From UPSC perspective, the following things are important :
Prelims level: Paris Agreement
Mains level: Paper 3- Net zero emission targets and issues with it
Climate Ambition Summit was held on the 5th anniversary of the Paris Agreement. The article takes stock of the progress made on climate action in the last 5 years.
The Paris Agreement
The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016.
Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.
To achieve this long-term temperature goal, countries aim to reach global peaking of greenhouse gas emissions as soon as possible to achieve a climate-neutral world by mid-century.
It is a landmark process because, for the first time, a binding agreement brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects.
How does it function?
Implementation of the Paris Agreement requires economic and social transformation, based on the best available science.
The Agreement works on a 5- year cycle of increasingly ambitious climate action carried out by countries.
By 2020, countries submit their plans for climate action known as nationally determined contributions (NDCs).
NDCs
In their NDCs, countries communicate actions they will take to reduce their Greenhouse Gas emissions in order to reach the goals of the Paris Agreement.
Countries also communicate in the NDCs actions they will take to build resilience to adapt to the impacts of rising temperatures.
Long-Term Strategies
To better frame the efforts towards the long-term goal, the Paris Agreement invites countries to formulate and submit by 2020 long-term low greenhouse gas emission development strategies (LT-LEDS).
LT-LEDS provide the long-term horizon to the NDCs. Unlike NDCs, they are not mandatory.
Nevertheless, they place the NDCs into the context of countries’ long-term planning and development priorities, providing a vision and direction for future development.
Progress made after 5 years
All states have submitted their national contributions to mitigate and adapt to climate change.
However, these contributions are radically insufficient to reach the “well below 2 degrees Celsius” limit and are even further from the “1.5 degrees Celsius” temperature limit identified in the Paris Agreement.
This initial shortfall was expected — the logic of the Paris Agreement relied on iterative scaling up of national targets over time to bridge the gap.
Are countries scaling up the targets
Although 151 states have indicated that they will submit stronger targets before December 31, only 13 of them, covering 2.4 per cent of global emissions, have submitted such targets.
While states have been slow to update their national contributions for 2025-2030, several have announced “net zero” targets in the recent past.
All G-7 states except the US and 11 G20 members have mid-century (2050 or 2060) net zero targets -carbon dioxide or other GHGs.
The Joe Biden administration is also expected to join this group.
Issues in Net Zero targets
1) Credibility of the commitments
First, the credibility check — are these long-term net zero goals aligned with short-term actions, policies and measures?
The IPCC 1.5 degrees Celsius Report indicated that to stay within a reasonable chance of achieving 1.5 degrees Celsius, global carbon dioxide emissions have to fall by 45 per cent from the 2010 levels by 2030.
Current national contributions are not on track for such a fall.
For many there is a mismatch between short-term actions and long-term commitments.
Further, there is a significant “overshoot” in terms of GHGs in the short and medium-term, and a reliance on negative emissions technologies to get there in the long-term.
2) Fixing accountability
Many net zero goals have not yet been embedded in national contributions and long-term strategies under the Paris Agreement.
In any case, accountability under the Paris Agreement is limited. States are not obliged to achieve their self-selected targets.
There is no mechanism to review the adequacy of individual contributions.
States are only asked to provide justifications for the fairness and ambition of their targets.
The transparency framework does not contain a robust review function, and the compliance committee is facilitative and limited to ensuring compliance with a short list of binding procedural obligations.
Accountability, therefore, has thus far been generated by non-state actors outside the UN regime rather than in the regime.
3) Fairness of climate action
The issue of equity and fairness, side-stepped in the Paris Agreement, is emerging in climate litigation before national and regional courts.
In the landmark Urgenda case (2019), the Dutch Supreme court considered “fair shares” when identifying benchmarks against which the Netherland’s national effort could be judged in the context of a collective action problem.
Issues of fairness and justice, both between and within generations, are “unavoidable”.
India’s commitment
In 2015, ahead of the UN significant climate conference in Paris, India announced three major voluntary commitments called the Nationally Determined Contributions (NDC):
Improving the emissions intensity of its GDP by 33–35% by 2030 over 2005 levels
Increasing the share of non-fossil fuels-based electricity to 40% by 2030 and
Enhancing its forest cover, thereby absorbing 2.5 to 3 billion tonnes of carbon dioxide
A success (?)
The Environment Minister said that we have achieved 21% of its emissions intensity reduction target as a proportion of its GDP in line with its pledge to a 33-35% reduction by 2030.
India was the only major G20 country that was on track towards keeping to its nationally determined commitments to halt runaway global warming.
Conclusion
Credible short-term commitments, with a clear pathway to medium-term decarbonisation, that take into account the multiple challenges states face, such as on air pollution, and development, might well be the more defensible choice for some.
From UPSC perspective, the following things are important :
Prelims level: Iran's nuclear deal
Mains level: Paper 2- Iran nuclear deal and challenges
The article analyses Iran’s response to the recent killing of its top nuclear scientist. Instead of responding to the provocation, Iran has decided to wait and watch the new U.S. administrations response.
Background of nuclear deal with Iran
In 2015, the P5+1 nations-China, France, Russia, the U.K. and the U.S., plus Germany- reached an agreement with Iran to curb the country’s nuclear programme.
It was expected that the agreement would lead to a new beginning in West Asia, however, this did not happen.
Washington saw Iran’s nuclear programme, which was at an advanced stage in 2015, as a national security problem and tackled it via diplomacy.
However, for Israel and Saudi Arabia, Iran’s nuclear programme was not the problem but was part of the larger geopolitical challenges Iran posed.
The problem was Iran itself: Tehran’s influence across West Asia, its backing for non-state militias, and its ambition to emerge as a dominant pillar in the region.
The Donald Trump administration took an entirely different line towards Iran.
It pulled the U.S. out of the nuclear deal, despite United Nations certification that Iran was compliant with its terms, and reimposed sanctions on Tehran.
Israels
Iran wants to set back Iran’s nuclear programme by taking out a prominent scientist and scuttle the possible revival of the nuclear deal.
If Iran does not retaliate, it shows that Iran’s deterrence is getting weaker, which could trigger more such attacks from its rivals.
If it retaliates, it could escalate the conflict, giving the outgoing Trump administration and Isarael reasons to launch heavier strikes on Iran’s nuclear facilities, closing off the diplomatic path.
Iran’s response and challenges in it
Instead of walking into the trap of provocation, Iran’s Parliament passed a Bill that obliges the government to enrich uranium to a higher level, from less than 5% now to 20%.
This is a technical step away from the weapons-grade level of 90%.
And stop access for UN inspectors to the country’s top nuclear facilities in two months if sanctions relief is not given.
Within two months, Mr. Biden will be in the White House.
Conclusion
Iran is taking a calculated risk by enhancing its nuclear programme, which can be reversed if talks are revived. But it is leaving the Israel problem unaddressed, for now. This leaves the region vulnerable to a prolonged crisis.
From UPSC perspective, the following things are important :
Prelims level: POSHAN Abhiyan
Mains level: Paper 2- Analysing the contribution of POSHAN Abhiyan
POSHAN Abhiyan has completed 1000 days. The article analyses the challenges country face on the nutrition front which has been exacerbated by the Covid-19 induced disruptions.
Severity and impact of malnutrition
Malnourished children tend to fall short of their real potential — physically as well as mentally.
That is because malnutrition leaves their bodies weaker and more susceptible to illnesses.
In 2017, a staggering 68% of 1.04 million deaths of children under five years in India was attributable to malnutrition, reckoned a Lancet study in 2019.
Without necessary nutrients, their brains do not develop to the fullest.
Malnutrition places a burden heavy enough for India, to make it a top national priority.
About half of all children under five years in the country were found to be stunted (too short) or wasted (too thin) for their height, estimated the Comprehensive National Nutrition Survey, carried out by the Ministry of Health and Family Welfare with support of UNICEF three years ago.
POSHAN Abhiyan against the background Covid-19 disruption
The Prime Minister’s Overarching Scheme for Holistic Nutrition (POSHAN) Abhiyaan in 2018, led to a holistic approach to tackle malnutrition.
Under it, the government strengthened the delivery of essential nutrition interventions.
COVID-19 is pushing millions into poverty making them vulnerable to malnutrition and food insecurities.
Pandemic-prompted lockdowns disrupted essential services — such as supplementary feeding under anganwadi centres, mid-day meals, immunisation, and micro-nutrient supplementation which can exacerbate malnutrition.
Leaders from academia, civil society, development partners, community advocates and the private sector have come together as part of ‘commitment to action’.
The ‘commitment to action’ includes commitments around sustained leadership, dedicated finances, multi-sectoral approach and increased uninterrupted coverage of a vulnerable population under programmes enhancing nutrition.
Financial commitments
India already has some of the world’s biggest early childhood public intervention schemes such as the Integrated Child Development Scheme, the mid-day meal programme, and Public Distribution System.
India needs to ensure coverage of every single child and mother.
To ensure this, the country needs to retain its financial commitments for nutrition schemes.
Economic insecurities often force girls into early marriage, early motherhood, discontinue their schooling, and reduce institutional deliveries, cut access to micronutrient supplements, and nutritious food.
Accelerating efforts to address these will be needed to stop the regression into the deeper recesses of malnutrition.
Conclusion
It takes time for nutrition interventions to yield dividends, but once those accrue, they can bring transformative generational shifts. Filling in the nutrition gaps will guarantee a level-playing field for all children and strengthen the foundations for the making of a future super-power.
From UPSC perspective, the following things are important :
Prelims level: ICDS program
Mains level: Paper 2- Role of Anganwadi centres in ICDS
The article highlights the role of Anganwadi’s in the effective implementation and service delivery under the ICDS.
Gaps in the utilisation of services by ICDS
The economic fallout of COVID-19 makes the necessity of quality public welfare services more pressing than ever.
The Integrated Child Development Services (ICDS) programme is one such scheme.
ICDS caters to the nutrition, health and pre-education needs of children till six years of age as well as the health and nutrition of women and adolescent girls.
However, recent reports have shown gaps in the utilisation of services.
Recasting the Anganwadi centres
Anganwadi centres (AWCs) could become agents of improved delivery of ICDS’s services.
According to government data, the country has 13.77 lakh Anganwadi centres (AWCs).
These centres have expanded their reach, but they need to play a much larger role in anchoring community development.
Nearly a fourth of the operational AWCs lack drinking water facilities and 36 per cent do not have toilets.
In 2015, the NITI Aayog recommended better sanitation and drinking water facilities, improved power supply and basic medicines for the AWCs.
NITI Aayog also suggested that these centres be provided with the required number of workers, whose skills should be upgraded through regular training.
It has acknowledged the need to improve anganwadi centres.
The Central government’s Saksham Anganwadi Scheme aims to upgrade 2.5 lakh such centres across the country. It is up to the state governments to take up the baton
Only a limited number of AWCs have facilities like creche, and good quality recreational and learning facilities for pre-school education.
An approach that combines an effective supplementary nutrition programme with pedagogic processes that make learning interesting is the need of the hour.
Steps taken for effective implementation of ICDS
Effective implementation of the ICDS programme rests heavily on the combined efforts of the anganwadi workers (AWWs), ASHAs and ANMs.
The Centre’s POSHAN Abhiyaan has taken important steps towards building capacities of AWWs.
Technology can also be used for augmenting the programme’s quality.
AWWs have been provided with smartphones and their supervisors with tablets, under the government schemes.
Apps on these devices track the distribution of take-home rations and supplementary nutrition services.
The data generated should inform decisions to improve the programme.
In Andhra Pradesh and Telangana, anganwadi centres have been geotagged to improve service delivery.
Gujarat has digitised the supply chain of take-home rations and real-time data is being used to minimise stockouts at the anganwadi centres.
Conclusion
Government must act on the three imperatives. First, while infrastructure development and capacity building of the anganwadi remains the key to improving the programme, the standards of all its services need to be upscaled. Second, states have much to learn from each other’s experiences. Third, anganwadi centres must cater to the needs of the community and the programme’s workers.
From UPSC perspective, the following things are important :
Prelims level: Federal structure
Mains level: Paper 2- Federalism in India and factors sustaining it
The article analyses the various factor that helped in sustaining the federal structure in India.
Flexible federalism
The Indian Constitution was designed to be opportunistic about federalism.
As BR Ambedkar had put it, “India’s Draft Constitution can be both unitary as well as federal according to the requirements of time and circumstances.”
This flexible federalism is still the default common sense of Indian politics.
The concerns about security, state-building, and economic development are always given preference over the idea of federalism.
4 factors sustaining federalism in India
1) Linguistic and cultural diversity in India
The first was a genuine concern about whether a centralised state could accommodate India’s linguistic and cultural diversity.
The States Reorganisation Act and the compromises on the issue of languages was a victory for federalism.
It allowed India to use federalism to accommodate linguistic diversity.
So long as regional linguistic identities are not threatened there is no natural source of resistance to centralisation.
2) Distribution of political power
The rise of coalition governments, economic liberalisation, regional parties, seemed to provide a basis for political federalism.
Political federalism is quite compatible with financial, and administrative centralisation.
Fragmentation of power effectively meant was that each state could bargain for certain things, or very strong leaders could veto central proposals.
However, it is striking that the period of fragmented power, strong chief ministers, didn’t act to strengthen the institutions of federalism.
3) Political and institutional culture
The third thing that sustains federalism is the political and institutional culture.
But the culture of political parties ruling at the Centre was committed to the most extreme interpretation of flexible federalism, including procedural impropriety to oust opponents.
Because of the increasing presidentialisation of national politics, the attribution of policy successes or failures might change, diminishing the stature of chief ministers considerably.
The other source of institutional culture might be the Supreme Court.
There was mostly a bi-partisan consensus on honouring the technical recommendations of institutions like the Finance Commission.
4) Asymmetrical federalism
The fourth thing that sustained federalism was “asymmetrical federalism” — special exemptions given to various states.
But asymmetrical federalism has always been subject to three pressures.
For Kashmir, asymmetrical federalism came to be seen as the source, not the resolution, of the security threat.
Even in the North-east, local conflicts within the scheme of asymmetrical federalism and discourse of security allowed the Centre to step in.
And increasingly, there will be pressure on the question: Which laws under asymmetrical federalism are compatible with Article 14 of the Indian Constitution?
GST and Decentralisation in states
The most far-reaching change in the Indian Constitution on federalism was GST.
It does increase centralisation in the system.
But it is a product of the cooperation of the states, who still have a significant role in shaping it.
The states did push back against the possibility of the Centre reneging on its commitment on payments.
Most states are reluctant to honour more decentralisation within, to rural and urban bodies.
The Centre disproportionately controls resources in India; but very few states have shown a zeal to increase their own financial headroom by utilising whatever powers they might have on taxation.
Consider the question “How federalism in India is different from the U.S.? What are the factors responsible for its sustenance in India?”
Conclusion
The flexible federalism will be bent in all kinds of ways. But it is important to remember that this mess is not a product of Centre versus states. It has been co-produced by a political culture in both Centre and the states.
From UPSC perspective, the following things are important :
Prelims level: GDP
Mains level: Paper 3- Recovery of Indian economy and the issue of fiscal conservatism
Overoptimism stemming from the signs of recovery shown by the figures for the second quarter could result in reduced spending and the rollback of the stimulus. However, other features indicate that fiscal conservatism at this moment is not a good idea.
Hype over recovery
India’s economy contracted by 7.5% in the second quarter of financial year 2020-21.
There are two ways to look at that figure:-
1) That figure is far lower than the 23.9% contraction registered in the first quarter of this financial year.
2) A 7.5% second quarter contraction is high both in itself and when compared with most similarly placed countries.
The government, however, has chosen to focus on the unsurprising evidence that GDP rose sharply, by 23%, between the first quarter and the second when restrictions were substantially lifted.
Based on that evidence, the Finance Ministry’s Monthly Economic Report, for November, speaks of a V-shaped recovery reflective of “the resilience and robustness of the Indian economy”.
The danger is that such optimism would provide the justification to avoid adoption of the measures crucially needed to pull the economy out of recession.
India economy is still demand constrained: 3 signs
1) The decline in private final consumption expenditure at constant prices, which accounts for 56% of GDP, has come down from minus 27% in the first quarter to minus 11% in the second, it still remains high.
Though there are signs of a short-run recovery in private consumption demand with the lifting of lockdowns, net incomes and consumer confidence are not at levels that can even restore last year’s levels.
2) As is to be expected, with production restraints relaxed, depleted stocks are being replenished with a fall of 21% in the first quarter turning into an increase in stocking of 6.3% in the second quarter.
3) The decline in fixed capital formation has fallen from a high minus 47% in the first quarter to minus 7% in the second, investment is still falling year-on-year.
These are all signs of an economy that is severely demand constrained, requiring a significant step up in government expenditure.
Impact on spending by the Centre and the States
Figures from the Office of the Controller General of Accounts for the first seven months of 2020-21 (April to October) indicate that the total expenditure of the central government stood at only 55% of what was provided for in the Budget for 2020-21.
In fact, in a non-COVID-19 year, 2019-20, the ratio of actual spending by the central government over April-October relative to that budgeted figure was a higher 59%.
Meanwhile, with Goods and Services Tax (GST) revenues having fallen from their lower-than-expected levels during the COVID-19 months, the States have been cash-strapped.
Yet, the government has decided not to compensate them for the shortfall, as promised under the GST regime.
States have been left to fend for themselves by going to market and borrowing at high interest rates, which they would find difficult to cover.
Needless to say, as a consequence, State spending has also been curtailed.
Why government should avoid fiscal conservatism
The loss of jobs and livelihoods that happened during lockdown is sure to affect demand now.
This leads to increased indebtedness and the bankruptcies well after restrictions are relaxed.
So, the tasks of providing safety nets, reviving employment and spurring demand become crucial.
Since the market cannot deliver on those fronts, state action facilitated by substantially enhanced expenditure is crucial.
And since government revenues shrink during a recession, that expenditure has to be funded by borrowing.
This is no time for fiscal conservatism, as governments across the world have come to accept.
Trend suggests that allocations for welfare expenditures — ranging from subsidised food to minimal guaranteed employment — needed to support those whose livelihoods have been devastated by the pandemic, would be reduced over time.
As collateral damage, this frugality in a time of crisis is likely to prolong the recession.
Conclusion
The optimism that a V-shaped recovery is imminent, and that optimism, in turn, would justify the view that fiscal conservatism pays. It does not, as time would tell.
Back2Basics: What is V-shaped recovery?
A V-shaped recovery is characterized by a quick and sustained recovery in measures of economic performance after a sharp economic decline.
Because of the speed of economic adjustment and recovery in macroeconomic performance, a V-shaped recovery is a best case scenario given the recession.
The recoveries that followed the recessions of 1920-21 and 1953 in the U.S. are examples of V-shaped recoveries.
From UPSC perspective, the following things are important :
Prelims level: AI and machine learning
Mains level: Paper 3- Artificial intelligence and opportunities for Indian economy
Artificial Intelligence (AI) has the potential to transform the Indian economy. In the last few years, India made significant progress in its adoption. However, there are several areas India need to focus on to make the most of what AI offers.
AI adoption and capacity building in India
NITI Aayog’s national strategy for AI envisages ‘AI for all’ for inclusive growth.
NITI Aayog identifies healthcare, agriculture, education, smart cities and infrastructure, and smart mobility and transportation as focus areas for AI-led solutions for social impact.
The Telangana, Karnataka, Tamil Nadu and Maharashtra governments, among others, have announced policies and strategies for AI adoption.
Technology companies have established AI centres of excellence to create solutions for global clients.
India has a thriving AI start-up ecosystem.
Our talent pool in AI/ML (Machine Learning) is fast-growing, with over 5,00,000 people working on these technologies at present.
AI will boost Indian economy
Nasscom believes that data and AI will contribute $450 billion-$500 billion to India’s GDP by 2025, which is around 10% of the government’s aspiration of a $5 trillion economy.
The growing AI economy will create employment opportunity by creating an estimated over 20 million technical roles.
AI can create not just niche solutions to specific problems that banks and other service providers are deploying, such as speeding up loan application processing or improving customer service; it can also provide solutions for better governance and social impact.
AI can create not just niche solutions to specific problems that banks and other service providers are deploying, such as speeding up loan application processing or improving customer service; it can also provide solutions for better governance and social impact.
Way forward: Focus on 3 areas
1)Talent development
In 2019, we nearly doubled our AI workforce to 72,000 from 40,000 the year before.
However, the demand continues to outpace the supply.
That means our efforts to develop talent must pick up speed.
2) Policies around data
Without data, there cannot be AI.
However, we need a balanced approach in the way we harness and utilise data.
We need a robust legal framework that governs data and serves as the base for the ethical use of AI.
3) Providing the right amount of training data
Though the use of digital technologies has gone up, the level of digitisation continues to be low.
This poses a big challenge for organisations in finding the right amount of training data to run AI/ML algorithms, which in turn affects the accuracy of the results.
Then there is the problem of availability of clean datasets.
Organisations need to invest in data management frameworks that will clean their data before they are analysed, thus vastly improving the outcomes of AI models.
Consider the question “What is Artificial Intelligence? How it could help in providing a boost to the India economy?”
Conclusion
The future for AI looks promising but to convert the potential into reality, India will need better strategies around talent development, stronger policies for data usage and governance, and more investments in creating a technology infrastructure that can truly leverage AI.
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Geopolitics of climate change and India's role in it
With the victory of Joe Biden in the U.S. Presidential election geopolitics of the climate change is headed for a new reset. The article examines the role India could play in the changing geopolitical realities and also spells out the challenge for India.
India’s role in geopolitics of climate change
India is probably better prepared than in the past when India was widely seen as part of the problem on climate issues.
But the urgency of addressing climate change is likely to intensify for two reasons:
1) The election of Biden as US President.
2) The prospect of cooperation on climate change between Washington and Beijing.
India’s ability to influence the new geopolitics of climate change will depend a lot on its domestic political resilience in adapting to the new imperatives.
While a democratic India struggles to deal with the new internal conflicts centred on climate, China has crafted a new template of “coercive environmentalism”.
The Chinese model of coercive environmentalism is finding an echo among some Western environmentalists.
Whatever the merits of authoritarian environmentalism, it has little political chance of being replicated in democracies.
Cooperation on climate change between the US and China
Modernising liberal environmentalism is the essence of president-elect Biden’s commitment to integrating the climate question with the domestic policy agenda.
“Climate justice” is another important objective of Biden’s domestic environmental policy.
It is based on the recognition that pollution and other ecological problems have a greater impact on the poor and minorities.
Although coercive and liberal approaches to managing climate change are different, the US and China share some important objectives.
Both China and the US (along with the West) recognise the urgency of the challenge.
Beijing and Washington are also racing to develop new technologies that will constitute the foundations of the green economic future.
Both have zeroed in on industrial policy to achieve their climate objectives.
For Xi and Biden, gaining the leadership of the global movement for mitigating climate change is a strategic mission.
Washington and Beijing understand that climate politics is in the end about rearranging the global order.
Consequently, the new direction of Chinese and US policies (in partnership with Europe and Japan) will inevitably put pressure on other states for climate actions.
Conclusion
India’s real test on climate change is on building a new domestic consensus that can address the economic and political costs associated with an internal adjustment to the prospect of a great global reset.
From UPSC perspective, the following things are important :
Prelims level: Right to Education Act, Skill India Mission
Mains level: Paper 2- Skill development of youth in India
Significant progress has been made in India on the skill development front. However, there are many challenges that are needed to be tackled through policy measures and their effective implementation. The article deals with the issue.
Progress in skill development in India
Evidence shows that many people develop 21st-century skills on the job, or from courses that focus on practical application of skills, rather than in schools.
India has laid the foundation for delivering on the vision of making quality skills development programmes available to the youth.
Vocational education can be a route for many to gain specific skillsets, such education formats are referred to as Technical and Vocational Education and Training (TVET).
The National Skill Development Policy was launched in 2009 and revamped in 2015, recognising the challenge of skilling with speed and high standards.
The Skill India Mission was launched soon after, with the vision for making India the “skill capital” of the world.
Key finding and recommendations of the UNESCO’s State of the Education Report for India
The report focuses on vocational education and training and showcases the growth of the skills development sector.
It also provides practical recommendations to ensure that policy is effectively implemented.
One of the biggest challenges for expanding the reach of TVET-related courses has been the lack of aspiration and stigma attached to jobs such as carpentry and tailoring.
Considerable effort, including information campaigns involving youth role models, would help in improving the image of vocational education.
At the same time, common myths around TVET need to be debunked.
Research is now proving that TVET graduates for entry level jobs can get paid as much as university graduates.
Moreover, students from vocational streams typically take less time to find jobs as compared to university graduates.
The report emphasises the need for expanding evidence-based research.
High-quality research based on careful data-gathering and analytics can add value to all aspects of TVET planning and delivery.
Emphasis on vocational education in NEP
The new National Education Policy (NEP) aims to provide vocational education to 50% of all learners by 2025.
Schools are encouraged to provide students access to vocational education from Grade 6 onwards and to offer courses that are aligned to the local economies and can benefit local communities.
For the vision of the NEP to be fulfilled, a robust coordination mechanism for inter-ministerial cooperation is necessary for bringing the skills development and vocational education systems together.
Conclusion
Effective implementation of the policies for skill development is essential for capitalising on the country’s demographic dividend.
op-ed snap | Economics | Mains Paper 3: Major Crops & Cropping Patterns,PDS, Buffer Stock & Food Security,Transport & Marketing Of Agricultural Produce
Note4Students
From UPSC perspective, the following things are important :
Prelims level: MSP
Mains level: Paper 3- Problems faced by the Punjab farmers and issue of MSP
The article analyses the state of agriculture in Punjab and the its dependace on the MSP regime and suggest the diversification as a solution to the MSP trap.
Punjab’s role in Green Revolution
India was desperately short of grains in 1965, and heavily dependent on PL 480 imports from the US against rupee payments, as the country did not have enough foreign exchange to buy wheat at global markets.
The entire foreign exchange reserves of the country at the time could not help it purchase more than 7 MMT of grains.
It is against this backdrop that the minimum support price (MSP) system was devised in 1965.
India’s current grains management system: Issue of excess grains
Today, the Food Corporation of India (FCI) stocks grains touched 97 MMT in June this year against a buffer stock norm of 41.2 MMT.
The economic cost of that excess grain, beyond the buffer stock norm, was more than Rs 1,80,000 crore, a dead capital locked in without much purpose.
That’s the situation of the current grain management system based on MSP and open ended procurement.
Decline in Punjab’s economic level
In 1966 Punjab had the highest per capita income.
Punjab’s position fell to 13th in 2018-19.
There are several reasons behind this deterioration, ranging from lack of industrialisation to not catching up even with respect to the modern services sector like IT, financial services.
What explains Punjab’s prosperity
Punjab’s agriculture is blessed with almost 99 per cent irrigation against an all-India average of little less than 50 per cent.
The average landholding in Punjab is 3.62 hectare (ha) as against an all-India average of 1.08 ha.
Punjab’s fertiliser consumption per ha is about 212 kg vis-à-vis an all-India level of 135 kg/ha.
The productivity levels of wheat and rice in Punjab stand at 5 tonnes/ha and 4 tonnes/ha respectively, against an all-India average of 3.5t/ha and 2.6t/ha.
Assesing Punjab’s real contribution to income and agriculture
In Punjab, the total farm families are just 1.09 million, a fraction of the all-India total of 146.45 million.
The overall subsidy, from just power and fertilisers would amount to roughly Rs 13,275 crores.
That means each farm household in Punjab got a subsidy of about Rs 1.22 lakh in 2019-20.
This is the highest subsidy for a farm household in India.
Let’s not forget that the average income of the Punjab farm household is the highest in India.[2.5 time’s the India’s average].
But to assess the real contribution of farmers/states to agriculture and incomes, the metric is the agri-GDP per ha of gross cropped area of the state in question.
This is an important catch-all indicator, as it captures the impact of productivity, diversification, prices of outputs and inputs and subsidies.
On that indicator, unfortunately, Punjab has the 11th rank amongst major agri-states.
Way forward: Diversification of crops
States in south India like Andhra Pradesh, Tamil Nadu and Kerala have a much more diversified crop pattern tending towards high-value crops/livestock — poultry, dairy, fruits, vegetables, spices, fisheries.
If Punjab farmers want to increase their incomes significantly, double or even triple, they need to gradually move away from MSP-based wheat and rice to high-value crops and livestock, the demand for which is increasing at three to five times that of cereals.
Punjab needs a package to diversify its agriculture — say a Rs 10,000 crore package spread over five years.
Conclusion
Once farmers diversify their farm output and double their incomes, they will not be stuck in the MSP trap.
From UPSC perspective, the following things are important :
Prelims level: APMC Act
Mains level: Paper 3- Farmers protest against Farms Acts
Farmers protest against the Farm laws is based on the multiple reasons. The article analyses these concerns of the protesting farmers.
Three farm laws and response to it
Three Farm Bills were passed by the Central government in September 2020.
In the process, the regulatory role the state played hitherto with regard to these issues was watered down to a great extent.
Apart from complex challenges that rural India confronts today, there is a substantial body of studies that demonstrates how the vagaries of the market and the role of the middlemen reinforce agrarian distress in India.
However, organised farmers’ bodies are not in sync with the reasoning of the government.
Role of the states
There is a debate around the constitutional provisions with regard to the respective domains of the State and the Union with regard to agricultural marketing,
However, issues affecting the farming community have a far greater bearing on the States relative to the Centre.
Ideally, given its immediacy, the States are the apt agencies to respond to a host of concerns faced by the farming community, which includes agricultural marketing.
While enacting the Farm Bills, the Centre extended little consideration to the sensitivity of the States.
Role of APMC
In Punjab and Haryana, tweaking the APMC system and its resultant bearing on Minimum Support Price (MSP) is seen by the farmers as a threat to an assured sale of their produce at a price.
MSP system provides a cushion, wherein the farmer can anticipate the cost of opting for these crops and tap the necessary supports through channels he has been familiar with.
Farmers are apprehensive of the vagaries of a competitive market where he would eventually be beholden to the large players including monopolies.
There is widespread apprehension that the measures proposed by the Farm Acts in addition to the existing agrarian distress, are only going to make the lot of the farmer even more precarious.
All across the country, the farming community is prone to sympathise with the demand to scrap the new laws, as they have little to offer to them in a positive sense.
Conclusion
Those with large holdings and produce for the market — are spearheading the present stand-off against the Farm Bills, as it affects them very deeply. But farming distress is shared in common by the different strata within the farming community, even though it has a differential impact on them.
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Analysis of economic recovery post-Covid
The economies across the world are showing recovery driven by profits. However, one cannot neglect the implication of such recovery for the long term growth given the pressure such recovery has been exerting on the labour markets. The article deals with this issue.
3 Ways to look at GDP
The first is what they tell us about the past.
Here, the news has generally been better-than-expected.
The US and India saw a much stronger recovery last quarter than previously envisioned.
The second is sectoral, production side-agriculture, manufacturing, services- and the functional, expenditure side consumption, investment, net exports.
But there’s a third way — the income side.
Value addition must ultimately accrue to the different factors of production.
On the income side, therefore, GDP is simply the sum of profits, wages and indirect taxes.
Profit-driven growth and impact on employment
The economic recovery in many parts of the world is driven disproportionately by capital than labour.
In India, the net profits of listed companies grew 25 per cent (in real terms) last quarter. This despite revenues shrinking.
Revenue shrank because firms aggressively cut costs, including employee compensation.
This implies that if listed company profits are growing 25 per cent, and yet GDP contracted 7.5 per cent, it reveals (by construction) significant pressure on profits of unlisted SMEs, wages and employment.
Labour market pressures are evident in India too.
Household demand for MGNREGA remains very elevated, suggesting significant labour market slack.
The employment rate in some labour market surveys still reveal about 14 million fewer employed compared to February, and nominal wage growth across a universe of 4,000 listed firms has slowed from about 10 per cent to 3 per cent over the last six quarters.
Why this matters
It may be rational for any one firm to boost profits by cutting employee compensation.
But if every firm pursued that strategy, that simply reduces future aggregate demand and profitability for all firms.
This is quintessential fallacy of composition that Keynes enumerated.
Weak demand, in turn, disincentivises re-hiring, reinforcing the risks of settling into a sub-optimal equilibrium.
Need to remain vigilant about labour market
Remaining vigilant about labour markets is particularly important for India.
Private consumption was increasingly financed by households running down savings and taking on debt pre-COVID-19.
Consequently, if job-market pressures induce households into perceiving this shock as a quasi-permanent hit on incomes, households will be incentivised to save, not spend in the future.
Way forward for fiscal consolidation
While economic momentum is expected to slow as pent-up demand wears off, the level of output will progressively reach pre-COVID levels as the economy normalises.
The question is what will drive growth after that?
India’s fiscal response has been restrained thus far, with the Centre’s total spending similar to last year and state capex under pressure.
It’s therefore important for the Centre to step up spending in the remaining months.
More importantly, public investment, and a large infrastructure push, must be the leitmotif of the next budget.
This will be crucial to boost demand, create jobs, crowd-in private investment and improve the economy’s external competitiveness.
If higher infrastructure spending is financed by higher asset sales, the headline fiscal deficit (which matters for bond markets and interest rates) can be slowly reduced, even as the underlying fiscal impulse (which matters for growth and jobs) remains positive.
This is the only way to undertake fiscal consolidation without incurring a fiscal drag.
Monetary policy has led the charge in 2020. But with inflation continuing to remain sticky and elevated, the RBI has fewer degrees of freedom going forward.
Conclusion
The stronger-than-expected GDP print is very encouraging. But this is the start of a long journey back. Much, therefore, remains to be done. The excitement around the vaccine shouldn’t obscure this fundamental premise.
op-ed snap | Polity | Mains Paper 2: Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Scope of Article 25
Mains level: Paper 2- Freedom of conscience under Article 25
The order delivered by the Allahabad High Court underlines the most cherished values of our Constitution. The order examines the scope of individual choice and personal liberty on the touchstone of constitutional values.
Background
The Allahabad High Court declared last month that religious conversions, even when made solely for the purposes of marriage, constituted a valid exercise of a person’s liberties.
The petitioners had approached the High Court seeking orders to quash a First Information Report (FIR) that was lodged against them.
The petitioners claimed that they were both adults competent to contract a marriage, and had, in fact, wedded in August 2019, as per Muslim rites and ceremonies, only after the girl had converted to Islam.
The State argued that petitioner’s partnership had no sanctity in the law, because a conversion with a singular aim of getting married was illegitimate.
In making this argument, the government relied on a pair of judgments of the Allahabad High Court, in particular on the judgment in Noor Jahan v. State of U.P. (2014).
There, the High Court had held that a conversion by an individual to Islam was valid only when it was predicated on a “change of heart” and on an “honest conviction” in the tenets of the newly adopted religion.
Additionally, the High Court had ruled that the burden to prove the validity of a conversion was on the party professing the act.
Major takeaways from the High Court order
The Allahabad High Courtruled that the freedom to live with a person of one’s choice is intrinsic to the fundamental right to life and personal liberty.
It order recognises that a person’s freedom is not conditional on the caste, creed or religion that her partner might claim to profess.
And also that every person had an equal dominion over their own senses of conscience.
The High Court’s order makes it clear that it is neither the province of the state nor any other individual to interfere with a person’s choice of partner or faith.
By invoking the Supreme Court’s judgment in Puttaswamy, the High Court held that an individual’s ability to control vital aspects of her life inheres in her right to privacy.
Term privacy includes the preservation of decisional autonomy, on matters, among other things, of “personal intimacies, the sanctity of family life, marriage, procreation, the home, and sexual orientation”.
It Court that the judgment in Noor Jahan was incorrectly delivered.
Marriage, the High Court said, is a matter of choice, and every adult woman has a fundamental right to choose her own partner.
Freedom of conscience under Article 25
Article 25 of the Constitution expressly protects the choices that individuals make.
In addition to the right freely to profess, practise and propagate religion, it guarantees to every person the freedom of conscience.
The idea of protecting one’s freedom of conscience goes beyond mere considerations of religious faith.
Conclusion
When we fail to acknowledge and respect the most intimate and personal choices that people make — choices of faith and belief, choices of partners — we undermine the most basic principles of dignity. Our Constitution’s endurance depends on our ability to respect these decisions, to grant to every person an equal freedom of conscience.
From UPSC perspective, the following things are important :
Prelims level: Current account and capital account
Mains level: Paper 3- Policy options to revive the Indian economy
The article weighs in the policy options with the Indian policymakers to revive the India economy. This leads to the trilemma of managing the exchange rate, controlling the inflation and maintaining the capital account open all at the same time.
A brief overview of 1991 economic reforms
The crisis in 1991 was centred on the balance-of-payments.
Allowing the Indian rupee to fall from an artificially high level was a key part of the solution.
Since the reforms, the Indian rupee has steadily depreciated, roughly according to a market-determined equilibrium.
Extraordinarily high tariff barriers were reduced, allowing for welfare gains from greater international trade.
Reforms of the domestic economy that increased market orientation was, in some sense, opportunistically combined with these externally-oriented measures.
What should be India’s foreign economic policy
In terms of connections to the rest of the world, however, it is less clear what the right policy mix should be.
We can think of three types of international flows: labour, goods and services, and capital.
1) Internation flow of Indian labour
India has benefited from being able to send workers with a variety of skills to different types of economies: construction workers and nurses in the Persian Gulf, software engineers in the US, and so on.
Direct benefits came from large remittances back to India.
The pandemic and US immigration policy, have had some major impacts on this international connectivity, but new vaccines and a change in the US president are likely to reverse these shocks.
In any case, there is not much that Indian policymakers can do or need to do on this front.
2) Trade in Goods and Service
India has been able to grow its exports, both in a variety of agricultural and manufactured commodities and in services, from software services to tourism.
It has been reasonably competitive in a range of goods and services.
It was only in the last few years, even before the pandemic, have Indian exports struggled to register growth.
Whereas the export powerhouses of East Asia consistently ran surpluses on the current account of the balance of payments, India has mostly run deficits, albeit manageable ones.
3) Capital Flow: Area where policymakers have option
Current account deficits have to be covered somehow, though various forms of foreign capital.
Whereas economic theory and economic policymakers mostly agree on the benefits of international trade in goods and services there is less of a consensus on the benefits of international capital flows.
Capital flows can raise fears of instability if they are reversed, or make exports less competitive if they push up the value of the rupee.
The country is a relatively attractive destination for foreign capital, both FDI and portfolio investment.
But, these flows can make Indian exports less competitive if the rupee appreciates too much, requiring domestic demand to do more of the work of absorbing increased output.
Lesson from Japan
Right now, India is trying to build its manufacturing capacity by raising tariffs, in an old-style push for import substitution.
It is also providing direct incentives, such as the new scheme rewarding increases in production.
Arguably, this did work in Japan in the 1960s, but it is not clear if India is well-off enough to sustain that domestic strategy.
In addition, the lack of competitive discipline exporting can hinder the achievement of acceptable quality levels.
Way forward
Capital controls to some extent can help mitigate the risk in this situation.
The Reserve Bank of India do more to keep the rupee at competitive levels, by accumulating foreign exchange reserves.
Consider the question “In terms of links with the rest of the global economy, it is less clear what the right policy mix should be. Do you agree with the view that focus on simultaneously managing the exchange rate and domestic inflation while maintaining an open capital account would help in the revival of India’s economic growth
Conclusion
Lurking under the surface of these issues is the trilemma of being unable to simultaneously manage the exchange rate and domestic inflation while maintaining an open capital account, although foreign exchange reserves provide a way of softening the trade-offs. These are not new challenges, but they will need to be a focus for India’s policymakers as they seek renewed economic growth.
From UPSC perspective, the following things are important :
Prelims level: The Convention on the Rights of Persons with Disabilities
Mains level: Paper 2- Provisions for persons with disability
Legal provisions not turning into reality through their implementation adds to the difficulties faced by persons with disabilities. The article deals with the idea of enabling persons with disability to contribute to society.
Context
December 3 is the annual International Day of Persons with Disabilities, it is also a stark reminder of how far we in India need to go in meeting the needs of the disabled.
Lack of implementation of provisions
The World Bank estimates that there may be well over 40 million Indians living with disabilities.
The Rights of Persons with Disabilities Act was passed in 2016 but our country is still largely devoid of ramps on its footpaths or government buildings.
The law promises them equality of opportunity and accessibility. Our practices deny them what the law promises.
Challenges faced by persons with disabilities
Indians with disabilities are far more likely to suffer from poor social and economic development.
45 per cent of this population is illiterate, making it difficult for them to build better, more fulfilled lives.
This is compounded by the community’s lack of political representation:
In our seven decades of independence, we have had just four parliamentarians and six state assembly members who suffer from visible disabilities.
This lack of representation, and these general attitudes, translate directly into policy that undermines the well-being of people with disabilities.
Last year, for example, the government inexplicably decided to depart from convention and render people suffering from cerebral palsy ineligible for the Indian Foreign Service.
Initiatives and steps taken by the government
The government has had some admirable initiatives to improve the lot of Indians with disabilities, such as the ADIP scheme for improving access to disability aids.
The Sugamya Bharat Abhiyan, or Accessible India Campaign, has aimed to make public transport, buildings and websites more accessible.
In 2017, the Mental Healthcare Act recognised and respected the agency of persons with mental-health conditions, expanding the presence of mental-health establishments across the country, restricted the harmful use of electroshock therapy, clarified the mental-health responsibilities of state agencies such as the police, and effectively decriminalised attempted suicide.
In 2007, the UN passed the Convention on the Rights of Persons with Disabilities.
India is a state party to the convention.
Conclusion
It is critical that the government work with civil society and individuals with disabilities to craft an India where everyone feels welcome and treated with respect, regardless of their disabilities. Only then can we welcome the next International Day of Persons with Disabilities without a sense of shame.
op-ed snap | Polity | Mains Paper 2: Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Freedom of conscience and conversion to other religion
The U.P. government’s ordinance seeking the prevention of illegal conversion has several provisions that go against the Constitution and restricts the freedom of conscience.
Objective of the ordinance
The Uttar Pradesh Prohibition of Unlawful Conversion of Religion Ordinance, 2020 seeks to prevent “love jihad” in the state
The ordinance makes it a criminal offence for a person to convert another by coercion, misrepresentation, fraud etc, which is unobjectionable.
A marriage solemnised for the “sole purpose” of unlawfully converting the bride or the groom is required to be declared void by the competent court.
There can be no objection to ordinance’s premise that converting somebody by fraud or misrepresentation is wrong.
In fact, though the members of the Constituent Assembly included the right to “propagate” one’s religion they considered it a “rather obvious doctrine” that this would not include forcible conversions.
However, the UP ordinance goes beyond this principle and does something quite strange.
Unconstitutional provisions and issues with the ordinance
1) Lack of clarity
The ordinance makes it a criminal offence to convert a person by offering her an “allurement”.
The term “allurement” is defined very broadly, to include even providing a gift to the person who is sought to be converted.
The use of the words “or otherwise” in the definition of allurement is puzzling.
The essential prerequisite of a criminal law is that it has to be precise.
A person cannot be put behind bars for doing something that a penal law does not clearly and unequivocally prohibit.
On this touchstone, the definition of “allurement” leaves much to be desired.
2) Reconversion to a person’s previous religion is not illegal
It says that “reconversion” to a person’s previous religion is not illegal, even if it is vitiated by fraud, force, allurement, misrepresentation and so on.
In other words, if a person converts from Religion A to Religion B of her own volition, and is then forced to reconvert back to Religion A against her will, this will not constitute “conversion” under the ordinance at all.
3) Unfairly treating all women in the same way
Illegal conversion under the ordinance attracts a punishment of 1-5 years in prison.
However, if the victim of the illegal conversion is a minor, a member of the Scheduled Castes or Scheduled Tribes or, strangely, a woman, the punishment is doubled — at 2-10 years behind bars.
In other words, it does not matter who the woman is, if somebody converts her against her will, the punishment can go up to 10 years in prison.
The ordinance unfairly paints all women with the same brush — assuming that all women are gullible, vulnerable and especially susceptible to illegal conversion.
4) Buden of proof
The burden of proof in criminal cases is on the prosecution, and the presumption is that a person accused of committing an offence is innocent until proven guilty.
The Uttar Pradesh ordinance turns this rule on its head.
Every religious conversion is presumed to be illegal.
The burden is on the person carrying out the conversion to prove that it is not illegal.
The offence of illegal conversion is also “cognisable” and “non-bailable”, meaning that a police officer can arrest an accused without a warrant, and the accused may or may not be released on bail, at the discretion of the court.
Time to revisit the past judgement
In Rev Stainislaus v State of Madhya Pradesh (1977), the Supreme Court held that the fundamental right to “propagate” religion does not include the right to convert a person to another religion.
In that case, the court had upheld anti-conversion statutes enacted by the states of Orissa and Madhya Pradesh.
Conclusion
The ordinance puts an incredible chilling effect on the freedom of conscience and state must reconsider it.
From UPSC perspective, the following things are important :
Prelims level: Factors responsible for AMR
Mains level: Paper 3- Link between pollution and AMR
Rapidly rising antimicrobial resistance (AMR) poses the threat of the next health crisis if not addressed with urgency. The article examines the severity of the issue.
The severity of the antimicrobial resistance (AMR)
Globally, about 35% of common human infections have become resistant to available medicines.
About 700,000 people die every year because available antimicrobial drugs — antibiotics, antivirals, antiparasitic and antifungals — have become less effective at combating pathogens.
Resistance to second- and third-line antibiotics — the last lines of defence against some common diseases — are projected to almost double between 2005 and 2030.
In India, the largest consumer of antibiotics in the world, this is a serious problem.
Responsible factors
Microorganisms develop resistance to antimicrobial agents as a natural defence mechanism.
Human activity has significantly accelerated the process.
The misuse and overuse of antimicrobials for humans.
Livestock and agriculture but other factors also contribute.
Research points to role of environment and pollution
Once consumed, up to 80% of antibiotic drugs are excreted un-metabolised, along with resistant bacteria.
Their release in effluents from households and health and pharmaceutical facilities, and agricultural run-off, is propagating resistant microorganisms.
Wastewater treatment facilities are unable to remove all antibiotics and resistant bacteria.
In India, there is capacity to treat only about 37% of the sewage generated annually.
Water, then, may be a major mode for the spread of AMR, especially in places with inadequate water supply, sanitation and hygiene.
Wildlife that comes into contact with discharge containing antimicrobials can also become colonised with drug-resistant organisms.
Initiative to tackle the AMR
The United Nations Environment Programme (UNEP) identified antimicrobial resistance as one of six emerging issues of environmental concern in its 2017 Frontiers Report.
UN agencies are working together to develop the One Health AMR Global Action Plan (GAP) that addresses the issue in human, animal, and plant health and food and environment sectors.
The Ministry of Environment, Forest and Climate Change (MoEF&CC) issued draft standards which set limits for residues of 121 antibiotics in treated effluents from drug production units.
The Ministry of Health and Family Welfare and MoEF&CC constituted the inter-ministerial Steering Committee on Environment and Health, with representation from WHO and UNEP.
Way forward
The Centre and State governments in India can strengthen the environmental dimensions of their plans to tackle antimicrobial resistance.
It is important to promote measures that address known hotspots such as hospitals and manufacturing and waste treatment facilities.
Consider the question “Being the largest consumer of antibiotics in the world, India faces a grave threat from growing anti-microbial resistance. What are the factors responsible for it? Suggest the ways to deal with it.”
Conclusion
We saw how quickly a pandemic can spread if we are not ready. This is an opportunity to get ahead of the next one.
op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth,Indian Economy
Note4Students
From UPSC perspective, the following things are important :
Prelims level: RCEP countries
Mains level: Paper 3- India's decision to not join RCEP
The article analyses government’s decision to stay out of RCEP and factors responsible for it.
What India chose not to join RCEP
By joining RCEP, India would have further risked a flood of cheap Chinese imports in sectors like electronics.
India had tried and failed to win substantial concessions in areas like work visas for its information technology-enabled services.
Two of India’s proposals—an RCEP business travel card and an RCEP service supplier card—failed to find favour with a majority of the bloc’s members.
Arguments in favour of India joining the RCEP
First argument made is RCEP would have provided an excellent opportunity for Indian firms to get integrated with regional value chains.
However, merely joining a trade bloc does not automatically result in integration with global value chains.
The complex nature of global production networks requires a lot of economic and trade policy reforms on the domestic front.
Second important argument made is that India would lose an opportunity to access RCEP’s common market.
But this argument too doesn’t hold much water if Indian producers are not competitive.
Competitiveness is driven by factors both within and beyond the control of domestic industry.
So it would be an over-simplification to assume that Indian industry does not have the capability or appetite to be competitive.
Often, global competitiveness inside factory gates gets diluted by costs borne outside those gates.
What past data suggests
India’s merchandise exports grew at an annual rate of more than 18% between 2000-01 and 2010-11, which was largely a pre-FTA period.
In this period, India activated only two FTAs—with Sri Lanka and Singapore.
India joined the FTAs in a big way from 2010 onwards.
It operationalized big trade agreements with the 10-nation Association of South East Asian Nations (ASEAN), Japan, Korea, and separately with Malaysia.
However, despite these deals, India could realize annual merchandise export growth of only 2.5% between 2010-11 and 2019-20.
This disappointing performance shows that FTAs are not conducive for exports.
Conclusion
While RCEP may theoretically offer India new opportunities for exports and integration with pan-Asian production networks, we have a lot of work to do internally before we are in a position to make the most of free-trade deals.
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Farmers protest against farm laws
The article suggests the policy options with the government to deal with the protest of the farmers against the recently enacted farm laws.
Context
Farmers have protested against the recently enacted farm laws by converging on Delhi’s highways connected to neighbouring states.
Why farmers are protesting
There is a gross communication failure on the part of the central government to explain to farmers what these laws are, and how they are intended to benefit them.
Neither do the laws say anything about it, nor is the MSP/APMC system going to disappear with these laws.
Nothing can be further from the truth.
1) Should government repeal the laws
Punjab farmer leaders, including two major political parties, demand repeal of these laws.
However, repealing would mean bringing back controls, licence raj and the resultant rent-seeking.
Milk, poultry, fishery, etc. don’t go through the mandi system and their growth rates are 3 to 5 times higher than that of wheat and rice.
Overall, almost 90 per cent of the agri-produce is sold to the private sector.
2) Should the government make MSP legally binding
Another demand is making the MSP statutory and legally binding even on the private sector.
This is impractical as there are 23 commodities for which MSPs are announced, but in actual practice only wheat and rice enjoy MSPs in any meaningful manner, and that too only in 6-7 states.
Punjab is the biggest gainer as its 95-98 per cent of market arrivals of wheat and paddy are procured at MSP by state agencies on behalf of the Food Corporation of India (FCI).
The FCI is overloaded with grain stocks that are more than 2.5 times the buffer stock norms.
Such high stock indicates massive economic inefficiency in the grain management system.
If the government cannot cope up with excess production of just wheat and rice in any meaningful way, think of how it will handle 23 commodities under MSP.
In case of excess production the government will not have the wherewithal to buy all and stock them without any viable outlet.
It will massively distort markets, make Indian agriculture non-competitive and stocking of these will be financially unsustainable.
And then, why only 23 commodities, why not 40?
This type of state socialism is a sure path to financial disaster.
3) Optio of the Price Stabilisation Scheme
The third policy option is to use the Price Stabilisation Scheme to give a lift to market prices by pro-actively buying a part of the surplus whenever market prices crash.
It can be done directly by NAFED-type agencies that are already active in the case of pulses and oilseeds.
Farmers can use Commodity Derivatives Exchanges where farmers can buy “put options” at MSP before they even sow their crops, and if the market prices at the time of harvest turn out to be below MSP, government can compensate them partly for lower market prices.
4) Decentralise MSP: Let the states decide it
The fourth option is to totally decentralise the MSP, procurement, stocking, and public distribution system (PDS).
MSP and procurement exist basically to support farmers for supplying grains to the FCI to feed into the PDS.
So, the whole money on food subsidy can be allocated to states on the basis of their share in all-India poverty/proportion of vulnerable population, all-India wheat and rice production, all-India procurement of wheat and rice, etc.
A step further could include another Rs 1,00,000 crore of fertiliser subsidy and free up fertiliser prices from any controls.
Still further, even include another Rs 1,00,000, say, of MNREGA.
Let the Finance Commission work out a formula for distribution of this Rs 3,00,000 crore amongst states based on some tangible performance indicators.
And the Centre should get off from MSP, PDS, fertiliser subsidy, and MNREGA.
Conclusion
This would be true decentralisation, and can be accomplished provided enough ground work is done well in advance. But will this be acceptable to farmer leaders/opposing states/activists? Only time will tell.
From UPSC perspective, the following things are important :
Prelims level: APMC Act
Mains level: Paper 3- Addressing the farmers apprehension about MSP
Farmers are protesting the farm laws which brought changes in the agri-produce marketing and the contract farming. Farmers are also demanding the legal backing of MSP. The article analyses the issues and suggests the measures to address them.
Analysing merits and feasibility of demands of protesting farmers
1) The Farmer Produce Trade and Commerce (Promotion and Facilitation) Act
The Act creates a new “trade area” outside the APMC market yards/sub-yards.
Any buyer with a Permanent Account Number (PAN) can buy directly from farmer sellers outside APMC market.
The state government can’t impose any taxes on such a transaction.
Therefore, it is expected that this would lower buying costs for buyers and that would automatically mean higher prices for farmers.
Concerns with the law
Buyers buying at lower cost does not necessarily mean they would pass on the cost saved on procurement to selling farmers.
The claim is also made that now farmers would have a choice of channels.
However, the majority of the farm produce across India with the exception of states like Punjab and Haryana does not go through APMCs.
Anybody with a PAN card allowed to buy agricultural produce could mean a free-for-all situation, which is not desirable.
2) The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act
What necessitated law on contract farming?
Contract farming has shown that marginal and small farmers are generally excluded.
The problems they face include the following-
Highly one-sided i.e. pro-contracting agency contracts.
Delayed payments.
Undue rejections and outright cheating.
Poor enforcement of contract farming regulation by the state governments.
Concerns with the law
The Act defined FPOs (farmer producer organisations) as farmers, which restricts them to the supply side.
But there is hardly any FPO in farm production.
Further, the contract farming Act does not provide for remedies when companies cancel contracts or there is delay in taking delivery of produce.
The Act says that sponsor would also pay, besides the minimum guaranteed price, a premium or bonus which will be linked to APMC or e-trading price.
This goes against the very concept of contract farming.
The contract price should be left to the contracting parties to decide.
Further, if the understanding is that mandis are not discovering prices well, then why peg the contract price to such mandi price?
Lessons from 2003 APMC Act
The government must go back to the 2003 Model APMC Act, which also had model contract agreement with mandatory and optional provisions in a contract.
In the 2003 Model APMC Act, the APMC was supposed to resolve the disputes.
Further under 2003 APMC Act when a licence is given to a trader or commission agent, there is a counterparty risk assurance.
Apprehensions about MSP
The Shanta Kumar Committee report and the CACP reports had suggested reducing procurement and an end to open-ended procurement from states like Punjab to cut down costs of FCI.
It is feared that FCI itself may start procuring directly from the new trade area to cut down buying costs like market fees and arhtiya commission.
It is more about the changes in the “social contract” between the state’s farmers and the Union government.
The demand for legal backing to MSP also arises from the fact that the government has been announcing MSP for 23 crops, but procurement is limited to a few crops.
Also, CACP in one of its reports in 2017-18 (kharif) suggested that “to instil confidence among farmers for procurement of their produce, a legislation conferring on farmers ‘the right to sell at MSP’ may be brought out.”
Punjab’s amendments to farm Acts — making MSP mandatory for wheat and paddy are ill-advised as this law will discourage private buyers from buying.
It is difficult to enforce such a law. Private agricultural markets cannot be run through such diktats.
By creating stringent rules (fine or imprisonment), the government may create a situation where farmers would not be able to sell at all.
Maharashtra attempted this legality in 2018 in its APMC Act but had to reverse it after protests by traders.
Consider the question “What are the factors that necessitated the robust contract farming Act? What are the issues related to the Act? Suggest the measures to address these issues.”
Conclusion
Apprehension among the farmers related to the farm laws needs to be addressed and the concern in the laws need to be addressed.
