registered in a pandemic year and the number of deaths that normally take place in a year.
Why was the data released ahead of schedule?
- India and the WHO are locked in a tussle over the latter’s excess death estimates that would give a sense of pandemic-linked fatalities globally in 2020-21.
- India has reportedly stalled WHO’s efforts to release the data, claiming flawed methodology.
- WHO is set to release its estimates today, a possible reason that India released CRS data early.
Why is India contesting the WHO approach?
- One key objection by India is that WHO has classified it as a Tier 2 country and hence used a different modelling process to estimate excess deaths from that used for Tier 1 countries.
- WHO says all countries that made available their full all-cause mortality data for the pandemic period were classified as Tier 1.
- India is in Tier 2 because it didn’t share official data with WHO.
- Hence, alternative data and modelling methods had to be adopted, adjusting for factors such as income levels, covid-19 reporting rates, and test positivity rates.
What does the 2020 data show?
(a) Covid deaths
- The CRS report for 2020 has recorded deaths of 8.12 million Indians, 6.2% more than 2019.
- Normally, an unusual increase in deaths would be linked to the pandemic. However, in India, not all deaths are registered.
- Thus, a rise could simply be because of more families getting deaths registered.
- The CRS for 2021, which saw more Covid deaths, may not be out until next year.
(b) Improvements in sex ratio
- Highest Sex Ratio at Birth (SRB) based on registered events has been reported by Ladakh (1,104) followed by Arunachal Pradesh (1,011), A&N Islands (984), Tripura (974), and Kerala (969).
- The lowest sex ratio was reported by Manipur (880), followed by Dadra and Nagar Haveli and Daman and Diu (898), Gujarat (909), Haryana (916) and Madhya Pradesh (921).
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Labour force participation rate (LFPR)
Mains level: Unemployment in India
Data from the Centre for Monitoring Indian Economy (CMIE) shows that India’s labour force participation rate (LFPR) has fallen to just 40% from an already low 47% in 2016.
What is LFPR?
- Before understanding LFPR, we need to define the labour force itself.
- According to the CMIE, the labour force consists of persons who are of age 15 years or older, and belong to either of the following two categories:
- are employed
- are unemployed and are willing to work and are actively looking for a job
- There is a crucial commonality between the two categories — they both have people “demanding” jobs.
- This demand is what LFPR refers to. While those in category 1 succeed in getting a job, those in category 2 fail to do so.
- Thus, the LFPR essentially is the percentage of the working-age (15 years or older) population that is asking for a job; it represents the “demand” for jobs in an economy.
- It includes those who are employed and those who are unemployed.
- The Unemployment Rate (UER), which is routinely quoted in the news, is nothing but the number of unemployed (category 2) as a proportion of the labour force.
What is the significance of LFPR in India?
- Typically, it is expected that the LFPR will remain largely stable.
- As such, any analysis of unemployment in an economy can be done just by looking at the UER.
- But, in India, the LFPR is not only lower than in the rest of the world but also falling. This, in turn, affects the UER because LFPR is the base (the denominator) on which UER is calculated.
- The world over, LFPR is around 60%. In India, it has been sliding over the last 10 years and has shrunk from 47% in 2016 to just 40% as of December 2021.
- This shrinkage implies that merely looking at UER will under-report the stress of unemployment in India.
- Recent trend suggests that not only that more than half of India’s population in the working-age group is deciding to sit out of the job market, but also that this proportion of people is increasing.
How is it under-reported?
- Imagine that there are just 100 people in the working-age group but only 60 ask for jobs — that is, the LFPR is 60% — and of these 60 people, 6 did not get a job. This would imply a UER of 10%.
- Now imagine a scenario when the LFPR has fallen to 40% and, as such, only 40 people are demanding work. And of these 40, only 2 people fail to get a job.
- The UER would have fallen to 5% and it might appear that the economy is doing better on the jobs front but the truth is starkly different.
- The truth is that beyond the 2 who are unemployed, a total of 20 people have stopped demanding work.
- Typically, this happens when people in the working-age get disheartened from not finding work.
So, what is the correct way to assess India’s unemployment stress?
- When LFPR is falling as steadily and as sharply as it has done in India’s case, it is better to track another variable: the Employment Rate (ER).
- The ER refers to the total number of employed people as a percentage of the working-age population.
- By using the working-age population as the base and looking at the number of people with jobs, the ER captures the fall in LFPR to better represent the stress in the labour market.
ER trends in India
- If one looks at the ER data (Chart 1), it becomes clear that while India’s working-age population has been increasing each year, the percentage of people with jobs has been coming down sharply.
- Looking at the absolute numbers makes the stress even more clear.
- In December 2021, India had 107.9 crore people in the working age group and of these, only 40.4 crore had a job (an ER of 37.4%).
- Compare this with December 2016 when India had 95.9 crore in the working-age group and 41.2 crore with jobs (ER 43%).
- In five years, while the total working-age population has gone up by 12 crore, the number of people with jobs has gone down by 80 lakh.
Why is India’s LFPR so low?
- The main reason for India’s LFPR being low is the abysmally low level of female LFPR.
- According to CMIE data, as of December 2021, while the male LFPR was 67.4%, the female LFPR was as low as 9.4%.
- In other words, less than one in 10 working-age women in India are even demanding work.
- Even if one sources data from the World Bank, India’s female labour force participation rate is around 25% when the global average is 47%.
Why do so few women demand work?
- One reason is essentially about the working conditions — such as law and order, efficient public transportation, violence against women, societal norms etc — being far from conducive for women to seek work.
- The other has to do with correctly measuring women’s contribution to the economy.
- There are methodological issues in formally capturing women’s contribution to the economy since a lot of women in India are exclusively involved within their own homes.
- Lastly, it is also a question of adequate job opportunities for women.
How do people who leave the labour force survive?
- Households with more than one working member often witness this phenomenon.
- The fall in the LFPR since 2016 has been accompanied by a fall in the proportion of households where more than one person is employed.
- The fall in LFPR has largely been the result of the additional person employed in a typical household losing a job.
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