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

The $5 trillion arithmetic

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- The ambitious target of $5 trillion economy.
Context

The Indian government has set itself a big target, namely, that the Indian economy will have an aggregate income or gross domestic product (GDP) of $5 trillion by 2024-25.

Lack of clarity
- There is little effort to take it beyond a slogan.
- When it comes to targets and aims pertaining to the economy, it is important to have-
  - The officials and advisers go beyond the headline.
  - To lay out the details and the road-map for the target.
- Matter for investors: For international observers and particularly investors, not to see these details creates doubts about professionalism.
What growth rate is required to reach that target?
- How long will it take to achieve the target at the present growth rate?
  - In 2018-19, India’s GDP was $2.75 trillion.
  - India’s latest official growth rate happens to be 5 per cent.
  - Target will be reached in 2032-33: Continue in the same fashion to compute the size of the GDP and it becomes clear that the target of $5 trillion will be reached not in 2024-25, but in 2032-33.
- What is the required rate? Set the target as $5 trillion dollars for 2024-25 the required rate turns out to be 10.48 per cent or, approximately, 10.5 per cent.
Why 10.5 rate is an ambitious target?
- The only example of any nation growing for six consecutive years at an average annual rate of over 10.5 per cent was China from 2003 to 2009.
- Can India achieve this rate?
  - From 1947 till now, India’s economy grew at over 10 per cent only twice — in 1988-89 and 2007-8.
  - Of these, the first may be dismissed because the previous year the economy had grown very slowly, by 3.5 per cent.
- What we can learn from the past growth rate?
  - The only example to learn from: The only example from which we can learn is the remarkable growth in 2007-8, made all the more remarkable by the fact that India had been growing well for several years, starting from 2003.
  - And from 2005, India was actually growing over 9 per cent.
  - What factors played the role in high growth?
  - This was a period of professional fiscal policy and steady effort at building infrastructure.
  - India’s economy was making big news in the international media and investment poured in.
  - India’s investment-to-GDP rate climbed to an all-time record of 39 per cent.
- Current investment-to-GDP ratio: Our investment-to-GDP ratio has crashed to 30 per cent and this takes time to re-build.
  - If we can get back to a growth rate of 7 per cent we will be lucky.
Can inflation make the target achievable?
- Combination of real growth and inflation can make it possible: Virtually all serious commentators agree that in purely real terms, the $5-trillion target is unreachable.
  - But maybe we can make it by a combination of real growth and inflation.
  - How the combination will work? One way India can get to the target is if alongside say 7 per cent growth, India has inflation of say 3.5 per cent.
  - Then India’s nominal GDP growth rate will be 10.5 per cent.
- Why the inflation argument is flawed?
  - The five trillion target is in dollar terms.
  - Inflation will lead to depreciation: Typically, if India has higher inflation than the US, the rupee would depreciate vis-à-vis the dollar to account for that.
  - For the sake of pure arithmetic, assume US inflation is zero, India’s inflation is 10 per cent, and India’s real growth rate is 0.
  - In that case, in rupee terms, India’s economy will grow by 10 per cent. But how much will India’s economy grow in dollar terms?
  - The answer is zero.
  - Why is it so? This is because the rupee will typically depreciate by 10 per cent to match the inflation differential, and so the larger GDP of India in rupee terms, when converted to dollars will show no growth.
- The other possibility of achieving the target?
  - What if the dollar loses value? But this should immediately make it clear that there is another way of getting to the target.
  - This can happen if the US dollar loses value.
  - We can then get to the target of $5 trillion because that will mean less in real terms.
Conclusion

There are two routes to achieve the target of $5 trillion: A huge policy initiative to boost real growth or the luck of dollar depreciation. The luck of dollar would mean nothing for us in the real term so the best course of action for the government is to seek the first option and try to achieve it.
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Food Procurement and Distribution – PDS & NFSA, Shanta Kumar Committee, FCI restructuring, Buffer stock, etc.

A crisis deferred

op-ed snap | Agriculture | Mains Paper 3: Issues Related To Farm Subsidies & Msp

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 3-Reforms in foodgrain management, the PDS and the fertiliser subsidy.
Context

Union budget missed the opportunity to undertake reforms in the grain management system and food security act.

The massive reduction in food subsidy and its implications
- Subsidy slashed by 75,552 crores: The revised estimates (RE) for food subsidy for 2019-20 have been slashed by a whopping Rs 75,552 crore -from the budgeted estimate (BE) of Rs 1,84,220 crore to Rs 1,08,668 crore (RE).
  - For the next fiscal year, the budget estimate has been kept at Rs 1,15,570 crore.
- No major reforms in grain management system: One wonders whether any major reforms have been undertaken in the grain management system or in the National Food Security Act such that this massive reduction in budget estimates is feasible. But no such reforms are undertaken.
  - The Food Corporation of India (FCI) has been asked to borrow more from myriad sources, but most importantly from the National Small Savings Fund (NSSF).
  - An item that should have been in the budget, is now getting reflected as outstanding dues of FCI.
- Implications of the move–postponing of the crisis: In order to gauge how much is the effective food subsidy in the country, the budget numbers are becoming totally irrelevant.
  - One needs to add the actual subsidy numbers reflected in the budget to the outstanding dues of FCI.
  - Effective food subsidy: If one adds the due, the effective food subsidy turns out to be Rs 3,57,688 crore.
  - By not provisioning for it fully in the budget, and not undertaking any reforms in the foodgrain management system or the NFSA, the government is only postponing the crisis.
Need to bring down the coverage: The Economic Survey
- Bringing down the coverage at 20 %: While the Economic Survey clearly states that the coverage under NFSA needs to be revisited, and brought down to say 20 per cent of the population.
  - The budget did not bite this bullet.
  - Cost of procurement to go up: The expected cost of rice to FCI in 2020-21 is going to be about Rs 37/kg, and for wheat it will be Rs 27/kg.
  - The issue price, that covers 67 per cent of the population, is just Rs 3/kg and Rs 2/kg respectively.
Excessive stock with the FCI
- Actual stock in excess of buffer stocks: Compared to a buffer stock norm of 4 million tonnes, actual stocks with FCI (including unmilled paddy) were 3.5 times higher.
  - It speaks of a colossal waste of scarce resources, especially when tax revenues have been sluggish.
- Stocks likely to increase further: Given that Skymet has predicted that the coming wheat crop is going to be one of the best in many years-the stocks is likely to touch 113 million tonnes.
  - With procurement prices being above global prices, the chances of wheat exports are bleak unless there is a subsidy for exports.
  - And that will be challenged in the WTO.
  - The FCI may run out of stock capacity: So, one should expect a piling up of grains stocks with a record procurement of wheat.
  - FCI may run out of storage capacity. Stock levels may touch 85-90 million tonnes, or even more, by July 1, 2020.
Fundamental questions
- First: Is the government ignorant of the impending crisis of plenty?
- Second: Does it realise that the policy of procurement prices (50 per cent above cost A2+FL), without looking at the demand side, is likely to create more troubles for the government?
- Third: Does the government have any plan to reform the public distribution system under NFSA?
Way forward
- Reforms in foodgrain management: Reforms in foodgrain management have to start with reforming the PDS system.
  - With moving gradually moving away from grains to cash transfers.
  - Think over implementing the Shanta Kumar Committee reports recommendations.
- Stop open-ended procurement in Punjab-Haryana belt: The policy of procurement prices, with open-ended procurement in the Punjab-Haryana belt, is doing more damage by depleting the water table and not letting crop diversification take place.
  - This is very unfortunate as the “dead loss” in grain management runs to more than Rs 1,00,000 crore.
- Rationalise the fertiliser subsidy: The other part related to this is the fertiliser subsidy, which is largely used in wheat and rice.
  - The budget estimates for 2020-21 show a reduction in the subsidy, while dues of the fertiliser industry keep on piling.
  - The fertiliser industry estimates that by April 2020, the dues will be roughly Rs 60,000 crore.
  - Demoralised fertiliser industry: While FCI has been asked to borrow, the fertiliser industry does not have that type of window.
  - It is feeling totally demoralised.
  - No private player wants to come and invest in this sector.
Conclusion

Instead of postponing the crisis by compelling the FCI to borrow, the government need to reform the foodgrain management system, rationalise the fertiliser subsidy and limit the coverage under the NFSA.
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Foreign Policy Watch: India-United States

Hype Trumps Hope

op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India,Effect Of Policies & Politics Of World On India’S Interests

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 2- India-US relation in changing circumstances.
Context

US president’s visit comes when a mutually beneficial framework of bilateral relationship stands disrupted.

Significance previous U.S. President’s visits
- The Clinton visit: The Clinton visit occurred against the backdrop of a new assessment within the American strategic community of India’s potential role in the post-Cold War era and against the backdrop of the rise of China.
  - Recognition of India’s nuclear power: He implicitly recognising India’s nuclear power status.
  - Kashmir issue: He suggested that the line of control (LoC) between India and Pakistan should be viewed as the international border so as to bury the “Kashmir issue” forever and-
  - Visas for Indians: increasing entry visas for Indians that has since contributed to the emergence of a sizeable community of Indian Americans.
  - As a counter to China: It was suggested that the rise of democratic India would be in the interests of the US and so the latter ought to be supportive of the former.
- The Bush visit:
  - Political context: The rise of China and of radical Islam and jihadi terrorism provided the geopolitical context.
  - Economic context: The growth of an increasingly open Indian economy provided the economic context.
  - Cooperation in civil nuclear energy: Influenced by this new thinking, President George Bush took the next steps in strategic partnership and led the initiative to promote cooperation in the field of civil nuclear energy that also explicitly recognised India as a nuclear weapons power.
  - As heads of state, Clinton and Bush altered US-India bilateral relations in a fundamental way.
- The Obama visit:
  - P2P relation: His second visit was more a recognition of the growing importance of people-to-people (P2P) relations and
  - Defence sales to India: The visit also aimed at promoting defence sales to India.
  - During the nuclear deal negotiations, US Congresspersons would often suggest that it was a “123 for 126” deal — that is, they would vote in favour of the 123 agreement in Congress in the hope that India would buy 126 fighter jets from the US.
  - That hope remains as yet unfulfilled, with the French getting the Rafale deal and no decision taken on the purchase of US fighter jets.
America First policy of Trump
- The credit for laying the foundation for a new and supportive post-Cold War relationship between the US and India goes singularly to President Bush.
- Disruption with the arrival of Trump: The mutually beneficial framework that Bush helped create to promote the bilateral relationship has been rudely disrupted by the arrival of Donald Trump in Washington DC.
  - End of GSP: Trump’s “America First” policy offers no space for offering India “special and differential” treatment on any front, least of all trade.
  - Status of the Indian economy from the US perspective: With per capita annual national income of US $60,000, Trump’s America has no qualms declaring India, with a per capita annual average national income of US $2,000 a “developed economy” not deserving of any leniency in trade policy.
  - Clubbing together with China: To club China, a $15-trillion economy, with a $3-trillion India on the trade front is not just stupid but an affront to Indian sensibilities.
What are the hopes and what could be the outcomes of the visit?
- No bi-partisan support to India’s rise: It has to be recognised that neither Democratic liberals nor Republican conservatives are any longer willing to be supportive of the Bush-Rice paradigm that views India’s rise in benign and mutually beneficial terms.
  - Inward-orientation in both the countries: Today the relationship seems caught in the pincers between the inward-orientation of rightwing nationalists in both nations.
  - No hope of change: There is no reason as yet to believe that this unfortunate state of affairs will be altered by the Trump visit next week.
- Stand on Pakistan or Kashmir: Trump has also moved away from the Clinton-Bush framework on India-Pakistan relations and moved closer to approach of wanting to insert the US into the equation on Kashmir.
  - Appeasement of Pakistan: Trump’s motives are no different from those that initially drove Obama-namely, to appease Pakistan in the hope of securing a peaceful exit from Afghanistan.
  - Expect differences to persist: At best, India can hope to limit the damage Trump may do to strategic stability in the region.
- Visa and investment: There will be much talk about US investments in India and increased visas for Indians going to the US.
  - Corporate interests: Both are driven largely by US corporate interests.
  - Given the direction of the Modi government’s trade policy, one cannot expect any dramatic concessions being made.
  - Defence purchases: The best India can do for the US is to buy more defence equipment and ease up on some trade restrictions.
  - Defence sales to India are an essentially commercial activity and much of it can go on even in the absence of strategic convergence and shared geopolitical perspectives.
- Brain-drain and need to focus on education: Much is made of Indian Americans heading US multinationals and the Great Indian Diaspora in the US.
  - Outmigration of talent: The continued neglect of education in India is increasing the outmigration of talent, offering the US a reservoir of talent.
  - Drain on national resources: While the Indian elite celebrates this out-migration, the fact is that it is a drain on national resources.
Conclusion

In sum, with the supportive Bush-Rice doctrine defining the post-Cold War US-India partnership virtually abandoned, and the new Trump doctrine treating India as a “developed” economy, demanding parity on trade, bilateral relations have become uncertain and testy. To hide the lack of substance in the relationship the Trump visit will focus on the hype and Prime Minister Modi has perfected the art of diplomacy as mass entertainment.
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Coronavirus – Health and Governance Issues

Battling the bug

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- India's preparedness to deal with epidemics.
Context

With multiple cities in China under a public health lockdown, global supply chains of various essential products and consumer goods are likely to be affected. This should be particularly worrisome for India, which has a roughly $93 billion total trade and about $57 billion trade imbalance with China.

Cause of worry turned into a reality
- Public health experts have worried most about an animal virus-
  - That gets into humans.
  - Causes human-to-human transmission.
  - Has high infectivity and a range of clinical severity.
  - With no human immunity, no diagnostic tests, drugs or vaccines.
- An emerging virus, called the 2019 novel coronavirus (2019-nCoV), appears to be just that.
- With the World Health Organisation declaring it a Public Health Emergency of International Concern (PHEIC), this outbreak is now a pandemic.
What is coronavirus
- Group of animal virus: Coronaviruses are a group of animal viruses identified by their crown-like (corona) appearance under a microscope.
- SAARS connection: The 2019-nCoV belongs to this group of viruses, six of which, including the 2003 Severe Acute Respiratory Syndrome (SARS) and the 2012 Middle East Respiratory Syndrome (MERS) viruses, were earlier known to cause disease in humans.
  - Genetic similarity with other viruses: Genetic sequencing of the virus from five patients showed it to be 5 per cent identical to the SARS virus.
- Bats as hosts: Since the SARS outbreak in 2003, scientists have discovered a large number of SARS-related coronaviruses from their natural hosts-bats.
  - Previous studies have shown some of these bat coronaviruses to have the potential to infect humans.
  - Genetic sequencing showed it to human coronavirus to be over 96 per cent identical to a bat coronavirus.
  - Thus, 2019-nCoV clearly originated from bats, jumped into humans either directly or through an intermediate host, and adapted itself to human-to-human transmission.
  - Bats are a particularly rich reservoir for viruses with the potential to infect humans.
  - Examples of these include viruses such as Hanta, Rabies, Nipah, Ebola and Marburg viruses, and others that have caused high levels of mortality and morbidity in humans.
  - India has 117 species and 100 sub-species of bats, but we know little about the viruses they harbour and their disease potential.
India’s response
- India’s response includes-
  - Surveillance of arriving passengers at airports.
  - Awareness drives in the border states.
  - Designation of hospitals with isolation wards and the availability of protective gear (e.g. masks) to health workers.
  - SOP: There are clear operating procedures for sample collection and its transport to the National Institute of Virology, Pune, which is the nodal testing centre.
  - A self-declaration mechanism is in place and a 24×7 telephone helpline has been set up.
- Two areas of concern
  - 1. Promotion of untested medicines: There is mixed messaging promoting AYUSH products that are untested and of questionable efficacy.
  - 2. India- a hot zone of zoonotic pathogens: India has been a “hot zone” for the emergence of new zoonotic (animal-derived) pathogens for over a decade.
  - But we continue to lack the capacity to quickly identify, isolate and characterise a novel pathogen.
  - Example of China: China is a good example of how investments in research and public health will allow it to take a lead on developing diagnostic tests, vaccines and drugs for this new virus. We must do the same and prepare for the future.
- Disruption in global supply chains and concerns for India
  - With multiple cities in China under a public health lockdown, global supply chains of various essential products and consumer goods are likely to be affected.
  - This should be particularly worrisome for India, which has a roughly $93 billion total trade and about $57 billion trade imbalance with China.
  - Disruption in medicine supply: The Indian pharmaceuticals industry imports about 85 per cent of its active pharmaceutical ingredients from China.
  - Any disruption in this supply chain would adversely affect the availability of medicines in India, which would be required in an outbreak situation.
  - Need to support local pharma. industry: India must, therefore, take steps to correct this imbalance and support the local pharmaceuticals industry in reducing its dependence on China
Possible scenarios
- Public health experts estimate that the epidemic will peak in three months.
- From here on, there are a few possible scenarios, but which of these would play out is hard to guess.
- 1^st possibility: There could be very large numbers of cases and global spread of the virus with a low CFR of 0.1-0.5 per cent, like the bad flu. Or the same with increased CFR, which would lead to significant mortality.
- 2^nd possibility: It is also possible that the outbreak spiralled in China due to a combination of factors not present elsewhere, such as population density, food habits and the Chinese New Year, which sees large population movements.
  - It is also possible that the pandemic may not sustain outside China and die out like the 2003 SARS outbreak.
- Whatever be the case, surveillance and sensible public health measures will be needed over the next few months.
Conclusion

India escaped the 2003 SARS and 2012 MERS outbreaks largely unscathed. This may still be the case with 2019-nCoV, but the laws of probability are likely to catch up soon. It would help to invest, build capacity and be ready.
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Goods and Services Tax (GST)

Fine-tuning GST

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

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Types of the GST returns.
Mains level: Paper 3- How the GST has performed and ways to improve it.
Context

Even as the 31-month-old GST evolves, the debate on its success rages on. Many have argued that GST is losing its sheen and needs a complete overhaul while others contend that the new tax system is on course and the trials and tribulations were not unexpected.

Analysis of GST collection
- 39% increase over the average of the base year 2015-16: The average monthly GST collection for the period August 2017 to January 2020 stands at Rs 97,188 crore which is an impressive 39 per cent increase over the average monthly collection of subsumed taxes in the base year 2015-16, at around Rs 70,000 crore.
- The average growth rate of 9.7% per year: This is an average growth rate of 9.7 per cent over the almost 4-year period post-2015-16 and a compounded growth rate of 8.55 per cent.
  - Though less than 14% but not insignificant: This compounded growth rate is not insignificant even though it is just about 0.61 times the very ambitious 14 per cent rate of growth promised to the states before GST rollout.
- Perception of infectiveness due to ambitious 14% promise: The average growth rate of the collection in 18 non-special category states (accounting for the bulk of the revenue) during the 3-year period immediately preceding GST stood at around 8.9 per cent.
  - Thus, if the perception about the effectiveness of GST has not been very encouraging, it is only in the context of the very ambitious 14 per cent compounded annual growth rate promised to the states.
Reasons for tepid growth in GST collections
- The overall economic situation in the country: The revenue performance of GST during the current fiscal year is not out of sync with the overall economic situation in the country.
  - The growth rate in tax yield at 4.69 %: Accordingly, during the 10-month period ending January 2020, the growth rate in tax yield was 4.69 per cent.
  - The relatively tepid growth was primarily due to a negative growth of 4.03 per cent in September-October 2019.
  - After the dip in September-October 2019, GST collections rebounded and this is a reminder that one need not write GST off in a hurry.
- Complacency in the states due to 14% promise: Complacency in the states on account of assured 14 per cent growth cannot be ruled out.
  - States were jolted with the delay in compensation for August-September 2019 and resorted to vigorous monitoring of compliance and action against toxic and unverified credits, circular trading and tax evasion which had resulted in unmatched credit claims of around Rs 50,000 crore.
Two suggestions as corrective measures
- The GST Council deliberated on the recent trends in revenue collection and was cognizant of the need for corrective measures. Two options were suggested. One was the “big bang” approach-
- Big Bang approach: It involves an overhaul of-
  - The legal framework.
  - Processes and systems and-
  - Re-writing GST almost de novo.
- A steady-state approach: A “steady-state” approach involved-
  - Incremental reforms.
  - Solving problems as they arise.
  - Plugging loopholes.
  - Improving the compliance environment through increased monitoring with better tools.
- The Council chose the second approach and the signs are already showing.
The steps taken-
- Red flag reports: The GSTN has developed red flag reports based on GSTR-1, auto-generated GSTR-2A, GSTR-3B and the national e-way bill system.
  - These reports identify non-filers so that action can be taken against active taxpayers who defaulted in filing returns.
  - Till November 2019, around 6 lakh dealers had defaulted in furnishing one or more returns from July 2017 involving estimated tax liabilities of around Rs 25,000 crore.
  - Increase in the filing: An SOP has been developed for proceeding against such return defaulters and this has helped increase the percentage of filing which has contributed to revenue.
- Making Aadhaar mandatory: To further the ease of doing business, it was decided to grant registration without physical verification and a system of deemed registration was put in place.
  - Spot verification has unearthed non-existent dealers and led to the cancellation of around 1 million entities.
  - It has now been decided to mandate Aadhaar authentication for taking new registration and thereafter the existing registered taxpayer population would have to undergo Aadhaar authentication in a phased manner.
- Use of analytical tools: Advanced analytic tools are being used to unravel complex networks of firms created just for generating credit and these analyses are being strengthened through machine learning and AI.
  - An all-India offence/enforcement database is being built.
- System of data exchange with other agencies: In order to identify dealers posing a “hazard” to revenue and do a 360-degree profile of risky taxpayers, a system of regular data exchange with banks, CBDT, ED, RoC and other agencies is being put in place.
  - Fraudsters will find it almost impossible to game the system.
  - The new return system set to roll from April 1 is expected to curb incidences of unmatched turnovers and utilisation of un-validated.
- System of e-invoicing: In order to validate and improve the quality and fidelity of invoice reporting and return filing, a system of e-invoicing is proposed to be implemented in a phased manner beginning April 1.
  - This will begin with taxpayers with turnovers exceeding Rs 500 crore and will auto-populate e-way bill generation and filing of Anx-1 in the new return system apart from validating credit flow from taxpayers.
Conclusion

These measures will effect qualitative improvement to the compliance eco-system which will not only lead to an improvement in the collection but will also make life easier for taxpayers and tax authorities alike.
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Issues related to Economic growth

Towards a new world order

op-ed snap | Economics | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia,Inclusive Growth & Issues,Issues relating growth and development, employment

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 3- Globalisation and its impact on Climate Change, Lessons from Nordic Model.
Context

Social inequalities and the grim problems of stark and continuing poverty are at the epicentre of the new world.

The ugly face of capitalism and growing inequalities
- The concentration of the health: The latest Oxfam Report presented at Davos points out that 2,153 billionaires have more wealth than 4.6 billion people.
- Rising poverty: The emergence of billionaires and oligarchs in different parts of the world coincides with increased poverty among the already poor people, especially children.
- Concept of stakeholder’s capitalism: These realities make observers question the tenability of stakeholder capitalism as a concept.
- Faults in the capitalism on display in 2008: The ugliest face of this capitalism was visible during the 2007-2008 economic crisis, first in the U.S. and thereafter across the European Union.
  - At that time, it appeared as if the global economy was on the verge of collapse.
Intensification of energy use and sustainability
- The relation between growth and energy: One of the chief characteristics of economic development is the intensification of energy use.
  - There is an unprecedented concentration of high energy density in all economic development strategies.
- Use of non-renewable sources: The bulk of the energy continues to be generated from non-renewable sources.
- Developing world capturing energy-generating sources: The developed world’s, and China’s, central objective is to capture energy-generating resources from across continents and put them to use to push GDP growth to greater heights.
  - In the process, sustainability is becoming a casualty.
- Higher waste generation: The higher the use of energy, the larger the amount of waste generated. Entropy, like time, is always unidirectional, it only goes forward.
Disposal of e-waste
- High energy consumption and disposal of waste: Egregious consumption of energy by the developed world has been accompanied by the disposal of residual products (‘e-waste’) on the shores of many African and Asian countries.
- Impact on the developing world: As a result of the disposal, the poor in the developing world are, unwittingly, drawn and exposed to toxic, hazardous materials like lead, cadmium and arsenic.
  - Hence, the ‘globalisation’ phenomenon has turned out to be nothing other than the exploitation of the developing world, with most countries being treated as a source of cheap labour and critical raw material.
Unfairness involved in the Globalisation
- Increasing consumption in the developing world: Countries in the developed world, and China, are ferociously using up finite raw materials without care or concern for the welfare of present and future generations.
- Bright and the dark side of the development: Certainly, there has been significant technological progress which has brought about a revolution in the fields of healthcare and communications, but there is also a dark side to this.
- System loaded in the favour of the rich: High expenses and Intellectual Property Rights load the system further in favour of the rich.
  - Pernicious system of carbon credit: To demonstrate how unfair the system is, one can look at the pernicious plan to set up a carbon credit system.
  - Under this, countries with high energy consumption trends can simply offset their consumption patterns by purchasing carbon credits, the unutilised carbon footprint, from poor developing countries.
Understanding the Nordic Economic Model
- ‘Nordic Economic Model’: It pertains to the remarkable achievements of the Scandinavian countries comprising Denmark, Finland, Iceland, Sweden, Norway, and allied territories. They also have-
  - Large public sector enterprises.
  - Extensive and generous universal welfare systems.
  - High levels of taxation.
  - And considerable state involvement in promoting and upholding welfare states.
  - Among the happiest countries: UN reports also indicate that the Nordic countries are the happiest countries in the world. The U.S., in contrast, is in 19th place.
  - The total population of the Nordic countries is estimated at almost 27 million people.
  - Among the richest countries: These nations are among the richest in the world when measured in terms of GDP per capita.
Enlightened Global Order
- Taking the Nordic model as a template, there are some ingredients that could be part of a new ‘enlightened global order’.
- What does the Global Order include? These should include-
  - Effective welfare safety nets for all.
  - Corruption-free governance.
  - A fundamental right to tuition-free education including higher education.
  - And a fundamental right to good medical care.
  - Shutting of tax havens.
  - Tax structure: In Nordic countries, personal and corporate income tax rates are very high, especially on the very rich. If a just, new world order is to arise, taxes everywhere should go up.
- Holding companies responsible: When it comes to the corporate sector, there are some new perspectives.
  - Changing the parameters of profit: In traditional business accounting, ‘bottom line’ refers to the financial year’s profit or loss earned or incurred by the company on pure financial parameters.
  - The four ‘Ps’: Following vigorous debates, a new format has emerged under which a company’s performance is measured through four ‘Ps’.
  - The first is ‘P’ for ‘profit’.
  - The second ‘P’ is for people — how the company’s actions impact not only employees but society as a whole.
  - The third ‘P’ is for the planet — are the company’s actions and plans sensitive to the environment?
  - The fourth ‘P’ is for purpose, which means the companies and individuals must develop a larger purpose than ‘business as usual’. They must ask: what is the larger purpose of the company, apart from generating profits?
  - Using performance in terms of four ‘P’s: Using big data and text analytics, a company’s performance can be measured in terms of all the four ‘P’s and a corporate entity can be thus held accountable. Market capitalisation need not be the only way to measure the value of a company.
Conclusion

Much work is yet to be done to uplift the global economic order, but the important point is that new tools are now emerging. What is required is a global consensus and the will to make the planet more sustainable, so that all individuals can live with justice and equality, ensuring that not a single child is hungry or seriously unwell because of poverty or lack of affordable medical help.
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Women empowerment issues – Jobs,Reservation and education

To help her work

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

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 3- Inclusive growth and need to focus on gender budgeting in India.
Context

When it came to allocating funds, the budget relegates women’s economic participation to secondary importance.

The current status of women in India
- Lack of Equality: India continues to struggle to provide its women with equal opportunity.
- A low score on international measures: On international measures of gender equality.
  - India scores low on women’s overall health and survival and ability to access economic opportunities.
- Why it matters? Since the woman’s economic engagement is related to her own and her family’s well-being, the continuing decline in rural women’s labour force participation is a cause for concern, and both affects and reflects these worrying gender gaps.
Why female labour force participation matters beyond social cause?
- Source of economic growth: Ignoring India’s declining female labour force participation at a time of economic distress is a mistake.
  - Not just a social cause: Involving women in the economy is not a social cause — it is a source of efficiency gains and economic growth.
- Missing out on many things: In a country where young women’s education is now at par with men’s, ignoring that half of the population isn’t participating equally in the economy means we are missing out on many things, like-
  - Innovation.
  - Entrepreneurship.
  - And productivity gains.
- Large potential to increase in GDP: The large potential increases in GDP that could accrue to India and countries around the world, if they could only close their labour force gender gaps, are often cited.
  - 60% increase in GDP: A report by McKinsey Global Institute suggests that if women participated in the Indian economy at the level men do, annual GDP could be increased by 60 per cent above its projected GDP by 2025.
  - Underlying conclusion: The underlying conclusion is that women’s potential to contribute to GDP is huge.
  - Gain larger than any other region: The same analysis also suggested that India’s potential GDP gains through achieving economic gender parity were larger than gains in any of the other regions they studied.
How can the state be responsive to women?

It can be ensured in the following two ways-
- 1.MGNREGA-Important focus: An important focus could be a smarter policy and gender-intentional implementation.
  - A key example comes from MGNREGA, a programme whose official policy has long been to pay individual workers in their own bank accounts.
  - It is observed that this policy was typically not implemented and that women’s wages were usually being paid into the bank account of the woman’s husband.
- Why paying wages in women’s account matters?
  - Giving women digital control of her wage:
  - This seemingly small change — giving a woman digital control of her wages — had a big impact.
  - Working women more outside their home: Women who received digital accounts plus training worked more outside their homes, not only for MGNREGA but also in private employment.
- Higher economic engagement and lessening patriarchy
  - Importantly, women from especially conservative households reported higher economic engagement and an improved ability to move about their communities unaccompanied.
  - Lessening of patriarchal norms: Surveys conducted showed that the payment in account also began to influence restrictive patriarchal norms.
- 2.Need to move beyond MGNREGA
  - Ease of doing business and reform in labour market reforms: Continuing to improve ease of doing business and addressing rigid labour market regulations can also draw more women into high-potential sectors.
  - Such as those supported under Assemble in India.
  - Potential in manufacturing: Rural women’s relative participation in manufacturing has grown compared to men’s, and manufacturing stands out as a promising means to pull young women, in particular, into the economy.
  - Potential in SMEs: Ensuring better support to small and medium-sized enterprises can help new businesses.
Conclusion
- Attune schemes to the aspiration of women: Ensuring that these programmes are attuned to the needs and aspirations of women is not expensive. But it makes a much difference.
  - Review of policy and programme: It requires a review of individual policies and programme implementation.
- Increase the funding: The government needs to increase funding to programmes targeting women. Until then, the policy can build on the fact that pulling women into the economy isn’t just a function of budget allocations or social sector programmes. It’s also a matter of thoughtful policy design and political will.
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Digital India Initiatives

Riding on data for mobility

op-ed snap | Governance | Mains Paper 2: E-Governance

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Not much.
Mains level: Paper 2- Applying digital revolution to transform governance.
Context

Data-based governance can assist in reducing traffic congestion, as illustrated by a pilot study in Hyderabad.

How the Digital revolution is transforming lives
- Seamless and efficient interaction: The digital revolution has made interactions between humans and machines, and among citizens, governments and businesses, seamless and efficient.
- Helping efficient delivery of services: Today, e-governance enables and empowers citizens to directly engage with the state, thereby eliminating barriers in the delivery of public services.
- The next wave of transformation: The next wave of transformation in digital governance is at the intersection of data and the public good.
  - Data as a strategic asset: The key to this transformation lies in incorporating data as a strategic asset in all aspects of-
  - Policy.
  - Planning.
  - Service delivery and-
  - Operations of the government.
Transportation system improvement by leveraging Digital revolution
- Loss caused by the congestion
  - Congestion caused an estimated $24 billion to the four metro cities in India in 2018.
  - Given the limited land resources available, the key to solving congestion lies in improving the efficiency of existing transportation systems.
- How can Digital revolution help tackle the problem?
  - An efficient transportation system would help ease congestion, reduce travel time and cost, and provide greater convenience.
  - How it will work? Data from multiple sources such as-
  - CCTV cameras.
  - Automatic traffic
  - Map services and-
  - Transportation service providers could be used.
- Results of the previous studies
  - London example: A study by Transport for London estimates that its open data initiative on sharing of real-time transit data has helped add £130 million a year to London’s economy by improving productivity and efficiency.
  - Results from China: In China, an artificial intelligence-based traffic management platform developed by Alibaba has helped improve average speeds by 15%.
Hyderabad Open Transit Data portal
- Hyderabad Open Transit Data, launched by Open Data Telangana, is the country’s first data portal.
  - What does it do? It publishes datasets on bus stops, bus routes, metro routes, metro stations, schedules, fares, and frequency of public transit services.
- The objective of the portal: The objective is to empower start-ups and developers to create useful mobility applications.
  - The datasets were built after an intensive exercise carried out by the Open Data Team and Telangana State Road Transport Corporation to collect, verify and digitise the data.
- Collaboration with the private sector: Hyderabad has also begun collaborating with the private sector to improve traffic infrastructure.
  - MoU with Ola Mobility Institute: One such partnership followed a Memorandum of Understanding signed between the Telangana government and Ola Mobility Institute.
  - Monitoring the quality of roads in the city: Under this collaboration, Ola has developed a tool, Ola City Sense, to provide data-based insights that can monitor the quality of Hyderabad’s roads and identify bad quality patches.
  - Other areas in which the data is used: The information thus given is useful not only for carrying out road repairs, it also helps officials take initiatives to improve road safety, monitor quality of construction, and study the role of bad roads in causing congestion.
- A pilot project to prioritisation of repairs: A pilot was implemented in a municipal zone to gauge the efficacy of the data in supporting road monitoring and prioritisation of repairs.
  - The early results of this pilot project were encouraging. The dashboard helped city officials plan the pre-monsoon repair work and budget for repairs last year.
Conclusion
- The willingness of the government to apply data-based insights: The Hyderabad project and the pilot demonstrated the willingness of government departments to apply data-based insights for better decision making.
  - This could also serve as a model for other cities to emulate.
- Making the departments data-centric: The Hyderabad example also shows that governments can make their departments data-centric by-
  - Institutionalising data collection.
  - Building technology platforms.
  - And helping the departments develop the capacity to handle the insights generated from the data.
  - Smart cities as a starting point: Command and control centres under the ‘smart cities’ initiative can be an ideal starting point.
  - Data security and privacy: Such interventions, however, also need to address genuine concerns around data security and privacy.
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Hunger and Nutrition Issues – GHI, GNI, etc.

Nutrition and the Budget’s fine print

op-ed snap | Governance | Mains Paper 2: Government Scheme/Policies,Poverty & Hunger

Note4Students
From UPSC perspective, the following things are important:
Prelims level: Bharatiya Poshan Krishi Kosh
Mains level: Paper 2- Despite having many schemes to address the malnutrition the problems still looms large, why?
Context

There are well-equipped schemes to address the malnutrition, plugging the policy gaps is the problem.

Nutrition and hunger in India
- Global Hunger Index rank 102: A few months ago, the Global Hunger Index, reported that India suffers from “serious” hunger, ranked 102 out of 117 countries.
- Only one-tenth of children getting proper diet: Just a tenth of children between six to 23 months are fed a minimum acceptable diet.
- Urgency reflected in the budget: The urgency around nutrition was reflected in the Union Finance Minister’s Budget speech, as she referred to the “unprecedented” scale of developments under the scheme for Holistic Nutrition, or POSHAN Abhiyaan, the National Nutrition Mission with efforts to track the status of 10 crore households.
- The Economic Survey notes that “Food is not just an end in itself but also an essential ingredient in the growth of human capital and therefore important for national wealth creation”.
- How malnutrition affects? Malnutrition affects cognitive ability, workforce days and health, impacting as much as 16% of GDP (World Food Programme and World Bank).
Addressing Nutrition through Agriculture
- Multiple dimension of malnutrition: There are multiple dimensions of malnutrition that include-
  - Calorific deficiency.
  - Protein hunger.
  - Micronutrient deficiency.
- Addressing the issue through Agriculture: An important approach to address nutrition is through agriculture.
  - The Bharatiya Poshan Krishi Kosh which was launched in 2019 is a recent attempt to bridge this gap.
  - The krishi kosh was launched by Ministry of Women and Child Development along with Bill & Melinda Gates Foundation (BMGF).
  - Existing schemes can well address India’s malnutrition dilemma. Following is the analysis of budgetary allocation and expenditure in the previous year.
First- Calorific deficiency
- The Integrated Child Development Services (ICDS) scheme provides a package of services including-
  - Supplementary nutrition.
  - Nutrition and health education.
  - Health check-ups and
  - Referral services addressing children, pregnant and lactating mothers and adolescent girls, key groups to address community malnutrition, and which also tackle calorific deficiency and beyond.
  - Underutilisation of funds: For 2019-20, the allotment was ₹27,584.37 crore but revised estimates are ₹24,954.50 crore, which points to an underutilisation of resources.
  - Which area needs the emphasis: The allocation this year is marginally higher, but clearly, the emphasis needs to be on implementation.
- Mid-Day Meal Scheme: Another pathway to address hunger is the Mid-Day Meal Scheme, to enhance the nutrition of schoolchildren.
  - Here too, the issue is not with allocation but with expenditure.
  - The 2019-20 Budget allocation was ₹11,000 crore and revised estimates are only ₹9,912 crores.
Second-Protein Hunger
- Contribution of pulses: Pulses are a major contributor to address protein hunger.
  - Underutilisation of funds: A scheme for State and Union Territories aims to reach pulses into welfare schemes (Mid-Day Meal, Public Distribution System, ICDS) has revised estimates standing at just ₹370 crores against ₹800 crore allocation in the 2019-20 Budget.
Third-micronutrient deficiency
- Horticulture Mission: The Horticulture Mission can be one of the ways to address micronutrient deficiency effectively, but here too implementation is low.
  - Revised estimates for 2019-20 stand at ₹1,583.50 crores against an allocation of ₹2,225 crores.
- National Millet Mission: In 2018-19, the Government of India launched a national millet mission which included renaming millets as “nutri-cereals” also launching a Year of Millets in 2018-19 to promote nutritious cereals in a campaign mode across the country.
  - This could have been further emphasised in the Budget as well as in the National Food Security Mission (NFSM) which includes millets.
  - Under-utilisation of funds: The NFSM strains to implement the allocation of ₹2,000 crores during 2019-20, as revised expenditures stand at ₹1,776.90 crore.
  - Need to sustain the momentum: As millets have the potential to address micronutrient deficiencies, the momentum given to these cereals needs to be sustained.
POSHAN Abhiyan and issues involved
- 72% expenditure on technology: The National Nutrition Mission which is a major initiative to address malnutrition, had 72% of total expenditure going into “Information and Communication Technology.
  - Misplaced focus: The focus of the bulk of the funding has been on technology, whereas, actually, it is a convergence that is crucial to address nutrition.
  - Under-utilisation of funds: Only 34% of funds released by the Government of India were spent from FY 2017-18 to FY 2019-20 till November 30, 2019.
  - Limiting the possibility of an increase in the allocation: With underspending, allocations for subsequent years will also be affected, limiting the possibility of increasing budgets and the focus on nutrition schemes.
Agriculture-nutrition link
- The agriculture-nutrition link is another piece of the puzzle.
- Link not explicitly mentioned: While agriculture dominated the initial Budget speech, the link between agriculture and nutrition was not explicit.
  - Why the link is important: The link is important because about three-fifths of rural households are agricultural in India (National Sample Survey Office, 70th round)
  - The malnutrition rates, particularly in rural areas are high (National Family Health Survey-4).
  - Need for greater emphasis: Agriculture-nutrition linkage schemes have the potential for greater impact and need greater emphasis.
Way forward
- Focus: Focus on nutrition-related interventions, beyond digitisation.
- Bring all departments in one place: Intensify the convergence component of POSHAN Abhiyaan, using the platform to bring all departments in one place to address nutrition.
- Nutrition based activities by farmer-producer: Direct the announcement to form 10,000 farmer producer organisations with an allocation of ₹500 crores to nutrition-based activities.
- Youth schemes: Promotion of youth schemes to be directed to nutrition-agriculture link activities in rural areas.
- Emphasis on fund allocation: Give explicit emphasis and fund allocation to agriculture-nutrition linked schemes.
- Early disbursement and utilisation of funds: Ensure early disbursement of funds and optimum utilisation of schemes linked to nutrition.
Conclusion

Nutrition goes beyond just food, with economic, health, water sanitation, gender perspectives and social norms contributing to better nutrition. This is why the implementation of multiple schemes can contribute to better nutrition.
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US policy wise : Visa, Free Trade and WTO

A new approach on investment

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 2- Trade deal with the US, issues involved.
Context

When Prime Minister Narendra Modi welcomes U.S. President Donald Trump to India this month the two leaders are expected to sign a first-ever trade agreement.

What will be on the agenda of the trade deal?
- GSP issues: The restoration of India’s Generalised System of Preferences benefits,
- Pricing of medical devices.
- And agriculture trade are all important.
- Incremental outcomes: If the two sides continue efforts to achieve incremental outcomes, the start of negotiations on a comprehensive free trade agreement (FTA) could even be a credible scenario. Presently, this is not the case.
What could be the incremental outcomes?
- The most obvious candidates are-
  - Intellectual property rights (IPR).
  - IPR has historically been an area of contention between the two, but discussions on IPR have progressed well in recent years.
  - Digital trade.
  - Both are grappling with the appropriate scope and approach for regulating electronic commerce issues in this digital age.
  - Ideally, there should be room to seriously consider better ways to encourage skilled professionals to work in the other’s economy.
- Progress on the investment
There are already some shared interests in the area of investment.
- For example, India invests in the U.S. and continues to seek U.S. investment in India.
- FDI issue: Foreign direct investment (FDI), this is an important moment to do more to encourage it than simply welcoming it.
- Need to negotiate o investment: Ideally, the two sides should move ahead to negotiate an agreement on investment matters that can provide greater transparency, predictability, and regulatory certainty to investors from the other country.
- Negotiation on FDI off the table: It appears that the traditional approach through which countries pursue commitments on FDI, bilateral investment treaties, or ‘BITs’ (bilateral investment treaties) is off the table.
- The Trump administration has put a hold on negotiating additional BITs and appears to be suspicious of how well they balance U.S. interests.
- The Indian government is similarly sceptical of BITs, having cancelled all existing ones soon after it came into office.
Need for the new approach on the investment issues
- Until they resume their work on BITs, the two sides may find common ground in devising a new approach to investment issue.
- What the new approach involve?
- Taking cues from their respective FTAs: A starting point should be to review what they have done in their recent FTAs.
- Abandonment of investor-state dispute settlement: The recently concluded U.S.-Mexico-Canada Agreement contains a novel approach on investment notably its abandonment of investor-state dispute settlement with respect to the U.S. and Canada.
  - Similarly, the Regional Comprehensive Economic Partnership, which India had been negotiating with ASEAN, Australia, China, Japan, Korea, and New Zealand, does not include investor-state dispute settlement.
  - While India chose not to join the Regional Comprehensive Economic Partnership when it was concluded at the end of last year, it appears to have been on board with the FTA’s investment provisions.
- Where the agreement focus as of now? For now, however, both countries should focus on what is doable. A U.S.-India investment agreement could focus on-
  - Fair treatment for investors from the other country.
  - Regulatory transparency and predictability.
  - And approaches for resolving concerns short of investor-state dispute settlements.
- At a later stage: At a later stage-
  - Most likely when the two are prepared to negotiate a more comprehensive bilateral FTA, they can go further on investment matters.
Conclusion

A new, hybrid approach on investment would be a substantial step in the right direction. It will be critical to sustaining momentum coming out of a first trade deal when the two leaders meet in Delhi. If India and the U.S. fail this test, the trade relationship is more likely to languish than blossom.
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Type: op-ed snap