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  • Cashless Society – Digital Payments, Demonetization, etc.

    Demonetization and the digital payment ecosystem

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: E-rupee

    Mains level: UPI and future of E-rupee

    digital

    Context

    • Paperless payments have been a big national goal ever since 8 November 2016, when India rendered ₹500 and ₹1,000 currency notes useless in a stunning decision that was upheld as valid by the Supreme Court on recently. Today, our cash intensity remains roughly on the same incline as it was earlier. But online payments have soared. This means a fine policy judgement call will need to be made soon.

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    digital

    Demonetization: A brief Analysis

    • The supreme court rejected petitions arguing that demonetization was done illegally and by 4:1 bench majority Supreme court held the process as satisfactory.
    • The overnight note-ban was also found to satisfy a general test of proportionality. For all the hardship caused by weeks of cash starvation, that exercise of authority was not judged too drastic for its aims.
    • The extent to which unaccounted-for money was flushed out, terror funding frozen and commerce formalized cannot reliably be estimated, but small businesses were clearly hit hard and India’s economy slowed down soon after.

    digital

    The changing trend: How we are transacting?

    • Rise of digitals payments: The past half decade’s big trend in our use of money has been the exponential rise of a platform that’s part of our digital stack of public goods.
    • Spectacular success of UPI: Designed for instant transfers between bank accounts done via mobile phones, the Unified Payments Interface (UPI) has been a spectacular success since its 2016 launch.
    • UPI transactions for instance: According to National Payments Corporation of India (NPCI), its operator, UPI processed more than 74 billion transactions in 2022, up 90% over 2021, worth almost ₹126 trillion, a 76% leap.

    Examining feasibility of levying user fee on UPI and the E-rupee

    • Financial support to UPI: The case for UPI as India’s payment bedrock is weakened by the fact that while it levies no user fee, it isn’t a costless service. Last year, the finance ministry justified financial support for UPI on the ground that it’s a digital public good with immense convenience for the public and productivity gains for the economy.
    • Coast benefit review must be done: If public funds are increasingly needed to back UPI as it expands, we must put it to a cost-benefit review as we go along; UPI is already logging huge sums and the total for 2023 may be much more.
    • Promoting E-rupee: It’s not just a cost consideration that should make us promote RBI’s retail e-rupee instead for routine payments.
    • E-rupee is a direct liability of RBI: The E-rupee’s mass usage would involve circulation of money that’s a direct liability of the central bank (an IOU issued by it, i.e., like cash), which would better serve the cause of economic stability. This is because what RBI owes its currency bearers is entirely free of risk, while the same cannot be said of banks.

    digital

    Why India needs a digital rupee?

    • Online transactions: India is a leader in digital payments, but cash remains dominant for small-value transactions.
    • High currency in circulation: India has a fairly high currency-to-GDP ratio.
    • Cost of currency management: An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.

    Conclusion

    • For superior systemic safety, the e-rupee should get a significant share of online payment swipes. Even if its holdings earn no interest, it could catch on if the security of its value, ease of liquidity and erasure of data trails (below a limit) are duly advertised. For an e-rupee to aid macro level prudence, it will have to eat into UPI.

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  • Russian Invasion of Ukraine: Global Implications

    India’s role in chaotic world order

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NA

    Mains level: India's role in present International relations

    India

    Context

    • As the great powers get at each other’s throats, the prospects for multilateral agreements have diminished. On both the economic and political fronts, the conflict among the major powers has sharpened. That makes India’s chairmanship of G20 more challenging.

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    Historical understanding of major global events

    • Major wars and rebalancing: Major wars have always reshaped great power relations and rearranged the international system. Russia’s war against Ukraine will be no exception.
    • First world war: The First World War saw the collapse of the Ottoman, Austro-Hungarian, and the Russian empires. It also helped the Bolsheviks in Russia form the Soviet Union, gave birth to new nations in Europe, and accelerated the rise of Asian nationalism.
    • The Second World War: Hastened the demise of European colonialism and heralded the rise of the United States and the Soviet Union as the superpowers. Washington and Moscow managed an armed peace in a divided Europe during the Cold War. The process of decolonization saw the birth of a number of new nations in Asia and Africa.
    • The Cold War: It led to the collapse of the Soviet Union, undid its sphere of influence in East and Central Europe and led to the rise of the unipolar moment. The era of massive economic interdependence that followed the Cold War saw the rapid rise of China and a slower but definitive emergence of India as a major power.

    How Russia and China are colluding to change regional and global world order?

    • Asserting themselves against US: Moscow and Beijing, which were willing to acquiesce in the unipolar moment in the 1990s, began to assert themselves against the US-led international order in the 21st century. Europe focused on strengthening its economic and political integration, and sought greater strategic autonomy from the United States.
    • Apparent decline of USA: As they drew steadily closer over the last decade, Russia’s Vladimir Putin and China’s Xi Jinping bet that the apparent American decline was real and irreversible. That emboldened Putin to fancy his chances in ending Ukraine’s sovereignty.
    • China backed Russia against Europe: The seeming political disarray in the West also convinced Xi to back Putin’s attempt to reorder European regional security order. The partnership without limits and no forbidden areas of cooperation was unveiled less than three weeks before Putin invaded Ukraine on February 24, 2022.

    Outcome of Russia’s failed attempt to capture Ukraine

    • Only option is diplomacy: As the costs of war mount, the case for diplomacy will gain ground in 2023. While both sides talk about peace, they are also gearing up to fight through the harsh winter. Bridging that gulf between Russian and Ukrainian negotiating positions will occupy diplomacy in 2023.
    • Weaker Russia: Whatever the nature of the eventual settlement, Russia will come out weaker from this military misadventure. Putin’s attempts to eliminate Ukraine as an independent nation and roll back the eastward expansion of NATO have backfired. The war has consolidated Ukraine as a nation and NATO has expanded to include Sweden and Finland.
    • Self-defense Inability of Europe: The war has also demonstrated Europe’s inability to defend itself against Russia despite the EU’s economy being 10 times larger than that of Russia. But for now, and the near term, Europe will remain dependent on the US to defend it against an expansionist Russia. While Europe is weaker, trans-Atlantic NATO has become stronger.
    • US industries are winning: The US is emerging as a big winner from the Ukraine war. American oil companies are raking it in from high energy prices. US weapons like the HIMARS and its high technology companies like SpaceX with its Starlin satellite system and Palantir with its algorithms have actively shaped the battlefield in favour of Ukraine, the underdog in the war. Far more consequential is the fact that without being directly involved in the fight, the US is influencing the direction of the war and has the most leverage in defining the terms of peace in Ukraine.

    Impact of Chinese and Russian aggression on Mid-power countries

    • US as reliable partner: Thanks to the overreach of Putin and Xi, the US has become a valuable partner for the middle powers at the receiving end of Russian and Chinese bullying.
    • Eyeopener for Germany and Japan: Russian expansionism in Europe and Chinese aggressiveness in Asia have compelled Germany in Europe and Japan in Asia to boost their defence spending.
    • Regional security Policy: Poland in Europe and Australia and South Korea in Asia have embarked on ambitious regional security policies.

    What should be the approach of India?

    • India should rework its status: India that long relied on Russia to provide a regional balance of power will have to rework its great power sums. This should not be too hard, given India’s improving relations with the US and Europe and its focus on diversifying its defence partnerships.
    • Boosting the domestic capabilities: Delhi, however, will have to move much faster in developing the national capabilities and international partnerships to deter China’s aggressive actions on the border and balance Beijing’s power in the Indo-Pacific. Delhi certainly can’t take for granted that its current economic and political advantages will endure.
    • Prevent the breakdown of multilateral system: Finally, it is unlikely the world will return to the kind of multilateralism we got used to since the 1990s. India’s G20 leadership would be a success if it can prevent the complete breakdown of the multilateral system and generate major power consensus on a few issues.

    Conclusion

    • India should take the advantage of chaotic world order to strengthen itself. Indigenous military capabilities, double digit economic growth and securing core foreign policy interest should be the top priorities for India.

    Mains Question

    Q. Major wars in world have often culminated into rebalancing of international politics. Comment. What should be the India’s approach towards new emerging global order in the aftermath of Russia-Ukraine war?

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Blue economy and marine pollution

    op-ed snap | Economics | Mains Paper 3: Inclusive Growth & Issues,Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Blue economy

    Mains level: Blue economy , maritime pollution and associated challenges

    Blue economy

    Context

    • Blue economy relates to presentation, exploitation and regeneration of the marine environment. It is used to describe sustainability-based approach to coastal resources. The worry is that the oceans are under severe threat by human activities, especially when the economic gains come at the cost of maintaining environmental sanity.

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    Blue economy

    From the beginning: The Blue economy

    • Origin of the concept: Gunter Pauli’s book, “The Blue Economy: 10 years, 100 innovations, 100 million jobs” (2010) brought the Blue Economy concept into prominence.
    • A project to find best nature inspired and sustainable technologies: Blue Economy began as a project to find 100 of the best nature-inspired technologies that could affect the economies of the world. While sustainably providing basic human needs potable water, food, jobs, and habitable shelter.
    • Inclusive approach and objective: This is envisaged as the integration of Ocean Economy development with the principles of social inclusion, environmental sustainability and innovative, dynamic business models
    • Environment friendly maritime infrastructure: It is creation of environment-friendly infrastructure in ocean, because larger cargo consignments can move directly from the mothership to the hinterland through inland waterways, obviating the need for trucks or railways

    Blue economy

    Significance of Maritime transport

    • One of the largest employers within ocean-related activities: Maritime transport plays a big role in the globalised market in the form of containerships, tankers, and ports, coastal tourism is the largest employer within ocean-related activities.
    • Eighty percent trade happens on the seas: Eighty per cent of world trade happens using the seas, 40 per cent of the world’s population live near coastal areas, and more than three billion people access the oceans for their livelihood.
    • Annual value makes up equivalent to seventh largest GDP: A healthy marine environment is essential for a sustainable future for people and the planet. Its value is estimated to be over $25 trillion, with the annual value of produced goods and services estimated to be $2.5 trillion per year, equivalent to the world’s seventh largest economy in gross domestic product (GDP) terms.
    • Ensures food security: The oceans, seas and coastal areas contribute to food security and economic viability of the human population. The ocean is the next big economic frontier, with the rapidly growing numerous ocean-based industries.

    What are the concerns?

    • Human induced Oceanic pollution: Marine activities have brought in pollution, ocean warming, eutrophication, acidification and fishery collapse as consequences on the marine ecosystems.
    • Oceans are rarely financial institutions: The ocean is uncharted territory, and rarely understood by financial institutions. Hence preparedness of these institutions in making available affordable long-term financing at scale is nearly zero.
    • Developing nations pay heavy price: In this journey of achieving blue economy goals, it is developing nations that pay a heavy economic price.
    • Lack of capacity is a critical hindrance: Many of the developing nations have high levels of external debt. Lack of capacity and technology for transition between agri economy and marine economy is also a critical hindrance.
    • Not having a elaborative guiding principles is a major concern: There is concern that without the elaboration of specific principles or guidance, national blue economies, or sustainable ocean economies, economic growth will be pursued with little attention paid to environmental sustainability and social equity.

    Blue economy

    What should be the approach towards achieving Blue economy?

    • Inclusive discussion and participation is must: The blue economy is based on multiple fields within ocean science and, therefore, needs inter-sectoral experts and stakeholders. It is imperative to involve the civil society, fishing communities, indigenous people and communities for an inclusive discussion.
    • SDG-14 journey cannot undermine the other SDGs: The UN stresses that equity must not be forgotten when supporting a blue economy. Land and resources often belong to communities, and the interests of communities dependent on the ocean are often marginalised, since sectors such as coastal tourism are encouraged to boost the economy.
    • Integrated marine spatial planning with national and global expertise is necessary: Developing the blue economy should be based on national and global expertise. It is important that any blue economy transformation should include using integrated marine spatial planning. This would provide collaborative participation of all stakeholders of the oceans, and would make room for debate, discussion and conflict resolution between the stakeholders.

    Where does India stand at this hour?

    • Suitable natural geography: Vast coastline of almost 7,500 kilometres, with no immediate coastal neighbours except for some stretches around the southern tip. In some sense, India has the advantage of its natural geography
    • Opportunity on G20 presidency: It is an opportunity for India to use its G20 Presidency to ensure environmental sustainability, while providing for social equity.
    • Rising role and significance: India’s engagement in the blue economy has been rising, with its active involvement in international and regional dialogues, and maritime/marine cooperation.

    Conclusion

    • Achieving the Blue economy goal would need tremendous human effort, and would call for global cooperation through various legal and institutional frameworks. This also includes the need to develop newer sectors such as renewable ocean energy, blue carbon sequestration, marine biotechnology and ex-tractive activities, with due attention paid to the environmental impacts.

    Mains question

    Q. What do you understand by mean Blue economy? Highlight the importance of maritime transport and discuss what need to be done to achieve blue economy in a true sense?

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  • Tax Reforms

    Levying the Wealth tax to reduce income inequality

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Wealth tax

    Mains level: Income inequality, Wealth tax and its necessity

    Wealth tax

    Context

    • The discourse on efficient, effective and equitable public spending often takes us into the realm of limited resources facing competing demands. India definitely needs to widen its revenue collection as well as base. In this context its time to consider a wealth tax.

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    What is wealth tax?

    • Wealth tax is a direct tax unlike the goods and services tax or value-added tax, can take several forms, such as property tax, inheritance or gift tax and capital gains tax.
    • It aims to reduce the inequalities of wealth.
    • It is based on the market value of assets owned by a taxpayer and charged on the net wealth of super rich individuals.

    Wealth tax

    Wealth Tax in India

    • Abolished wealth tax: The government abolished wealth tax as announced in the budget 2015. In its place, the government decided to increase the surcharge levied on the ‘super rich’ class by 2% to 12%. (Super rich are persons with incomes of Rs.1 crore or higher and companies that earn Rs.10 crores or higher).
    • Abolished to simplify tax structure and discourage tax evasion: The abolition was a move to do away with high costs of collection and also to simplify the existing tax structure thereby discouraging tax evasion.
    • No wealth tax at present: India presently does not have any wealth tax i.e., a tax levied on one’s entire property in all forms. It did not impose a one-time ‘solidarity tax’ on wealth in post-covid budgets that could have generated resources for essential public investment.

    What is the need for levying a wealth tax?

    • High inequality: India’s top 10% population owns 65% of the country’s wealth, while the bottom 10% owns only 6%, according to the World Inequality Database, 2022.
    • Massive accumulation of wealth in a few hands: A small section of people has access to a large share of economic assets and resources that remain almost completely untaxed and thus unavailable for public allocation.
    • Capital gains tax has limited base: Capital Gains tax exists in India, but applies only to transactions and hence is limited in its base.
    • Wealth largely depends on inheritance and privilege: Wealth, much less than even income, has little to do with one’s education, merit or efforts; it is largely dependent on inheritance and opportunities that come with the advantages associated with belonging to one of India’s privileged classes and castes.
    • India does not have inheritance tax: India scrapped its estate duty in 1985 and has no inheritance tax.
    • Almost entirely exemptions on gift tax: Although the receipt of gifts is subject to income tax in the beneficiary’s hands, it has various exemptions; it is almost entirely exempt if received from within the family, including the extended family of self and spouse. These exemptions shrink the base significantly, as most accumulated wealth is acquired through family, and that remains outside the gift tax’s ambit. Given the cultural context of wealth inheritance, some exemptions make sense, but upper thresholds can be easily added to make it more effective.

    Wealth tax

    Comprehensive PoV: Why wealth tax is necessary at present economic condition

    • Wealth of rich doubled during the pandemic but not channelised well to create productive resou: An Oxfam report has highlighted how India’s richest doubled their wealth during the pandemic. This happened for a variety of reasons. despite facing grave financial and economic challenges, has no means to convert any of this growing wealth into productive resources that can generate employment opportunities and push up the incomes of multitudes, which in turn can drive demand for goods something that is needed to counter an economic drag-down.
    • There is no sufficient increase in private investment: The government lowered the corporate tax rate significantly from 30% to 22% in 2019-20, which has continued despite the economic crises caused by the pandemic. However, this did not elicit much private investment. Obviously, there is something else at work, and one cannot assume that accumulated wealth in private hands will necessarily be invested in the domestic economy.
    • Not only investment is important but also the right application is important: It is not only investment that is important, but also where that investment is going and whether it is creating employment opportunities for the youth.

    Present status and economic projections

    • Data on youth unemployment: Data from diverse sources show high unemployment rates during May-July 2022 for the youth: 28.3% in the 15-24 age group and an even higher 43.3% for the 20-24 age-group.
    • Likely global recession overhead: The likelihood of a global recession and the related layoffs being announced by corporate giants will make the situation worse.
    • Jobless growth and wealth inequality: The recent economic growth experienced in India, especially in the post-covid recovery phase, has largely been jobless growth and can further deepen both income and wealth inequalities.
    • Economy cannot afford to have such high level of youth unemployment: No economy can afford to have such youth unemployment rates for long without adversely affecting economic growth and social cohesion.

    Way ahead

    • A number of Latin American countries, including Argentina, Peru and Bolivia, have either introduced or are introducing a progressive annual wealth tax levied on the wealth gains of each year or a one-time covid ‘solidarity’ tax.
    • There is no reason why India cannot do so too. This is the right time to introduce a progressive wealth tax along with other fiscal steps that can directly reverse the trend of growing inequalities in the country.

    Conclusion

    • India needs a shift in its fiscal policy, as suggested by a number of economists, to adopt measures that create employment opportunities and in turn drive demand for products made by small and medium level producers. This would also push up growth while not necessarily widening inequalities.

    Mains question

    Q. What is wealth tax? Why wealth tax abolished? Considering the present economic situation Discuss the need to levy wealth tax in India?

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  • Human Rights Issues

    Towards better Prison architecture

    op-ed snap | Governance | Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NA

    Mains level: Status of prisons in India and associated challenges

    Prison

    Context

    • Lieutenant-Governor of Delhi (L-G) Vinay Kumar Saxena directed the Delhi Development Authority (DDA) to allocate 1.6 lakh square metres of land to Delhi’s prison department to construct a district prison complex in Narela.

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    Background: Recent prison reform debate

    • Speech by president of India: At the Constitution Day celebrations organised by the Supreme Court in November 2022, President Draupadi Murmu shared a snippet of her journey with the audience.
    • Prisoners unaware of their rights: She reflected on her visits to prisons across India and the circumstances of those incarcerated. She highlighted that these individuals were often unaware of their fundamental rights and had been incarcerated for prolonged periods for minor offences, while their families, struggling with poverty, were unable to bail them out.
    • All organs of state must work together: President Murmu emphasised how the judiciary, executive, and legislature must work together to help them, and concluded by poignantly asking: How are we claiming that we are progressing as a nation, if we are still building prisons to address the issue of overcrowding?

    Prison

    What is the problematic architecture of Prison?

    • High security prison in Delhi: In phase 1, which is expected to be completed by April 2024, a high-security jail is to be built in the complex with a capacity to lodge 250 high-risk prisoners.
    • Stringent security measures: The prison administration has incorporated stringent security measures in the design such as constructing high walls between cells to prevent inmates from viewing others, and interacting with each other, as well as building office spaces between cells to facilitate surveillance.
    • Intention of torture: Architecture of prisons is often used as a tool to surveillance, torture, and break the souls of inmates.
    • Physical and mental health of prisoners: With this prison design, the Delhi prison administration is essentially creating solitary confinement which will have a severe detrimental effect on prisoners’ mental health.

    Prison

    Present condition of prisons in India

    • Governed by colonial act: Prisons in India are still governed by the Prisons Act, 1894, a colonial legislation which treats prisoners as sub-par citizens, and provides the legal basis for punishment to be retributive, rather than rehabilitative.
    • Caste biases in laws: These laws are also highly casteist, and remain largely unchanged since they were drafted by the British. For example, some jail manuals continue to focus on purity as prescribed by the caste system, and assign work in prison based on the prisoner’s caste identity.
    • Colonial mindset in prison governance: Organisations such as the Vidhi Centre of Legal Policy have taken us one step further in identifying colonial legal continuities that India must shred, and the manner in which she can do so.
    • SC/ST community suffers more: Furthermore, Dalits and Adivasis are over-represented in Indian prisons. The National Dalit Movement for Justice and the National Centre for Dalit Human Rights’ report ‘Criminal Justice in the Shadow of Caste’ explains the social, systemic, legal, and political barriers that contribute to this. Legislations such as the Habitual Offenders Act and Beggary Laws allow the police to target them for reported crimes.

    What should be way forward?

    • Preventive measures are necessary: We must take preventive measures before we realise that we have travelled far down this road, and have subjected several people to unnecessary trauma and confinement.
    • Prison reforms rather than more prisons: With the warning signs beseeching us, we must amplify President Murmu’s message on the need to de-carcerate and stop building more prisons, so that the L-G takes adequate steps in that direction.

    Conclusion

    • Many prisoners in India continue to suffer for petty crimes just because of lack education and legal assistance. More than 70% of them are economically poor people. Government must address the false cases by police and judicial delay before building more prisons.

    Mains Question

    Q. Critically examine the present condition of prisons in India? prisons reform should be prior step than building more prisons. Comment.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Stock Trade and the Economy

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NA

    Mains level: Indian Economy, stock trade indicators and economic growth

    Stock

    Context

    • Even as the RBI steadily downgraded India’s growth forecasts for the year from 7.2 per cent in April to 6.8 per cent in December, and the benchmark Nifty50 index ended the year up a mere 4.1 per cent, a handful of stocks delivered outsized returns to investors.

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    Expansion of business and reward

    • Adani gained because of expansion: The top trade was undoubtedly that of Adani Enterprises with the stock more than doubling over the year. But that should not come as a surprise. After all, the group has embarked on a breathless pace of expansion (both organic and inorganic) that is perhaps unparalleled in recent times.
    • Unexpected rise in prices: Share prices of associated companies such as Adani Green have also seen a remarkable surge, catapulting the group into the top leagues of Indian conglomerates.
    • Risky price-to-rent ratio: One should be forgiven for thinking that residential real estate in Delhi, with a price-to-rent ratio that ranges between 40-50, is expensive. Adani Enterprises is currently trading at a price-to-equity ratio of 394 as per NSE. The Nifty50, in comparison, is trading just above 21.

    Performance of Public sector banks

    • SBI AND PNB gained: The year also belonged to Indian banks, more specifically to public sector banks, who at last seemed to have turned the corner. SBI is up more than 30 per cent, while Punjab National Bank is up almost 50 per cent. Others like Bank of Baroda and UCO Bank have more than doubled.
    • Outperforming private banks: While private sector bank stocks have also seen a sharp rise Axis is up almost 35 per cent, while ICICI is up 17 per cent, public sector banks have outperformed their private counterparts by a significant margin. The Nifty PSU bank index is up 70 per cent for the year, while in comparison, the private bank index is up only 21 per cent. This was perhaps to be expected.
    • Cleaning up balance sheet: Public sector banks have been on a multi-year drive to clean up their balance sheets, and shore up capital. And while there are still some concerns over possible slippages from accounts that were restructured during the pandemic, gross non-performing assets or bad loans were down to 6.5 per cent at the end of September 2022.
    • Rising lending rates: Moreover, lending is growing at a brisk pace. And banks’ spreads also have improved with the interest rate cycle on the upswing. In typical fashion, lending rates have risen faster than deposit rates. But, as credit growth picks up and competition for deposits among banks begins to intensify, deposit rates are likely to edge upwards, putting pressure on the spread.

    Status of Consumption and auto sector

    • Consumption is up: while concerns over the unevenness of the economic recovery persist, consumption stocks have fared well. ITC is up more than 50 per cent, as are Britannia (almost 20 per cent) and HUL (9 per cent).
    • Real wages have not increased: But with firms underlining the continuing pressure on volumes with elevated inflation, real wage growth has been subdued in rural areas it is likely that in some product segments, the formalisation theme is still playing out.
    • Size of market is not expanding: The bigger formal firms gaining market share even as the overall size of the market isn’t expanding as hoped.
    • Auto sector have done well: Among the auto stocks, M&M and Maruti are up 50 per cent and 12 per cent respectively, though Tata motors is down 22 per cent, while among the two-wheelers, both Bajaj and Hero are up.

    Better performance of Infrastructure

    • Moderate uptick in infrastructure: Infrastructure stocks are a mixed bag. Larsen & Toubro, often thought of as a proxy for the domestic capex cycle, is up almost 9 per cent, recently hitting a new high.
    • Impact of PLI scheme: Perhaps, this reflects a pick up in the public sector capex or the private sector push under the government’s production-linked investment scheme.
    • Mix picture of steel and cement: Among cement stocks, Ultratech is down, though ACC is up, while among steel stocks, SAIL is down, Tata steel is almost flat, but JSW Steel is up.

    IT sector was worst performing

    • IT NIFTY significantly down: The sector which has taken a beating has been IT. The Nifty IT index is down 26 per cent.
    • Heavy correction in market: All major IT firms from TCS to Infosys to Wipro have witnessed heavy correction.
    • Impact of slowdown in advanced economy: Valuations of the sector will be heavily influenced by market views over the slowdown in advanced economies which are major revenue centres for these firms.

    Conclusion

    • Though stock market doesn’t reflect the entirely true picture of economy but it certainly a good indicator of where the retail investor and common man invest his money. India’s stock market is going to be top 3 in the world. SEBI must protect the retail investor from this highly volatile terrain.

    Mains Question

    Q. Analyze the performance of the auto and IT sector in India through lenses of stock market? Why the balance sheet of public sector banks is improving?

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  • Oil and Gas Sector – HELP, Open Acreage Policy, etc.

    What should India do in the current international energy market?

    op-ed snap | Economics | Mains Paper 3: Inclusive Growth & Issues

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NA

    Mains level: International energy market, decarbonatization and Challenges in front of India

    energy

    Context

    • India marches ahead carrying the same challenge projected as last year that it will have to navigate the choppy waters of a volatile petroleum market without straying from the green path towards clean energy. Energy security cannot be achieved by focusing only on the supply and distribution side of the equation. The demand conservation and efficiency sides are equally important.

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    Current situation of international energy market

    • Fragmented energy market: the energy market has fragmented and energy nationalism is the driving force behind policy.
    • Restricted markets for Russia: Irrespective of how and when the Ukraine conflict ends, Russia will not be allowed access to the western markets for as long as President Putin is at the helm of the affairs. One fallout is the tightening energy embrace between Russia and China.
    • Declining western orbit and increasing non-aligned approach: Three, OPEC plus one which is, in effect, Saudi Arabia plus Russia has stepped outside the Western orbit. Saudi Arabia has made clear it intends to pursue a Saudi first, non-aligned approach to international relations including with the US.
    • Emergence of new energy centres: The new centres of energy power are emergent around countries that have a large share of the metals, minerals and components required for clean energy. China is currently the dominant power.

    What should India do against this backdrop?

    • Government must increase productivity of existing sources: Discounted Russian crude is an opportunistic panacea. It does not provide a sustainable cover to meet our requirements. To secure such a cover, government must increase the productivity of our existing producing fields; additional resources should be allocated for accessing relevant enhanced oil recovery technologies.
    • Secure long- term supply relationship with Saudi Arabia and Iran: Further, it should leverage the country’s market potential to secure a long-term supply relationship with Saudi Arabia and an equity partnership with Iran.
    • Enhance the strategic petroleum reserves: It should enhance the strategic petroleum reserves to cover at least 30 days of consumption and remove the sword of Damocles that the CBI/CVC/CAG wield over the heads of the public sector petroleum companies so that their traders can, without fear, take advantage of market volatility.
    • Expediate gas pipeline grid: The construction of a pan-India national gas pipeline grid should be expedited.

    energy

    Analysis: Phasing out coal and the energy transition in India

    • Coal one of the major sources of energy in India: Coal will remain the bulwark of India’s energy system for decades. It is no doubt the dirtiest of fuels, but it remains amongst, if not the cheapest, source of energy. Plus hundreds of thousands depend on the coal ecosystem for their livelihood.
    • Phasing out is not yet a near possibility: The option of phasing out coal whilst environmentally compelling is not yet a macroeconomic or social possibility.
    • Need a balance: In the interim, the government has to find an energy transition route that balances livelihoods and pushes forward the green agenda.
    • Steps to be taken: Some small, politically feasible steps in that direction would include increased R&D expenditure for coal gasification and carbon capture and sequestration technologies; setting a carbon tax; the establishment of regulatory and monitoring mechanisms for measuring carbon emissions from industry; the closure of inefficient and old plants and a decision not to approve any new ones.
    • Determining competitiveness: In parallel, it would help if Niti Aayog were to pull together a group of economists and energy experts to determine the competitiveness of coal versus solar on a full-cost basis

    Other possible measures 

    • Upgrading the transmission grid: Allocation of funds for upgradation of the transmission grid network to render it resilient enough to absorb clean electrons on an intermittent basis. The sun does not shine at night and the wind does not blow all the time. In parallel, the underlying structural issues currently impeding the scaling up of renewables must be addressed.
    • Repairing the balance sheets of discoms through various regulatory reforms: In parallel, the repair of the balance sheets of state distribution companies (discoms), easing the procedures for the acquisition of land and the removal of regulatory and contract uncertainties are most important.
    • Building up the domestic chip industry: It will take decades to harness our indigenous resources of the metals and minerals critical for clean energy and build up a domestic chip industry. In the interim, diplomats should secure diversified sources of supply to reduce the country’s vulnerability.
    • Developing and commercializing 3G clean energy technologies: Finally, the creation of an enabling ecosystem for developing and commercializing third-generation clean energy technologies like hydrogen, biofuels and modular nuclear reactors. Nuclear, in particular, should be pushed.

    energy

    Conclusion

    • India is not responsible for global warming, but it will be amongst the worst affected. Millions live around its coastline. Their livelihoods will be undermined by rising sea levels. Millions will also be affected by melting glaciers and extremes of temperatures. So irrespective of who is to blame, India has to stay on the path of decarbonization. It cannot afford to develop first and clean up later.

    Mains question

    Q. What is the current situation of international energy market? What are the measures that India should take in the time of global uncertainty of energy market.

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  • Waste Management – SWM Rules, EWM Rules, etc

    E-waste sector and Gender Justice

    op-ed snap | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NA

    Mains level: E- waste and gender justice

    E-waste

    Context

    • According to the Global E-waste Monitor 2020, out of the total 56.3 million tonnes of discarded e-waste products generated in 2019, only 17.4 percent was officially recorded as being collected and recycled. The rest end up in landfills, in scrap trade markets or are recycled by the informal markets.

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    E-waste in India

    • Third largest contributor: India is the third largest contributor to this great wall of waste after China and the United States (US) with a whopping 1,014,961.21 tonnes generated in 2019-2020, out of which only 22.7 percent was collected, recycled or disposed of.
    • More than 12 million workers: For the 12.9 million women working in the informal waste sector, Waste Electric and Electronic Equipment (WEEE’s) are lifelines as it contains valuable recyclable metals notwithstanding the detrimental effects it can have on health and the environment.

    E-waste and Burden on women

    • Less women in value chain: Inequalities are particularly pronounced in this largely gender-neutral sector across the value chain which is heightened by the barriers in decision-making roles.
    • Negligible percent of women: With reliable data hard to come by from this sector recent reports indicate that an estimated 0.1 percent of waste pickers account for India’s urban workforce with women populating the lower tiers in this economy as collectors and crude separators at landfill sites.
    • Men at skilled position: Men unsurprisingly dominate the entire spectrum of skilled positions as managers, machinery operators, truck drivers, scrap dealers, repair workers and recycling traders.
    • Women mostly from poor background: Workers in this ‘grey sector’ are some of the most marginalised, poverty-stricken, uneducated people from vulnerable backgrounds with little social or financial security. They remain unprotected at their workplaces, and often are victims of sexual abuse with no bargaining power in selling their goods. All of these factors then act upon their exclusion as cities begin to formalise the waste sector to effectively control discarded goods.

    E-waste

    E-waste Impact on Health

    • Incineration and leaching: Open incineration and acid leeching often used by informal workers are directly impacting the environment and posing serious health risks, especially to child and maternal health, fertility, lungs, kidney and overall well-being.
    • Occupational health hazards: In India, many of these unskilled workers who come from vulnerable and marginalised are oblivious to the fact that that what they know as ‘black plastics’ have far reached occupational health hazards especially when incinerated to extract copper and other precious metals for their market value.
    • Exposures to children: This ‘tsunami of e-waste rolling out of the world’, as described in an international forum on chemical treaties, poses several health hazards for women in this sector as they are left exposed to residual toxics elements mostly in their own households and often the presence of children.
    • Constant contact with organic pollutants: According to a recent WHO report, a staggering 18 million children, some as young as five, often work alongside their families at e-waste dumpsites every year in low- and middle-income countries. Heavy metals such as lead, as well as persistent organic pollutants (POPs), like dioxins, and flame retardants (PBDEs) released into the environment, have also added to air, soil, and water pollution.

    Laws and regulations related to E-waste

    • India’s E-waste (Management) Rules, 2016: Released by the Ministry of Environment, Forest and Climate Change (MoEFCC) flagged e-waste classification, extended producer responsibility (EPR), collection targets, and restrictions on imports of e-wastes containing hazardous substances.
    • Amendment to Rules: The amended Electronic Waste Management Draft Rules 2022, expected to come into effect by early next year has also emphasised on improving end-of-life waste throughout the circular economy.
    • Lack of clear guidelines: These progressive measures, however, lack clear guidelines on the role of informal recyclers and have particularly blind sighted the role of women creating a lacuna in equitable growth.
    • The Beijing Platform of Action: It is worth mentioning that The Beijing Platform of Action clearly maintains that a properly designed e-waste processing system can meet both economic and environmental goals to improve the status of women in the informal economy. Sculpting this blueprint in a variegated social and cultural milieu can perhaps play out to examine best practices and success stories around the world.

    E-waste

    How to make E-waste sector more gender inclusive

    • Ownership of supply chain: The social stigma attached to this sector progressively manifests in discrimination and loss of dignity. Women lack ownership at the end of the value chain as business owners of material processing units nor have access to capital for starting business ventures.
    • Separate policy for ground workers: Educating the un-educated takes more than simply designing training modules, skill development and generating awareness about e-waste should be tailored to run at ground-zero where workers operate without disrupting their daily work schedules.
    • Gendered data collection: All of these factors compounded by the severe lack of gender-disaggregated data necessitate earmarked gender budgeting to shape an inclusive e-waste management system.

    Conclusion

    • The concept of the 3R’s, Reduce, Reuse, recycle as envisaged under Mission LiFE will have to invest in women as drivers of a responsible waste management economy, recognising their critical role to minimise the quantum of waste with the ultimate objective of zero waste.

    Mains Question

    Q. Analyze the gender inequality in the E-waste sector? What are the ways to make e-waste sector more gender Inclusive?

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    New Year and the Indian economic growth

    op-ed snap | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NA

    Mains level: Indian economic growth prospect and challenges

    economic

    Context

    • The new year begins on a slightly more optimistic note for India. Global crude and food prices are down, the rupee has stabilised at 82-83 to the dollar after dropping from 74.5 levels at the start of 2022, even as official foreign exchange reserves have recovered. However, there are challenges to the economic growth of India which needs an immediate attention and action.

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    The current scenario and the optimism around Indian economy

    • Global crude and food prices: Global crude and food prices are roughly 38 per cent and 15 per cent down respectively from their highs in March, following Russia’s invasion of Ukraine.
    • Stabilised rupee: The rupee has stabilised at 82-83 to the dollar after dropping from 74.5 levels at the start of 2022
    • FOREX recovered: even as official foreign exchange reserves, which had plunged to $524.5 billion on October 21 from a year-ago peak of $642 billion, have since recovered to $562.8 billion.
    • Environmental conditions are good for Rabi crops: With the prospects for the upcoming rabi crop looking good, as there is favourable soil moisture conditions, timely onset of winter and improved fertiliser availability on the back of declining international prices one can expect consumer inflation to ease further.

    economic

    What is inflation?

    • Inflation is an increase in the level of prices of the goods and services that households buy. It is measured as the rate of change of those prices. Typically, prices rise over time, but prices can also fall (a situation called deflation).

    economic

    What are the challenges?

    • Challenge is more on growth than on Inflation: The challenge for India this year is likely to be more on the growth than on the inflation front.
    • It seems, Chinese’s authoritarian policies making India a favourable investment destination: On paper, the world’s disillusionment with China (more specifically, the authoritarian policies of Xi Jinping, both at home and beyond) and its diminishing economic prospects, worsened by a looming demographic crisis, should be making India every investor’s favourite destination.
    • On paper government efforts are honest to attract investment: The present government’s focus on improving the country’s physical as well as digital infrastructure plus schemes such as production-linked incentive to attract investments in specific sectors, from solar photovoltaic modules and drones to specialty steels ought to have given added impetus to this process.
    • But on the ground, neither domestic nor foreign companies are really investing: The biggest drag on investment during the last decade was over-leveraged corporates and bad loans-saddled banks.
    • Deepening global slowdown is a major challenge to the economic growth: That twin balance sheet problem has more or less resolved itself. Today’s problem has mainly to do with strained government and household balance sheets. That, coupled with a deepening global slowdown constricting export demand, could have a bearing on India’s economic growth.

    What is Current Account Deficit (CAD)?

    • A current account is a key component of balance of payments, which is the account of transactions or exchanges made between entities in a country and the rest of the world.
    • This includes a nation’s net trade in products and services, its net earnings on cross border investments including interest and dividends, and its net transfer payments such as remittances and foreign aid.
    • A CAD arises when the value of goods and services imported exceeds the value of exports, while the trade balance refers to the net balance of export and import of goods or merchandise trade.

    economic

    What should the government do?

    • Refrain from fiscal stimulus and maintain macroeconomic stability: It should certainly refrain from any fiscal stimulus to kick-start investment or drive growth. Far from stimulus, what the country needs is macroeconomic stability and policy certainty.
    • Managing current account deficit: The current fiscal deficit and public debt levels are far too high to allow any new populist schemes in the name of putting money in people’s hands or sharp tax cuts to supposedly revive investor sentiment. Large government deficits will invariably spill over into current account deficits. The latter number, at 4.4 per cent of GDP in July-September, was the highest for any quarter since October-December 2012 and the prelude to the last so-called taper tantrum-induced balance of payments crisis.
    • Must prioritize fiscal consolidation: The coming budget must prioritize fiscal consolidation. This will enable the RBI to also pause interest rate hikes and further monetary tightening, which is probably not the best thing for an economy already facing multiple growth headwinds.

    Conclusion

    • India’s challenge has shifted from inflation management to facilitating growth in 2023. Policy stability and credibility should be the mantra that will ultimately work for India.

    Mains question

    Q. It is said that the new year 2023 is starting on a slightly more optimistic note for the Indian economy. In this background, discuss the challenges facing India’s economy and what the government should do?

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  • Road and Highway Safety – National Road Safety Policy, Good Samaritans, etc.

    Indian road accident scenario: More serious than Covid-19

    op-ed snap | Governance | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: NA

    Mains level: Road accidents and road safety In India

    accident

    Context

    • Cricketer Rishabh Pant’s accident near Roorkee resulting in some injuries, has once again drawn attention to the problem of road safety in India. Nitin Gadkari, Minister of Road Transport and Highways, Government of India, recently said that the Indian road accident scenario, with 415 deaths and many injured every day, is more serious than Covid-19. This is a frank admission that even with comprehensive road safety programmes, India’s record shows little signs of improvement.

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    Road Accidents in India A lookover

    • In spite of several years of policymaking to improve road safety, India remains among the worst-performing countries in this area.
    • Total 1,47,913 lives lost to road traffic accidents in 2017 as per Ministry of Road Transport and Highways statistics.
    • The National Crime Records Bureau (NCRB) figure for the same year is 1,50,093 road accident deaths.

    An overall apathy: Road safety and traffic norms violation

    • Easy licences without basic road signage knowledge: The fact of the matter is that simple but serious issues, like road users’ inept understanding of the basic traffic rules and road signage, easier access to driving licences without a meaningful ground scrutiny of skills and unchecked selfish and aggressive driving behaviour continue to dominate Indian road traffic.
    • Road traffic rules are grossly violated and goes unchecked: Deadly violations of lane driving, speed limits and traffic signals, instances of at-will parking on the fast-developing modern, smooth highways all these go mostly unchecked and unquestioned.
    • Human errors are major factors: The causes of road crashes, such as the ones above, are well known. Human error on the roads is admittedly the single-largest factor responsible.
    • Lack of understanding of basic traffic rules: Nobody seems to know which lane they’re supposed to be in; not even the traffic police personnel on duty can tell.
    • Charges are often framed against the driver but rarely against the officials: Further, in case of a serious road crash, charges are framed against the erring drivers, but rarely (or, never) against the road-safety public officials for non-performance, non-enforcement of traffic rules, not taking urgent corrective action on conspicuous road-hazards and the black spots.
    • Engaged more in paperwork than ion ground: At the macro level, various institutions of road safety, both at the national level and in the states, are engaged in routine paperwork and bear no accountability for the failure to produce desired results.

    What is road safety?

    • Road safety means methods and measures aimed at reducing the likelihood or the risk of persons using the road network getting involved in a collision or an incident that may cause property damages, serious injuries and/or death.

    What needs to be done?

    • The enforcement of traffic norms is the key to road safety: All ongoing programmes towards enhancing safe road conditions and vehicles have to go on. However, the priority goal and the global mandate is to significantly reduce the rising number of road crashes.
    • Scare resources and complex nature of road safety: The central and state governments run complex road safety programmes with their scarce resources, with little success. The World Bank has chipped in with a $250 million loan to India to tackle the high rate of road crashes through road-safety institutional reforms and the results-based interventions.
    • Wise administration and enforcement of rules is necessary: Regular, professional enforcement of rules and swift and innovative solutions to traffic indiscipline and bottlenecks by the administration could help evolve a healthy safe-road culture.
    • An example to be followed: In Delhi too the government’s insistence on drawing a bus lane on the city’s major roads has been accepted overnight, and largely implemented. The lessons from such sporadic but crucial initiatives are apparent and inspiring.

    What are the proposed measures?

    • To begin with, identify the two worst roads in a specific area:
    1. Notify each identified road as a Zone of Excellence (ZOE) in road safety (RS) This could include a state or national highway/road/part thereof and adjoining areas
    2. Provide road marking/written instructions on road-surface/road signage
    3. Take care to provide lanes for emergency vehicles, cyclists, pedestrians etc, as feasible
    4. Ensure adherence to basic traffic rules/ safety norms. Create multiple checkpoints (CP), every 2-4 kms for example, with each CP supported by road safety volunteers in addition to police
    5. Use tech aids, judiciously combined with manual interventions/ volunteers
    6. Supplement enforcement with road safety education/ awareness measures
    7. Station ambulances and lift cranes for swift response to accidents
    8. Make reliable arrangements with hospitals/ trauma centres through formal MoUs
    • The administrative structure for the implementation of road safety can be set up in three tiers.
    1. Tier 1 would be the Managing Group (MG), which would look after day-to-day operations and would be autonomous and financially empowered. The MG would meet daily to introspect, analyse issues, incorporate suggestions and assign tasks. It would organise training and refresher programmes for traffic police and road safety volunteers.
    2. Tier 2 would have district level monitoring. Exclusive personnel would be earmarked for ZoEs with a district. This is where urgent solutions would be sought, budgetary allocations made and review modes fixed. It would also ensure adherence to targets.
    3. Tier 3 would have top management and control, represented at the level of the Union or state government. It is at this level that a dynamic road-safety ecosystem would be developed. Existing road safety institutions would either be dismantled or rejuvenated, and there would be monthly reviews, with directions, accountability and disciplinary action
    • The expected results would include:
    1. A logical, simple, practical and convincing model that would add new perspective to road safety measures
    2. A potentially effective action plan, plus a dynamic live-experiment lab for road safety
    3. Application of best practices, both local and global
    4. Proactive engagement of elected public representatives, NGOs, RWAs, educational institutes and voluteers
    5. An evolving standing expert think tank
    6. Revitalisation and development of existing and new institutions of road safety
    7. Employment generation
    8. Traffic decongestion and lane discipline
    9. A carnival of road safety on the ground overnight, throughout the country, which would make road safety visible and respectable
    10. A model that would be replicable in other low and middle-income countries

    Way ahead

    • The need here is to return to the basics, with courage and coordination: A newly power-packed Motor Vehicles Act, a decentralised federal structure, down to the level of district and panchayat administration, and the Supreme Court committee on road safety and its regular monitoring of the related issues.
    • Regular monitoring: What is further required is a specific regime whereby road safety authorities are given clear targets for reducing road crashes over a defined period.
    • Ensuring accountability: Further, the authorities should be subjected to close and regular monitoring, review and accountability.

    Conclusion

    • In spite of several years of policymaking to improve road safety, India remains among the worst-performing countries in this area. It is absolutely necessary for citizens to follow road safety norms but government cannot look away from its responsibility.

    Mains question

    Q. Road accidents in India is a serious and a silent pandemic. Discuss where lies the overall apathy and discuss mention few proposed measures.

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