Below are the answers of UPSC Mains Marathon Current Affairs Questions – August 29.
1. NITI Aayog has stated that not unemployment but a“severe under-employment” is the main problem facing the country. How is underemployment different from unemployment? Discuss the major factors behind underemployment in India, and government initiatives for handling the same. (GS 1)
- Underemployment is when workers’ jobs don’t use all their skills, education, or availability to work. There are two types of underemployment: visible and invisible.
- Visible underemployment includes employees who are working fewer hours than is typical in their field. They are willing and able to work more hours, but cannot get full-time employment.
- Invisible underemployment includes workers in full-time jobs that don’t use all their skills.This type of underemployment is nearly impossible to measure.
- However Unemployment is a situation when a capable and willing to do job workforce does not get work
Underemployment Vs unemployment:-
- Impact is different for both as in the first case atleast some income is expected but in the second there is no income at all.
- Similarly for unemployment the person might have no education at all,no skill at all but in underemployment the person has skill and education but the job he/she does is not utilizing it in full.
- Underemployment affects more at an individual level as the person is not satisfied with the job but for an unemployed person there is impact both from the societal and personal level.
- In underemployment often you have two to three workers performing a task of one worker. This translates into low productivity and low wages.
Reasons behind underemployment in India:-
- Social situations can push a person to take a job even though That job is inferior to his/her abilities.
- There is no proper infrastructure to tap the human resource in India
- No sufficient credit:
- Credit expansion by the Public Sector Banks, which now suffer from 12 per cent of their loans as NPAs, has taken a huge beating.
- A recession and the resultant cyclical unemployment caused underemployment as well. When workers outnumber jobs, they will take anything they can get to pay the bills.
- Technological change also causes underemployment. For example, ATM machines have replaced the need for many bank tellers.
- The youth’s belief in education as a ticket to better life did not always reflect in ground reality.
- Lack of literacy in rural areas makes people depend on farms leading to disguised employment with many people doing the same work.
- The higher education is not adhering to the demands of the industry for instance in UP PH.D students applied for government peon jobs.
- Too much focus on engineering and medicine as career preferences makes too many graduates with no proper job opportunities.
- Young people are advised to pursue education towards white-collar jobs, but a large portion of real job creation is in the informal sector.
- youngsters are not even aware of government initiatives.
- The government introduced the Mudra bank aimed at the provision of credit to micro enterprises.
- The government emphasises on start up and standup India to encourage young graduates to turn into entrepreneurs and provide employment to others.
- Pradhan Mantri Kaushal Vikas Yojana:-
- The objective of this Skill Certification Scheme is to enable a large number of Indian youth to take up industry-relevant skill training that will help them in securing a better livelihood.
- Upgrading the Skills and Training in Traditional Arts/Crafts for Development (USTTAD) Scheme:-
- The Scheme aims at upgrading Skills and Training of minority communities by preservation of traditional ancestral Arts and Crafts.
- It also envisages boosting the skill of craftsmen, weavers and artisans who are already engaged in the traditional ancestral work.
- Under the scheme, assistance will be provided to traditional artisans to sell their products in order to make them more compatible with modern markets.
- One of the pillars of Digital India focusses on providing training to the youth in the skills required for availing employment opportunities in the IT/ITES sector.
- Make in India programme will start generating new employment opportunities .The government hopes to create a 100 million new jobs by 2022.
- There is a need for the creation of high-productivity, high-wage jobs.
- The ‘Make in India’ campaign needs to succeed by manufacturing for global markets.
- It is the time for adopting a manufactures- and exports-based strategy could not be more opportune.
- NITI aayog recommendations:
- ‘Three Year Action Agenda’ also recommended for the creation of a handful of Coastal Employment Zones (CEZ), which may attract multinational firms in labour-intensive sectors from China to India.
- The country set up more vocational educational streams at school level. There is a crucial need to update academic syllabi in keeping with the demands of industry and job realities.
- Recently fixed-term employment has been introduced in the textiles and apparel industry.This option may be extended to all sectors. The change will encourage employers to rely on regular fixed-term employment instead of contract workers,
- There are industries where India is strong; such as engineering goods, auto and auto parts and pharmaceutical, but it needs to further strengthen them, especially by removing obstacles they still face as exporters.
- India is home to more than 24 Crore households out of which about 10 Crore households are still deprived of LPG as cooking fuel and have to rely on firewood, coal, dung – cakes etc. as primary source of cooking.
- As per a WHO report, smoke inhaled by women from unclean fuel is equivalent to burning 400 cigarettes in an hour. In addition, women and children have to go through the drudgery of collecting firewood.
- So in order to change this scenario government came up with Ujjwala yojana.
- The purpose of the scheme is to give free LPG connections to the poorest households.
- Pradhan Mantri Ujjwala Yojana (PMUY) aims to safeguard the health of women & children by providing them with a clean cooking fuel – LPG, so that they don’t have to compromise their health in smoky kitchens or wander in unsafe areas collecting firewood.
- Under this scheme, 5 Cr LPG connections will be provided to BPL families with a support of Rs.1600 per connection in the next 3 years.
- Ensuring women’s empowerment, especially in rural India, the connections will be issued in the name of women of the households.
- 8000 Cr. has been allocated towards the implementation of the scheme.
- Identification of the BPL families will be done through Socio Economic Caste Census Data.
- The identification of eligible BPL families will be made in consultation with the State Governments and the Union Territories
- Target of 1.5 crore connections fixed for the last financial year of Pradhan Mantri Ujjwala Yojana (PMUY) has been achieved within a span of less than eight months and the scheme is being implemented now across 35 States/UTs.
- The households belonging to SC/ST constitute large chunk of beneficiaries with 35% of the connections being released to them.
- 14 States/UTs with LPG coverage less than the national average, have been identified as priority states for implementing PMUY.
- The Ujjwala Yojana resonated well with people as the central government was quick in distributing cylinders to the beneficiaries and the people had the product in front of them in no time,
- According to scroll report the scheme has not resulted in an increase in the overall LPG consumption since many families who had received the gas connection under the PMUY scheme had not returned to refill their cylinders.
- PMUY beneficiaries also are not required to pay security deposit or any other overhead costs while taking LPG connections, and can even opt to pay in installments for gas stove and first refill at the time of getting connection. These concessions, however, do not apply for the second refill.
- High LPG prices:
- According to a survey, as many as 95% of LPG-deprived households in India cited their inability to pay as a barrier to their adopting LPG. Expenditure capacity of poorer households in India is very low.
- Limited LPG distribution networksin rural areas
- Awareness and administrative issues:
- About 40% of LPG-deprived households in rural areas cite a lack of information about the process of getting a connection as a challenge.
- Poorer states have the biggest mismatch between customer and consumption growth
- For households in urban slums, the absence of residential proof or a lack of interest by urban dealers to serve them also pose a barrier
- Most rural areas are served under the Rajiv Gandhi Gramin LPG Vitaran Yojana (RGGLVY). Here, the consumer has to collect the cylinder from a dealer. Such consumers typically travel 3-11 km (one way).
- As LPG coverage expands in rural areas, the Direct Benefits Transfer of LPG (DBTL) subsidy programme could create additional barriers for economically weaker households. These could be in the form of no bank account or the distance the person travels to have access to banking services.
- Those relying completely on free-of-cost biomass (about 50-60% of the rural population) would possibly opt for the subsidised connection, but would not spend on refilling cylinders regularly.
- Create awareness about the actual cost of fuel and its benefits, especially those related to health.
- It needs to look into whether the scheme has actually been successful in encouraging beneficiary households to switch to using clean cooking fuel.
- Tackle the issue of cash flow, especially for the strata of population who find it difficult to pay for the aggregated cost of refilling a large cylinder. Introducing smaller LPG cylinders (2 to 5 kg) for this section could be a solution.
- Leverage mobile money for LPG payments.
- Innovation is required in distributing LPG in the rural areas, beyond the traditional realm of a dealership model. Leveraging rural supply chains, only for the delivery of the regulated commodity, could be one such approach.
Government has recognised the importance of clean cooking energy with the launch of this scheme. However, India needs to go beyond subsidising connections and fuel costs and focus on issues of cash flow, awareness, availability and administration. Only such a comprehensive approach will help poor households have a better life.
GST and manufacturing sector:-
- The manufacturing sector might be revived under the focused efforts of government and by an implementation of GST regime that could even lead to experience a paradigm shift from an agrarian economy to manufacture and service based economy
- The manufacturing sector will also get a boost as GST is expected to address long-standing issues like
- inter-state taxes
- to also ensure a level-playing field with respect to imports as GST provides for appropriate countervailing duty.
- Many capital goods are likely to witness a 12-14% drop in cost owing to availability of full input tax credit, will spur investments and generate jobs.
- Low compliance costs:
- Also, the GST-compliance rating system for suppliers has shifted part of the burden of ensuring compliance to the recipient.
- This, along with technology enablement, will surely improve compliance significantly.
- For automobiles, the shift to GST has largely been to the benefit of the industry and the consumer except for certain issues
- Excess credit claim by the recipient will be disallowed automatically till the time the return is rectified. Thus, the new system motivates recipients to keep a check on suppliers.
- Reduced cost of production is expected to be spurred by tax reduction.
- Another advantage of GST administration is non-accessibilityof union or central tax credit over state taxes and vice versa can be removed.
- Hassle free supply of goods:-
- The new GST modelwill unify the Indian market and assist the smooth flow of goods within the country.
- Less requirement of Warehouses:-
- Savings will help the manufacturers in capacity buildup and produce more economically.
- Availability of input tax credit on state supply of goods and services may lead to warehouse re-engineering that can remove an extra level of warehousing in the supply chain, hence leading to greater cost benefit.
- GST removes the cascading effect of taxes. This will sufficiently reduce raw material cost and production cost.
- Reduction of logistics cost:
- GST will ensure removal of multiple checkpoints and permits at state border checkpoints.
- Almost 60% of logistics effort and time will be saved which ensure more road hours and faster delivery.
- This will make the manufacturer’s more competitive and will effectively reduce the price of goods at better quality.
- Removal of Area Based Incentives
- GST will effectively absolve the Area based incentive scheme and this will ensure the attractiveness of business to other locations and widely spread across the nation.
- Easy Credit availment
- Removing the restrictions, now service providers can also avail the credit of VAT/ GST paid on inputs procured, which ultimately will get passed on to the Supply Chain as cost savings.
- The advent of geographical business locations
- The decision of setting up business/ logistics/warehousing location will now be dealt by geographical positioning and not on tax based decisions. Many new locations will come up as attractive warehousing or logistic bases.
- Larger Warehouses Setup
- With lesser location constraint, the manufacturers can club there warehouses and consolidate into one large warehouse with state – of –the art handling facilities and equipments.
- At the same time, with larger warehouses, transportation lot sizes will automatically increase, making way for more efficient bigger trucks.
- The higher GST rate for hybrid vehicles will make them unviable for consumers and will result in petrol and diesel variants being sold instead.
- This is not desirable as hybrids are much more fuel-efficient and environment-friendly vehicles.
- Also, levy of tax on used cars at the same rate as for new cars is likely to push this business in the informal sector.
- would negate the Centre’s aim of bringing the unregulated part of this business under the regulated mainstream and also lead to the state losing tax revenue in the process
- The GST structure has been criticised owing to multiple slabs and high effective peak rate of GST. It has been argued by many that the true spirit of GST has been lost and that a high GST rate will fuel inflation.
- Higher taxes on renewable sector and no proper clarity on area based exemptions.
- Increased compliance concerns smaller manufacturers.
- There is a need to provide better compliance support to small medium industries.
- Technology advancement through government initiatives like digital India need to be encouraged more.
- The GST regime will be a game changer for Indian Economy and will provide competitive advantage to the Indian Manufacturing industry which accounts for 16% of the GDP. Thus GDP will also get boost with the proper implementation of these changes.