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Type: op-ed snap

  • Foreign Policy Watch: India-United States

    India’s strategic autonomy and its evolution

    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: Not much

    Mains level: Paper 2- Evolution of the idea of strategic autonomy

    The article analyses the evolution of India’s approach to strategic autonomy from the unipolar world dominated by the U.S. to now when the Chinese threat has been looming large.

    Context

    • Addressing a Southeast Asian forum last week, external affairs minister outlined India’s new quest for “strategic autonomy” in its global economic engagement.

    Connection with Atmanirbhar Bharat

    • This new quest for “strategic autonomy” is the natural external complement to new economic strategy, described as “Atmanirbharata” or “self-reliance”.
    • The concept carries so much ideological baggage, its revival by Government inevitably raised many questions
    • Senior ministers and officials of the NDA government sought to reassure India’s partners that Delhi was not marching backwards.
    • When applied to the foreign policy framework, “self-reliance” becomes “strategic autonomy”.

    Evolution of the idea of strategic autonomy

    • America towered over the world after the collapse of the Soviet Union in 1991.
    • India’s past emphasis on strategic autonomy was in the context of the “unipolar moment” [dominated by the U.S.] that emerged after the Cold War.
    • On the one hand, India needed Western capital as well as technology and better access to its markets.
    • On the other hand, Delhi had to protect some of its core national interests from the threats of US intervention.

    India-U.S. Relations: Evolution after the Cold war

    • In the early 1990s, the Clinton Administration strong desire to resolve the Kashmir dispute between India and Pakistan.
    • The Clinton Administration saw the nuclear and Kashmir disputes as one and the same thing.
    • Indian diplomacy for the next two decades tried to change the US policy on both Kashmir and nuclear issues.
    • Under President George W Bush, the US discarded the long-standing temptation to insert itself in the Kashmir dispute.
    • The US also went out of the way to resolve the nuclear dispute with India by changing its domestic laws and international norms on nuclear proliferation.
    • The Obama and Trump Administrations have stayed the course since then.

    China challenge for India

    • On the atomic front, as the US sought to lift the prolonged atomic blockade against India, China sought to block the process.
    • China turned an obstacle to India’s membership of the Nuclear Suppliers Group.
    • China takes up the Kashmir issue regularly in the United Nations Security Council.
    • Today, India’s strategic autonomy is about coping with China’s challenge to India’s territorial integrity and sovereignty.
    •  China today is viewed in Delhi as a major threat to India’s economic development.
    • The bilateral trade deficit reached nearly $55billion in 2019.
    • India pulled out of an Asia-wide free-trade arrangement called the Regional Comprehensive Economic Partnership late last year, sensing the threat posed by China-led economic order.
    • Ladakh aggression forced India to go from a passive commercial withdrawal to an active economic decoupling from China.

    Way forward

    • The logic of strategic autonomy from China nudges India to look for strong security partnerships with the US, Europe, Japan and Australia.
    • On the economic front, India is exploring various forms of collaboration with a broad group of nations that have a shared interest in developing trustworthy global supply chains.

    Consider the question “Delineate the evolution of India’s approach towards the idea of strategic autonomy. How it differs from the past?”

    Conclusion

    Threats to either territorial integrity or economic prosperity are powerful enough on their own to compel drastic changes in any nation’s policies. Coming together, they promise to make strategic autonomy from an assertive China an enduring theme of India’s economic and foreign policies in the years ahead.

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  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    The missing large in MSMEs

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: MSMEs

    Mains level: Paper 3- MSMEs issues and opportunities

    MSMEs in India has huge untapped potential. This article suggest the ways to tap it and make the MSMEs major contributor to India’s growth.

    What is an issue with MSMEs

    • Despite MSME contributing 20% of the GDP and employing about 110 million workers,  we have failed to make bold policy-moves to make it more productive and competitive.
    •  MSMEs are not becoming ‘larger’ and more dynamic, with 99% of the estimated 60 million being micro-enterprises with limited aspirations.
    • At the core of this lack of competitiveness is a structural issue.

    Addressing the structural challenges

    Size

    • Consider  India’s largest textile cluster vs Bangladesh’s largest.
    • More than 70% of the units in Tirupur are micro-enterprises with less than 10 employees while only 20% of the units in Narayanganj in Bangladesh have less than 10 employees.
    • This factor makes the cluster in Bangladesh more competitive and helping Bangladesh’s exports grow faster than India’s.
    • Though  Bangladesh has other advantages also, but this structural difference is critical.

    Relation between size and productivity

    • Productivity data from manufacturing MSMEs in OECD show that the productivity of medium firms (50-250 people) could be as much as 80-100% higher than that of micro firms (<9 employees).
    • Growth in scale allows them to invest in people to improve skills, in better technology & processes, and in innovation.
    • The most-competitive of them grow from their small beginnings to become world-beaters.
    • This push to grow and improve capabilities and productivity is central to dynamism of any country’s industrial structure.
    • This dynamism of micro-enterprises has been one of the less-reported policy levers behind China’s rise as an industrial powerhouse.

    What stops MSMEs in India from growing?

    • Our policy-legacy of highly restrictive asset-based definition which has only recently been relaxed, coupled with a mindset, and, policies, to support the ‘small is beautiful’ narrative.
    • Overly complex regulatory regime doesn’t differentiate enterprises on their scale, other than the really tiny ones, in terms of compliance needs.
    • For example, if a unit has more than six employees, the trade union law becomes applicable, If a unit has more than 10 employees, the Factories Act is applicable.
    • Small enterprises thus face the same multitude of regulatory requirements as larger ones, and end up having compliance costs account for a higher percentage of revenue.
    • For the tiny/micro units, there is simply no incentive to grow and enter the formal economy.

    Policy intervention needed

    1) Getting MSMEs into formal credit system

    • To do this, we need to adopt an approaches that can help banks and NBFCs move away from asset-backed lending, towards some form of cash-flow-based lending.
    • Small retailers are outside the formal credit system, unable to invest, modernise and grow, given they lack fixed ‘assets’.
    • But, all of them are linked to, and sell, brands of well-known, large companies.
    • If banks and NBFCs work with these companies and use anonymised data on sales and credit-performance to develop credit-scores for lending to them?
    • Similar innovative ways could help cover other micro-unit segments.

    2) Simplified tax and regulatory regime

    • The second policy intervention needed is to de-average and implement a simplified tax and regulatory regime for MSMEs.
    • This would also reduce the cost of compliance.

    3) Development of digital platform

    • The third intervention, appropriate for digital era, is to develop a comprehensive ‘digital platform’ for the sector.
    • This will call for a mandatory, unique identifier for all.
    • The platform will have to be linked to different relevant databases.

    Consider the question “MSMEs in India continues to play an important role in India’s development yet it suffers from structural challenges which hinders it from fueling India’s growth. In light of this, examine the challenges MSMEs faces and suggest the policy interventions.” 

    Conclusion

    As India launches the Atmanirbhar Bharat Abhiyan to reignite growth of the economy for a post-COVID world, building such a globally-competitive MSME has to become one of the initiative’s core pillars. Only then can our industry improve and sustain its global competitiveness.

    Source-

    https://www.financialexpress.com/opinion/the-missing-large-in-msmes-a-globally-competitive-indian-mittelstand-is-the-need-of-the-hour/2063155/

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  • Goods and Services Tax (GST)

    How GST created single market

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: GST

    Mains level: Paper 3- GST and its benefits to various stakeholders

    The article analyses the instrumental role played by the GST in transforming nation into a single market dismantling the barriers across the states.

    Reduced tax burden on consumers

    • In the pre-GST era, the total of VAT, excise, CST and their cascading effect led to 31 per cent as tax payable, on an average, for a consumer.
    • In its first two years, as the collections improved, the GST Council kept reducing the tax burden on consumers.
    • Most items have been brought in the 18 per cent, 12 per cent or even 5 per cent category.
    •  Most items of daily common use are in the zero to 5 per cent slab.
    • An analysis by the Reserve Bank of India (RBI) observes that since the roll out of GST, the rate changes have brought down the GST incidence from 14 per cent to 11.6 per cent.
    • This explains the revenue loss stated above. The consumer pays less tax now under the GST.

    Flexibility and increased compliance

    • Taxation threshold for goods was increased to Rs 40 lakh.
    • The composition limit was increased from Rs 75 lakh to Rs 1.5 crore.
    • For manufacturers, composition tax rate was lowered from 2 per cent to 1 per cent.
    • The composition scheme was extended to services as well.
    • Special lower rates without Input Tax Credit (ITC) were prescribed for construction and restaurants.
    • As per an RBI calculation, the weighted GST rate at present is 11.6 per cent.
    • The revenue-neutral rate determined at the time of GST introduction by its own committee was 15.3 per cent.

    Widened tax base

    • Today, there are 1.2 crore GST assessees compared to 65 lakh at the time of introduction of the tax regime.
    • The average revenue collected per month for the nine months (July-March) in 2017-18 was Rs 89,700 crore in  2018-19 it rose by 10 per cent to Rs 97,100 crore.
    • In FY 2019-20, the revenue per month was Rs 1,02,000 crore.
    • This steady increase was despite the various concessions and rate reductions mentioned above.

     Simplification

    • GST is an IT-enabled platform.
    • Accounting and billing software is provided free to the small taxpayers.
    • Those with nil return to file can do so with an SMS.
    • Since the registration is completely online, the refund process is also fully automated.
    • The Centre is the only refund disbursal authority and no physical interface is required.

    Agriculture sector under GST

    • Concessions are extended to the agriculture sector under GST, agricultural inputs such as fertilisers, machinery have seen a considerable reduction in rates.
    • Other inputs such as cattle/poultry/aquatic feeds are kept at the nil rate.
    • Agricultural produce such as vegetables, fruits, flowers and foodgrains are exempt from GST.
    • Dairy products — milk, curd, lassi, buttermilk and minor forest produce such as lac, shellac and sisal leaves are also exempt.
    • Silk cocoon, raw silk, wool, jute fibre are nil rated.
    • In the pre-GST era, many of these were in the 5 per cent slab.
    • Service inputs to agriculture are similarly treated.
    • Before the introduction of GST, many such items were taxed at a standard rate of 15 per cent.

    MSME  under GST

    • Micro, small and medium enterprises (MSMEs) have consistently received sensitive treatment under the GST regime.
    • Items that have large employment creating activities, rough diamond/precious stone sorting and polishing for example, have seen a GST reduction from 3 per cent to 0.25 per cent.
    • Services rendered by MSMEs have also received such sensitive treatment.

    Concerns

    • Tax reduction in some cases has led to an inversion of duty structure.
    • Manufactured goods in lower slabs have suffered due to inversion in the duty structure.
    • With lockdowns and consequential deferrals in tax payments, compensation payments to the states is a concern that the Council has taken cognisance of.

    Consider the question “Elaborate on how the GST has been benefiting the various stakeholders and helped in transforming India into a single market?” 

    Conclusion

    The states have shown maturity and understanding. The spirit of collective responsibility and statesman-like thinking have kept mutual trust and confidence high. The much talked about cooperative federalism is actually in action in the GST Council.

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  • Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

    Increasing age of marriage will be exercise of carceral power by state

    op-ed snap | | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections

    Note4Students

    From UPSC perspective, the following things are important:

    Mains level: Paper 2-Increasing the age of marriage for girls and implications

    The article examines the issue of the age of marriage of girls and its relation with their education level and economic status.

    Trends in early marriage

    • The National Family Health Survey (NFHS-4) data 2015-16 points to certain trends in early marriages:
    • That rural women are likely to marry earlier than their urban counterparts.
    • The higher up a woman is on the wealth quintile, the later she marries.
    • Most importantly, it establishes a direct causal link between education levels and delayed age of marriage.
    • Women with 12 years or more of schooling are most likely to marry later.
    • Only 8 per cent rural girls who drop out in the age group 6 to 17 years cite marriage as the reason.

    Impact on STs and SCs

    • According to the wealth quintile data, the poorest households are concentrated in rural India.
    • The lowest quintile, which is most likely to marry off their girls early out of socio-economic necessities, have 45 per cent of the Scheduled Tribe (ST) and 25.9 per cent Scheduled castes.
    • The NFHS-4 data on women aged 15-49 by number of years of schooling completed shows that 42 per cent ST women and 33 per cent SC women have received no schooling.

    Issues

    • Marriages in India are governed by various personal laws which set varying minimum ages for girls as also the Prohibition of Child Marriage Act (PCMA), 2006, where it is 18 years for girls and 21 for boys.
    • This is compounded by The Protection of Children from Sexual Offences (POCSO) Act, 2012, that increased the age of consent, from 16 years to 18 years.
    • Several studies have shown how this has criminalised self-arranged adolescent marriages as parents often misuse it to punish couples marrying without their approval, especially in cases of inter-caste marriages.

    Way forward

    • The National Human Rights Commission showed how higher education levels lead to a lower likelihood of women being married early and recommended that the Right to Education Act, 2009, be amended to make it applicable up to the age of 18 years.
    • Noting the law’s patriarchal underpinnings, the 18th Law Commission report (2008) asked for uniformity in the age of marriage at 18 years for both men and women and lowering the age of consent to 16 years. Government could act on such a recommendation.

    Consider the question “What are the advantages of increasing the minimum age of marriage for girls. Also, examine the issues with the move.

    Conclusion

    The median age at first marriage for both men and women in India has registered a significant decadal improvement with more people now marrying later than ever before. Any attempt to leapfrog through quick-fix and ill-conceived punitive measures will only considerably reverse these gains.

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  • North-East India – Security and Developmental Issues

    Naga peace process

    op-ed snap | Polity | Mains Paper 2: Federalism

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Naga peace process

    The article analyses the issue of Naga peace process and the problem of identifying the stakeholders in the process.

    Naga Polity and aspirations

    • The  Nagas family comprises over 25 tribes.
    • Each of these is a proud owner and inheritor of a distinct culture, language, tradition and geography, supporting a distinct world view.
    • However, many Nagas aspire to Naga unity, and they view those tribal loyalties as residues of a premodern past and an obstacle to Naga solidarity.
    • Naga nationalism is connected with the idea Naga homeland  that includes contiguous areas in a number of Northeastern states, and even parts of Myanmar.

    “Unique history” formulation

    • The source of the phrase can be traced back to a joint communiqué that NSCN-IM General Secretary Thuingaleng Muivah and former Home Secretary K Padmanabhaiah signed in Amsterdam on July 11, 2002.
    • Meaning of the phrase “unique history” is not self-explanatory.
    • Despite the lack of clarity, it is adopted by officials and political leaders intended to accept two things-
    • (a) the characterisations long favoured by security bureaucrats of the Naga political struggle as a separatist insurgency or a terrorist movement that makes false claims to Naga unity, are inaccurate and
    • (b) rejecting those labels [ such as separatist insurgency or terrorist movement] is a necessary condition for negotiations based on mutual respect.
    • Those are significant achievements that should not be allowed to wither away.

    Negotiating with NSCN-IM and issues with it

    • NSCN-IM had declared the Shillong Accord of 1975 a sellout, and a betrayal of the Naga cause.
    • But it emerged as a serious political force precisely because it stood for Naga unity.
    • However, it is argued that NSCN-IM’s appeal is limited to the Tangkhul tribes of Manipur only.

    Consider the question “The issues of identifying the stakeholders in the Naga peace process is at the root of the solution to the peace problem. Also, examine the other factors which make the resolution elusive. Suggest the measures to resolve the issue.”

    Conclusion

    That a more nuanced negotiating strategy is now emerging is a positive development. But the fundamental question about who all the stakeholders in the Naga conflict are, still needs a satisfactory answer, one that is based on an in-depth mapping of the conflict. Only then can we expect peaceful dialogue and patient negotiations to end the conflict and bring about a durable peace.

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  • Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

    Increasing the age of marriage for girls and related issues

    op-ed snap | Governance | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections,Poverty & Hunger

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Increasing the age of marriage for girls

    The article analyses the issues with objectives of increasing the age of marriage for girls.

    Poverty of mother: Important factor

    • Raising the age of marriage is the could be the way to improve the health and nutritional status of mothers and their infants.
    • An article published in the journal The Lancet Child and Adolescent Health analyses data on stunting in children and thinness in mothers in the latest round of the National Family Health Survey 4 (2015-16).
    •  The authors examine the strength of the association between many different causal factors.
    •  As it turns out, the poverty of the mother plays the greatest role of all by far.
    • Instead of early pregnancy causing malnourishment, they may both be the consequences of poverty.
    • The best way to go about breaking such a cycle would be to pick the factors perpetuating it, it would be the poverty of the mother in this case.

    Declining fertility rate in India

    • India’s fertility rates have been declining to well below replacement levels in many States, including those with higher levels of child marriage.
    • This could be the reason for the shift from fuelling fears about booming populations to expressing concern for the undernourishment of children.
    • So, the problem of “populations explosion” is not the real problem as the demographic data suggests.

    Concern

    • The change in the marriage age will leave the vast majority of Indian women who marry before they are 21 without the legal protections.

    Conclusion

    The proposal and the objective to be achieved through raising the age of marriage needs reconsideration for the reasons cited above.

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  • Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

    Three areas to work on to put India on the path to growth

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 3-Areas to put work on to put India on the path of growth

    The article suggests the three areas on which country should work on to make it resilient in the future. These three areas include the labour laws for informal employment, conditions of our cities and the strength of our rural economy.

    Background

    • The Prime Minister, while addressing the Confederation of Indian Industry (CII) annual meeting urged to think big and partner with the government in putting India on the path to growth.
    • There is much that we can be achieved if government and industry work towards the same objective, and in a spirit of mutual trust.

    Let’s look into some areas

    1) Employment

    • Over 85 per cent of employment in India is in the informal sector.
    • The Centre for Monitoring the Indian Economy (CMIE) estimates that between mid-March and mid-April, 120 million people lost their jobs.
    • With this unemployment rise to an all-time high of 27 per cent.
    • There was reverse migration on an unprecedented scale — some 10 million people abandoned cities to return to their native villages.
    • As economic activity has restarted in cities, CMIE reports that unemployment is now down to around 9 per cent.

    3 Problems we must address

    1) Need for labour regulation

    • We have stringent labour laws to protect workers, but this covers only the 15 per cent formal sector employment.
    • The 85 per cent of our workforce who are informally employed have almost no protection, and employers have almost complete flexibility.
    • We need to address both the formal and informal labour spectrum to get the balance right between flexibility and protection for all labour.

    Way forward

    • Everyone must have a minimum level of protection, and every employer a minimum level of flexibility.
    • This calls for a new social contract to define a well-calibrated social security system.
    • This huge project demands good faith and strong leadership by industry, labour and government.

    2) Living conditions of our cities

    • We need a massive private home-building programme.
    • It probably needs much more liberal land-use regulations — our cities have among the least generous floor-space indices (FSI) in the world.
    • New York, Hong Kong, and Tokyo have an FSI five times Mumbai’s.
    • Again, this is a multi-year project, and it involves state and city governments partnering with private developers.
    • India is unique in having 70 per cent of our population still residing in rural areas.
    • We must encourage the migration of people to higher productivity occupations in our cities.
    • And we must ensure that clean, affordable and accessible housing is available for all in our cities.

    3) Strength of our rural economy

    • Reverse migration is also an opportunity to collaborate in spreading the geography of development.
    • We need a three-pronged approach:
    • 1) As Ashok Gulati has often argued, the easiest way to grow farmer incomes is by having them grow more value-added crops.
    • Exports of fruits and vegetables must be consistently encouraged.
    • The cultivation of palm plantations with potential for huge import substitution, we need corporate farming as the gestation period of seven years for the first crop is too much for the average farmer to handle.
    • The Atmanirbhar agricultural reforms, which permit contract farming, and open up agricultural markets, are major medium-term reforms. Implemented right, they can transform agricultural markets.
    • 2) We need to encourage agro-processing near the source.
    • Fostering entrepreneurship in rural and semi-urban areas would combine nicely with local processing.
    • 3) We need to invest even more massively in rural connectivity.
    • Today, we would add digital connectivity to road connectivity to level the playing field for all regardless of where they live.

    Consider the question “What are the vulnerabilities in our economic structure that were highlighted by the covid pandemic? Also suggest the measures to make our rural economy strong and resilient to such shocks.”

    Conclusion

    The task is huge, and only collaboration between all levels of government (Union, state, and city) and our dynamic private sector can hope to make substantial progress.

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  • Important Judgements In News

    Right to possession to women and issues

    op-ed snap | Polity | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Women's right to parents' property

    The Supreme Court in its latest judgement clarified that women’s right to their parents’ property is their birthright and clarified the air of confusion surrounding the issue due to previous judgements.

    What was said in the judgement

    • The judgement highlighted the patriarchal practices of the Mitakshra School of Hindu law — the guiding force of the Hindu Succession Act, 1956.
    • It settled the confusion created by two of its own antagonistic judgments.
    • In Prakash vs Phulawati (2016), it had ruled that the amendments to the Hindu Succession Act (2005) applied only to women whose parents were alive on September 9, 2005, the date of the notification of the act.
    • In Danamma @ Suman Surpur vs Amar (2018) cases, it inferred that coparcenary rights were birthrights.
    • The Supreme Court has now set forth the idea that coparcenary rights are birthrights free from limitations imposed by the dates of any legal notifications.

    Issues that need to be addressed

    1) Stree dhan issue

    • Section 14 (1) of the Hindu Succession Act 1956 provides that women can acquire property as a full owner, and it can be carried over or retained post marriage as stree dhan.
    • There are cases where the movable property may have been given to a daughter by her father as an intentionally undeclared and informal settlement between his descendants.
    • At the same time, it is quite true that stree dhan over time gave way to the unethical and illegal practices of dowry.
    • But the issue of stree dhan needs to be explained further in the light of this judgment.
    • The ruling might impact dowry transactions that continue despite stringent anti-dowry laws.

    2) Issues in claiming the right to property

    • In the rural context, where most of the property is in the form of agricultural land claiming the property may not be easy.
    • With patriarchy, it is doubtful if male heirs will share property-related documents, information.

    3) Challenge of societal change

    • On occasion, the law and courts may turn out to be progressive.
    • However, we can not expect society to readily accede to progressive reforms.
    • The challenge for economically dependent women in far-flung rural areas who are denied literacy, dignity and, sometimes, even a name and identity, in securing their rights is immense.
    • In parts of Bihar, there are areas where women are still addressed by their village names or more commonly as someone’s wife.

    Conclusion

    Women are asserting their rights, both in conjugal and property matters. However, there are significant cultural, religious, educational barriers and caste and class inequalities that require a massive overhauling of social attitudes to overcome.

    Back2Basics: Mitakshra School of Hindu law

    • In the Mitakshara School, the allocation of parental property is based on the rule of possession by birth.
    • Moreover, a man can leave his property in his will.
    • The joint family property goes to the group known as coparceners.
    • Ther are the people who belong to the next three generations.
    • Hence, the joint family property by partition can be, at any time, converted into a separate property.
    • Therefore in Mitakshara School, sons have an exclusive right by birth in the joint family property.

    Coparcener

    • Coparcenary is a term often used in matters related to the Hindu succession law, and coparcener is a term used for a person assumes a legal right in his ancestral property by birth.

     

     

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  • Higher Education – RUSA, NIRF, HEFA, etc.

    Issues with the graded autonomy

    op-ed snap | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Issues with autonomy and graded autonomy

    The article analyses the issues the graded with the graded autonomy to the Higher Education Institutes.

    Background

    • NEP 2020 provided for phasing out of the system of affiliated colleges and the grant of greater autonomy in academic, administrative and financial matters to premium colleges.

    Concerns with the autonomy

    • The move has raised concerns about the politico-bureaucratic interference in the internal functioning of universities.
    • It has also raised concerns about the substantial burden on universities which have to regulate admissions, set curricula and conduct examinations for a large number of undergraduate colleges.
    • Concerns have long existed about over-centralisation, due to constraints imposed on the potential for premium affiliated colleges to innovate and evolve.
    • These apprehensions about the autonomy came to be used by successive governments to build a case for the model of graded autonomy.

    The push towards graded autonomy

    • Successive governments have pushed through measures that have largely allowed for greater penetration of private capital in higher education.
    • Recommendations of recent education commissions have promoted the unequal structure of funding for higher education.
    • Under this, hierarchy in higher education was created: Central government-funded universities, provincial Central government-funded universities, regional universities and colleges funded by State governments, etc.
    • The National Knowledge Commission (2005) stated that good undergraduate colleges are constrained by their affiliated status… the problem is particularly acute for undergraduate colleges which are subjected to the ‘convoy problem’ as they are forced to move at the speed of the slowest.
    • In turn, the dominant policy discourse vocally propagates “graded autonomy” for better performing Higher Educational Institutions.
    • Under which academic excellence can be supported through a grant of special funds and allowing greater power to such institutions.
    • This basis has been gradually enforced with the UGC in 2018 granting public-funded universities the right to apply for autonomy based on whether they are ranked among top 500 of reputed world rankings or have National Assessment and Accreditation (NAAC) scores above 3.26.

    NEP 2020: Centralisation and autonomy

    • NEP 2020  is a combination of enhanced centralising features and specific features of autonomy.
    • Deeper centralisation is indicative in the constitution of the government nominated umbrella institution, Higher Education Council of India (HECI); Board of Governors, the National Education Commission etc.

    Concerns

    • The model of graded autonomy will encourage hierarchy that exists between different colleges within a public-funded university, and between different universities across the country.
    • While the best colleges gain the autonomy to bring in their own rules and regulations, affiliated colleges with lower rankings and less than 3,000 students face the threat of mergers and even closure.
    • A shrinking of the number of public-funded colleges will only further push out marginalised sections.
    • Autonomy could lead to more inaccessibility as the independent rules and regulations of autonomous colleges and universities shall curtail transparent admission procedures.
    • Graded autonomy can be expected to trigger a massive spurt in expensive self-financed courses as premium colleges, which will lead to exclusion.

    Conclusion “Examine the issues with the autonomy of Higher Education Institutes in the NEP 2020.”

    Conclusion

    More than deliverance, autonomy represents the via media for greater privatisation and enhanced hierarchization in higher education.

    Sources: https://www.thehindu.com/opinion/op-ed/privatisation-via-graded-autonomy/article32396753.ece

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  • Monetary Policy Committee Notifications

    Dilemma the RBI faces

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: MPC

    Mains level: Paper 3- Role of the RBI and contradictions in its functions

    Limitations and contradictions in the functioning of RBI

    • The Reserve Bank of India, along with the monetary policy committee, has undertaken measures to address the fallout of the COVID-19 pandemic.
    • Their actions are guided by multiple considerations — inflation and growth management, debt management and currency management.
    • These multiple considerations have inadvertently exposed the limitations of and the inherent contradictions in the central banking framework in India.

    Monetary policy functions

    • The MPC is guided by the goal of maintaining inflation at 4 plus/minus 2 per cent.
    • In its August policy, despite dire growth prospects, MPC chose to maintain the status quo.
    • This decision was driven by elevated inflation i.e. above 4 plus/minus 2 per cent. 
    • This raises the question: At the current juncture, should the MPC be driven by growth considerations or should short-term inflation concerns dominate?

    Understanding the nature of current inflation

    • The current rise in inflation is driven by supply-chain dislocations owing to the lockdowns.
    • This is evident from the growing disconnect between the wholesale and consumer price index.
    • Since April, while WPI has been in negative territory, CPI has been elevated.
    • The MPC’s mandate is to deliver stable inflation over long periods of time, not just a few months.
    • Yet, it would appear as if it is more concerned about elevated inflation in the short run.
    • Equally puzzling is the refusal of MPC to provide any firm projection of future inflation.

    Manager of government debt

    •  As manager of the government debt, the RBI is tasked with ensuring that the government’s borrowing programme sails through smoothly.
    • To this end, it has carried out several rounds of interventions popularly known as operation twist.
    • in operation twist government RBI intended pushing down long-term Gsec yields, and exerting upward pressure on short-term yields as a consequence.
    • In doing so, the RBI ended up doing exactly the opposite of what the MPC was trying to achieve by cutting short term rates, well before it reached the lower limit of its conventional policy response.

    3) RBI’s intervention in currency markets

    • The RBI’s interventions in the currency market have constrained its ability to carry out open market operations as these would have led to further liquidity injections into the system.
    • Put differently, its debt management functions have run up against its currency management functions.
    • Underlining the complexity of all this is the talk of sterilisation — the opposite of injecting liquidity in the system.

    Consider the question “RBI’s functions at the current juncture suffers from contradicting functions. Examine such contradictions in its role and suggest the ways to avoid such contradictions.”

    Conclusion

    The central bank must develop a clear strategy on what to do. At this juncture, there is a strong argument to look past the current spurt in inflation, and test the limits of both conventional and unconventional monetary policy. At the other end, while it may want to intervene to prevent the rupee’s appreciation, in doing so, it is constricting its debt management functions which will have its own set of consequences. There are no easy answers.

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