Population and poverty
Globalization is not ending, it’s changing: (LiveMint, Editorial)
- Globalization isn’t ending, it’s changing. World is witnessing emergence of a new global economy, an economy without borders driven by digital rocket boosters.
What is happening?
- Companies that have learnt to thrive in this increasingly connected world have built large global businesses at astonishing speeds.
- Economic nationalism and protectionism are growing.
- WTO data indicates that India and the US rank among the countries with the most number of trade restrictive measures in recent years.
- Global Trade Alert reports that in 2016 alone more than 500 discriminatory measures (and only 300 liberalizing measures) were introduced worldwide.
- At the same time, the ability of multilateral institutions to establish and enforce shared rules seems to be weakening.
- The dominant role of the multilateral financial institutions that traditionally have provided global capital appears to be receding, as new financial institutions, such as China-backed Asian Infrastructure Investment Bank and the New Development Bank, emerge.
- Advanced digital manufacturing and global digital platforms are changing the structures in the world economy.
- Advanced digital manufacturing systems (“Industry 4.0”), for example, are enabling businesses to alter their global production and distribution networks by making it feasible to operate smaller, more flexible facilities closer to customers, instead of concentrating production in large plants in countries with low labour costs.
What is the status of global market?
- The global market has been growing as both traditional companies, such as General Electric, and relative newcomers, such as Uber, Airbnb and India’s Flipkart, gain access to borderless global markets through their information technology platforms and networks of local partners.
- Together, these shifts are leading to a different kind of globalization, more-fragmented, with decentralized supply chains and more countries involved. This creates a host of challenges for global corporations.
- The emergence of a new model of globalization does not mean, of course, that the old ways of engaging with the world will suddenly become irrelevant. The precise contours of the new global economy have yet to be defined.
The missing jobs: (Indian Express, Editorial)
- According to a recent report, less than 10% of the youth who had received training under the Pradhan Mantri Kaushal Vikas Yojana have obtained placement offers (offers, not jobs).
The Real Problem of Jobs:
- Jobs are not simply a function of the country’s workforce acquiring formal skills making them employable.
- More fundamental to job creation is a vibrant economy, in which investment and consumption fuel demand for labour, skilled and unskilled.
- This happened between 2004-05 and 2011-12.
- Today’s crisis is not one of employability, but of investment and economic activity leading to shrinking job opportunities.
- It seeks to impart industry-relevant skill training to 10 million youth over four years (2016-2020), largely through private accredited “training partners” and with the Centre meeting the entire fee expenses.
Problem with PMKVY
- The problem with PMKVY is not its poor job placement record.
- The question to ask is whether a scheme of this kind is required at all.
- Ideally, the government’s focus should be on providing decent education.
- That would mean ensuring minimum standards in schools, colleges, polytechnics and industrial training institutes (ITI).
- Training is better left to the private sector.
- The Rs 12,000-crore outlay for PMKVY can instead be used to beef up the infrastructure and course content in 2,284 government ITIs.
- Formal skilling — currently restricted to hardly three per cent of India’s workforce — is important.
- However, skills are mostly job-specific and acquired at the workplace.
- The market has ways to address skills gap.
- The government would do a great job by just concentrating on basic education, labour reforms and improving the ease of doing business.
The need for reforms in healthcare finance: (LiveMint, Editorial)
Health insurance seems to be a risky path for India’s long-term strategy for health financing.
What is the issue?
The Centre and state governments are experimenting with several new and exciting ideas in healthcare reforms.
- The issue, however, is a serious reform agenda for health financing.
- The last big reform was expanding the coverage of the Rashtriya Swasthya Bima Yojana (RSBY) from Rs 30,000 to Rs 1 lac, reinforcing insurance as the long-term strategy for health financing.
- However, the experience of several countries has revealed that this is a perilous path, taking India towards a bad equilibrium.
- Depending on the route, India could end up spending either 18% of its gross domestic product (GDP) on health like the US or just 4% like Singapore to achieve similar outcomes.
What is the problem with current system of health financing?
- The current “system” of health financing is largely out-of-pocket payments, with tax breaks provided for health insurance.
- The National Sample Survey data shows that Indian households are increasingly relying on their own income and drawing down their savings to finance healthcare expenses. This holds true for both rural and urban households.
- Data for health insurance coverage shows that while private health insurance is largely limited to the richer urban households.
- In contrast, public insurance coverage is evenly distributed across all quintile groups of the population.
- However, these public health insurance schemes have not been associated with lower health burden for the average household as measured by total real out-of-pocket health expenditure, catastrophic health expenditure or impoverishment caused by health expenses.
What are the concerns?
- Extreme poor households do not use their health insurance coverage given their low financial literacy and awareness.
- Insurance is widely recognized as a poor model for healthcare financing because it suffers from serious information asymmetries.
- The other big worry is a moral hazard. Clients and doctors are incentivized to over-use facilities, thereby driving up health costs.
- India’s poor record in healthcare governance inspires less confidence in its ability to successfully pull off a universal healthcare system with the government as the single payer.
- India must be open to experimentation with newer products of healthcare financing. Medical savings accounts (MSAs) is one such product. Its healthcare outcomes are comparable to most developed countries, while its spending is significantly lower.
- These are complemented by high deductible insurance (after a large amount has already been paid from the MSA) and a government fund to pay for those who cannot pay for themselves. Given India’s large population below and around the poverty line, it could do the same.
- In healthcare, it is important that even if one gets the financing model right, the sector remains labour-intensive with lower productivity growth.
- This means that when other sectors experience higher productivity growth, they can offer more competitive prices for land and human capital, which can be offset by productivity gains.
- In healthcare, there are no offsetting productivity gains. As a result, either the price of healthcare delivery goes up or quality falls. This is a long-term problem which the private sector and the government will have to grapple with perennially.
SC allows two minor rape survivors to abort foetuses: (The Hindu)
The Supreme Court recently permitted two minor rape survivors to medically terminate their pregnancies on the advice of the medical boards which examined them.
- They had both passed the 20th week of pregnancy, until which the law allows abortion.
- The Bench, comprising Justices Amitava Roy and A.M. Khanwilkar, directed preservation of the terminated foetuses for DNA sampling during the investigation in both the cases.
What are the legal grounds?
Medical Termination of Pregnancy Act of 1971:
- The Medical Termination of Pregnancy Act of 1971 does not allow abortion if the pregnancy has crossed 20 weeks.
- Under the 1971 law, an exception to the 20-week cap can be made if a registered medical practitioner certifies to a court that the continued pregnancy is life-threatening for either the mother or the baby.
- This was meant to be a safeguard against female foeticide.
- The court had recently denied permission to a 10-year-old rape survivor from Chandigarh to abort her foetus. Shortly after the court’s denial, the girl gave birth. The apex court awarded Rs. 10 lakh compensation to the girl.
- Senior advocate Indira Jaising who is intervening in the Supreme Court in the issue, had argued that the delay in offering urgent medical help to such abused women and children have led to untold suffering for them.
- Medical boards
- Recently, the Centre had written to the States and the Union Territories about the court’s suggestion to appoint permanent medical boards to provide rape survivors urgent access to medical care and to consider their requests for abortion.
- The recent privacy judgment of a nine-judge Bench of the Supreme Court has observed that the right to reproductive choice of a woman is part of her fundamental right to privacy.
Leg-up for PM’s pet housing project: (The Hindu)
- Pradhan Mantri Awas Yojana – Housing for all (Urban)
Why is it in the news?
- People purchasing a low-end house from a private developer will be eligible for financial help under the ‘Housing For All’ scheme of the Union government
What is the importance of this announcement?
- Pradhan Mantri Awas Yojana (PMAY) or ‘Housing For All’ has been moving at a very slow pace
- This will help in meeting the housing requirements for all targets
Why is this announcement important?
- This policy seeks to assign risks among the government, developers, and financial institutions, to those who can manage them the best
- This will help in utilizing the under-utilized and unutilized private and public lands towards meeting the housing for all target
- The government was to construct 12 lakh houses under PMAY by 2017-18, but only 1.49 lakh houses have been constructed till last year.
- Eligible buyers can get the Central assistance of about Rs. 2.50 lakh per house as interest subsidy on bank loans or can get up to Rs. 1.50 lakh otherwise as one-time assistance
- This policy aims to attract investments from developers through the PPP model
Effects of developed and developing countries policies
Solving the Afghan riddle: (The Hindu, Editorial)
India and neighbors
Turn the page to a new chapter: (The Hindu, Editorial)
- In September, the BRICS Summit witnessed an especially important meeting between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi. This was the first after the Dong Lang (Doklam) stand-off.
What are the expectations?
- An important consensus has been reached to improve mutual trust, focus on cooperation, and manage differences.
- Both leaders also agreed to conduct closer high-level exchanges, revitalize a series of dialogues and mechanisms, as well as promote youth and educational cooperation.
What are the common aspirations?
- Economic and trade cooperation are gaining momentum. Last year, the trade volume between China and India exceeded $70 billion.
- More than 500 Chinese companies have invested and started business in India with a total investment of over $5 billion.
- Many Indian enterprises of IT, pharmacy and consultancy have entered the Chinese market.
- People-to-people exchanges are thriving. Mutual visits between our two countries have exceeded one million.
- Practising yoga, drinking Darjeeling black tea, and watching Bollywood movies have become fashionable among the Chinese youth. Yunnan Minzu University has established the India-China Yoga College.
- Local exchanges are booming. China and India have established 14 pairs of sister cities and provinces. PM Modi made frequent visits to Guangdong province when he was the Chief Minister of Gujarat.
Why is this the correct time to work together?
- China’s economy is stable and India’s reform has entered a crucial stage.
- Make in India, Digital India, Startup India and other initiatives have yielded outcomes.
- Significant measures like the GST Act have been implemented.
- Faced with similar development objectives and common challenges such as “anti-globalisation” and trade protectionism, China and India should work together.
- Both sides should set long-term goals for the development of our bilateral relations.
- One should consider negotiating the Treaty of Good-Neighbourliness and Friendly Cooperation between China and India, restarting the negotiations of China-India Free Trade Agreement, striving for early harvests on boundary issues, and actively exploring the strategic synergy between China’s Belt and Road Initiative and India’s ‘Act East Policy’.
- Both sides should appropriately manage differences, get under control the problems left over by history such as issues related to boundary and the Dalai Lama, while finding solutions to new problems.
The challenge of reforming the UN: (LiveMint, Editorial)
Reforming the UN is an important agenda for United States. India is trying to expend its diplomatic capital on finding a seat at UN Security Council. It will have to articulate new ways to make UN more effective and efficient.
Trump Administration on UN reforms
- Trump pledged that US would be partners to make the organization more effective for peace across the globe.
- Reforming the UN is big on the Trump administration’s agenda and this reforms agenda is largely based on two principles: sovereignty and accountability.
- Trump’s vision is anchored in his “America First” approach with national sovereignty as the main pillar of the internal system.
- US is keen that management of UN becomes more accountable and transparent as it remains the largest contributor to UN budget, in-line with its position as the world’s largest economy. It pays 25% of the UN’s regular operating budget and over 28% of the separate peacekeeping budget.
- The Trump administration has been critical of the UN’s overreliance on the US and wants a more equitable sharing of burden.
- UN is structured in such a way that decision-making process is distributed among a wide range of countries and constituencies with often competing and contradictory views and interests.
- Russia and China, for example, did not attend the UN meeting on reforms.
India stand on UN reforms
- India has suggested that the UN reforms need to be “broad-based and all-encompassing” and the changes should not be restricted to its secretariat only.
- India thinks that reforms cannot sidestep issues related to the governance of UN bodies.
- But India has extended its support to Trump’s efforts at UN reforms, saying it should include the expansion of the world body’s permanent and non-permanent members to keep pace with the changed times.
- India has been spearheading a move for reforms at the UN to make the world body more representative of the changing global realities while enhancing its credibility and effectiveness.
- India remains one of the largest contributors to the UN peacekeeping operations.
- New Delhi has been concerned about the post-Cold War international acceptance of the UN’s questionable “right to intervene” where it believed it to be necessary, allowing the UN to act with little debate.
- UN peacekeepers were deployed to environments in which the belligerent parties were not entirely on board with the deployment, thus seriously threatening the safety of the troops under the UN flag. India has repeatedly underlined the dangers inherent in such a rapid transformation from traditional UN missions to these new operations.
- Trump administration’s focus on “sovereignty” as the defining feature of UN reforms is welcomed by New Delhi.
- India continues to expend its diplomatic capital on finding a seat at the UN Security Council.
- It will have to articulate new ways on how the UN can be made more effective and efficient.
- There is a need to create a new balance between India’s pursuit of its narrow national interest and its responsibility as a rising power to maintain global peace and stability.
Indian Economy. Planning, Growth and Employment
The Union Cabinet will soon take up the proposal for a “$5 billion worth world -class and state -of -the -art” Exhibition –cum-Convention Centre (ECC) in the national capital.
- It will be the largest such facility in Asia once completed by 2021.
- The Cabinet will consider on approval of the project and formation of a Special Purpose Vehicle
(SPV) to implement the same.
- Part of the $100 billion Delhi Mumbai Industrial Corridor (DMIC) project, it would be developed on Public-Private Partnership model using viability gap funding of the Centre.
- The SPV will be a 100% subsidiary of DMIC Development Corporation.
- The SPV will be given the rights to activities, including sub-leasing of land parcels, sub-contracting project components, granting long term concessions to private developers as well as fixing lease rentals.
Why project is necessary?
- The project became necessary as India lacked an integrated world class facility that can meet the requirements of global ECC operators in terms of space, project facilities and transportation linkages.\
Taper timetable: (The Hindu, Editorial)
The conclusion of quantitative easing in the U.S. could affect investment flows into India
- The U.S. Federal Reserve started is unprecedented programme of liquidity infusion through the purchase of asset-backed and Treasury securities in the wake of the global financial crisis.
- The Federal Reserve will throw its crisis-era stimulus programme into reverse from next month and stick with plans for further rate rises in a mark of confidence that stagnant inflation is set to bounce back.
- The asset wind-down will begin with monthly reductions of a modest $10 billion in the three months through December.
- That amount will gradually increase in quarterly increments of $10 billion so as to reach, in October 2018, a monthly cap of $50 billion
- The FOMC has, in fact, marginally raised its median projection for U.S. real GDP growth in 2017 to 2.4%, from the 2.2% estimated in June
- monetary authorities in the U.S. are focussed on reflating the economy by supporting “further strengthening” in the labour market through an accommodative stance, the central bank has to remain vigilant in warding off any let-up in expansionary momentum
What is Quantitative Easing?
- Quantitative easing is a massive expansion of the open market operations of a central bank.
- It is used to stimulate the economy by making it easier for business to borrow money.
- The bank buys securities from its member banks to add liquidity to capital markets.
- This has the same effect as increasing the money supply. In return, it the central bank issues credit to the bank’s reserves to buy the securities.
Implications on India:
- It could affect investment inflows in India
- It will have pressure on the current account deficit.
- For Indian policymakers, there are both positive and negative cues.
The return of India’s super rich: (Live Mint, Editorial)
The trajectory of wealth concentration in the country, not just the levels of recently estimated inequality, is important.
- High economic disparity among Indians
What are the reasons for high economic disparities?
- A large informal labour force
- Turbulent capital markets
- Unequal access to education
- Employment and mobility of workforce
What were the reasons of wealth concentration in the past?
- Wealth concentration at the top is an entirely different concept that cumulates past prosperity and disparity through inheritance, income and monopoly rents.
- Example: Indian has been home to extreme poverty as well as richest people:
- In 1937, the nizam of Hyderabad was declared the world’s wealthiest person by Time magazine.
- His wealth was estimated to be equal to around 30% of India’s gross domestic product (GDP).
Why is the computing wealth inequality in India harder?
- The absence of similar tax-return data.
- Issues of under-reporting
What were the steps taken after independence to reduce wealth concentration?
- Old royal wealth was eliminated through the abolition of princely titles and annexation of private land into national wealth as part of Indian unification
- A combination of Nehruvian socialism
- Indira Gandhi’s nationalization
- Progressive tax policies
What is the current trend?
- The decline of income and wealth inequality between 1950-80; but no diffusion of prosperity
- Due to emergence of new markets, promotion of private capital, modern investment, and market reforms made few Indians
- As India began to embrace the market, private capital adapted to more modern investments, and combined with market reforms, it made a select few enormously wealthy.These wealthy people are mainly leaders of the industries
- Old wealth came to be replaced by more dynamic and financially savvy industrial wealth.
What is necessary to bring equitable growth?
- India needs the effort to democratize economic resources to achieve equitable growth. Growth cannot be equitable if the superrich is able to accumulate wealth at even higher rates.
Is the Sardar Sarovar Dam boon or bane?: (The Hindu, Editorial)
Prime Minister Narendra Modi today inaugurated the Sardar Sarovar Dam in Gujarat on his 67th birthday. Addressing a public meeting after the event, PM Modi called the dam an engineering marvel.
The River Narmada
Narmada, the largest west flowing river in India & the fifth largest river in the country, rises near Amarkantak range of mountains in Madhya Pradesh. It traverses Madhya Pradesh, Maharashtra and Gujarat and meets the Gulf of Cambay. It is considered as the dividing line between North India drained by the Gangetic basin, and Peninsular India.
Although entirely rain fed, the Narmada has a fairly heavy discharge because of moderately heavy annual average rainfall in the basin, particularly in the upper catchment area.
What is Sardar Sarovar Project?
The Sardar Sarovar project was a vision of the first deputy prime minister of India, Sardar Vallabhbhai Patel. The foundation stone of the project was laid out by Pandit Jawaharlal Nehru on April 5, 1961 The project took form in 1979 as part of a development scheme to increase irrigation and produce hydroelectricity.
The Sardar Sarovar Project is an inter-state project with a terminal dam on river Narmada at Kevadia in Gujarat. It is meant to benefit the 4 states Gujarat, Madhya Pradesh, Maharashtra and Rajasthan. It is a multipurpose project with irrigation, power and drinking water benefits, which was accorded environmental clearance in 1987.
What is Narmada Bachao Andolan?
Narmada Bachao Andolan (NBA) is a social movement consisting of adivasis, farmers, environmentalists and human rights activists against the number of large dams being built across the Narmada River, which flows through the states of Gujarat, Madhya Pradesh and Maharashtra, all over India. Sardar Sarovar Dam in Gujarat is one of the biggest dams on the river and was one of the first focal points of the movement. It is one of the many dams under the Narmada Dam Project. The main aim of the project is to provide irrigation and electricity to people in these states.
Their mode of campaign includes court actions, hunger strikes, rallies, and garnering support from notable film and art personalities. Narmada Bachao Andolan, with its leading spokespersons Medha Patkar and Baba Amte, who have received the Right Livelihood Award
The case of World Bank:
The World Bank began working on the Narmada Project after it got clearance from the Narmada Water Disputes Tribunal.The bank sent a team for the assessment of the project in economic and technical terms. This team didn’t focus on the social or environmental issues.
However, the Bank realised the harm that it had done by sanctioning the loan for the project and thus announced that the new projects should “ensure that, after a reasonable transition period, the displaced people regain at least their previous standard of living.”
Despite this, the relocation process was flawed.
The Bank then adopted certain policies to ensure proper relocation of the tribal people and protect them from the forced relocation . The Indian government, however, did not adopt these policies.
In 1985, irrespective of the harm done by the Sardar Sarovar project, the World bank sanctioned a loan to the state governments for construction purposes.
Medha Patkar and other protesters testified on the Bank’s role in Washington D.C in 1989. This led to a build-up of pressure on the Bank to set an independent review to assess the situation at hand. A lot of support was withdrawn from the project after this.
The Morse Commission was established to look into the construction of the dam, and the environmental cost and human displacement in 1991. For the first time, a Bank commissioned panel had complete access to the documents to form a report.
The 357 pages’ report mentioned the lack of any environmental assessment undertaken either by the Indian Government or the World Bank. In an internal referendum held, the Bank very closely voted for the continuation of the Narmada Dam Project.
The Indian Government canceled the loan sanctioned by the World Bank on March 31, 1993
- Social and environmental impacts have gone far beyond what was estimated at the outset when the project was cleared in the late 1980s. Rehabilitation of even the submergence-affected population is about 80% incomplete
- Sea water from the Bay of Khambhat has intruded up to 40 kilometres eastwards into the Narmada” affecting “10,000 hectares of agricultural land.
- The SSP received an environmental clearance in 1987 with requirements for detailed surveys and studies. A rehabilitation plan was to be completed “ahead of reservoir filling”. But even today, the families residing in the proposed submergence area are not assured of their rightful rehabilitation.
- Thousands of families along the Narmada River in Madhya Pradesh are at risk of getting displaced with the closing of gates of Sardar Sarovar Dam and resultant rise in the water level in its catchment area
- The Narmada Bachao Andolan group claims that 40,000 families in 192 villages in Madhya Pradesh would be displaced when the reservoir is filled to its optimum capacity.
- Large dams have forced the displacement of millions of India’s small farmers and landless peasants from across the country, forcing them into urban slums and breaking apart families Downstream habitat change and impacting biodiversity.
- The Narmada estuary has become increasingly saline because of the decrease in fresh water flow
- Siltation is one of the biggest challenges faced by dams worldwide, and giant dams such as the Sardar Sarovar cannot be easily desilted.
- The basic justification offered for the SSP by the Gujarat government from the time of the Narmada Water Disputes Tribunal in the 1970s was that there is no alternative to SSP waters for the drought-prone areas of Kutch, Saurashtra and north Gujarat.
- It will provide drinking water to 4 crore people and help irrigate 2.2 million hectares of land.
- The irrigation benefits will help in doubling the farmers income by 2022.
- The Narmada canal will also irrigate lands in the desert districts of Barmer and Jalore of Rajasthan.
- Project has successfully brought water to the dry Kutch district, where the armed forces are guarding the nation.
- Provide flood protection to riverine reaches
- Wild life sanctuaries viz. “Shoolpaneshewar wild life sanctuary”, Wild Ass Sanctuary, Great Indian Bustard Sanctuary, Nal Sarovar Bird Sanctuary and many others will be benefited.
- Benefits of fisheries development and recreational facilities
On GM crops, a failure to heed scientific evidence: (Live Mint, Editorial)
Mazagon Dock Shipbuilders Ltd. (MDL) of Mumbai handed over the first of the Scorpene submarines, Kalvari , to the Navy.
- This is the Navy’s first new conventional submarine in two decades.
- The state-of-the-art technology utilised in the Scorpene has ensured superior stealth features such as advanced acoustic silencing techniques, low-radiated noise levels, hydro-dynamically optimised shape and the ability to launch a crippling attack on the enemy using precision guided weapons.
- MDL is constructing six Scorpene submarines with technology transfer from Naval Group, formerly DCNS of France.