Every year in January, when the Annual Status of Education Report (ASER) is released, there is a hue and cry about the status of children’s learning in India. The hand-wringing, debates and discussions die down after some time. But this year’s situation is different. India is in a position right now to think and act differently
Benefits of RTE
First cohort to benefit from RTE: First, this year is historic because the children who are today in Class VIII are the first cohort to benefit from the Right to Education Act, which came into effect in April 2010
- We are in an excellent position to think seriously about what eight years of schooling should entail and what it should enable children to do.
Two points of data ASER and NAS: Second, there are now two new sources of data available on children’s learning.
Last week, ASER 2017 and the district report cards from the National Achievement Survey (NAS) were released.
Current ASER survey different than the usual
Different target population: It concentrates on the 14-18 age group, which is different from the usual target population.
Survey in one or two districts only: Also, unlike the usual ASER surveys which are carried out in all rural districts of the country, this year the exercise was done only in one or two districts per State.
ASER 2017 “beyond basics” assessment framework
The ASER 2017 “beyond basics” assessment framework explores how youth cope with everyday tasks that involve literacy and numeracy.
- This is in line with the National Council of Educational Research and Training’s (NCERT) learning outcomes approach where developing connections between mathematical thinking and daily life is stressed
NAS survey also different this year
Performance on broad competencies: In a departure from usual practice, the NAS reports lay out performance of children by different broad competencies rather than by reference to the syllabus or simply in terms of a score.
Example: For example, for Class VIII, the report card gives the proportion of students who can “read textual/non-textual materials with comprehension and identify the details, characters, main idea and sequence of ideas and events while reading” or “solve problems involving large numbers by applying appropriate operations”.
Significant shifts in learning
Both 2017 exercises, one by the government and the other done by NGOs, indicate a significant shift in thinking about children’s learning.
- Stage wise learning outcomes needed: In their own ways, both point to the importance of considering stage-wise learning outcomes, a move which will contribute towards a much-needed rethinking of class-wise curricular expectations.
Both use different methodologies –
- ASER is a household survey and NAS is a school-based effort.
- ASER conducts its assessment one-on-one, while NAS is a pen-paper test.
- ASER is aimed at a representative sample of all children (whether in school and attending or out of school) whereas NAS is a representative sample of children who are enrolled in government or aided schools.
- Typically, ASER focusses mainly on foundational skills like reading and arithmetic, while NAS looks at a wider variety of skills.
District level data now available
Third, district-level data are now available.
- This is significant as within the government’s education system, planning focusses on the district as the unit for planning, allocation and implementation.
- Information on inputs or infrastructure are available annually at the district level.
Why at district level?
One of the reasons for ASER collecting data on a representative sample of children at the district level was to contribute to decisions at that level.
More data to mine
Given these three important milestones, India is in a good position to think of effective new ways of moving beyond universal schooling towards learning for all.
Learning Improvement Fund
- Each year, as the Finance Ministry prepares the Budget, it carries out consultations with different groups.
- Recently, in such a discussion, a suggestion was to have a learning improvement fund that districts can apply to for implementing a results-oriented multi-year learning improvement programme.
Multi year period needed
The annual nature of the planning process in education may have been useful for when inputs had to be provided. But when the focus is moving from “providing schooling” towards “ensuring learning”, a multi-year period is needed for implementation.
Helping the district administration
- Over and above whatever States do, for many years we have seen many instances where the district administration wants to implement serious district-wide learning improvement efforts. But sometimes this energy can be constrained by lack of interest, funds and guidance at the State level
- Although there is a provision for innovation funds in the annual work plan guidelines, these are usually not effectively spent.
- In the upcoming Budget, an amount could be set aside specifically for a learning improvement fund.
- Financial mechanisms could be worked out to access this Central or State-level special fund so that interested districts could bid for these funds based on a well worked out plan.
- The mechanism could include provision of know-how and support, external verification of progress, and room for course correction.
Today there is much more data and evidence about the contours of the learning crisis in India than ever before. The time is ripe for timely and effective decentralised action to improve the quality of children’s learning outcomes
The issue of office of profit must be understood as part of the legislature’s institutional separation
- On January 21, President Ram Nath Kovind approved the recommendation of the Election Commission (EC) to disqualify 20 Members of the Legislative Assembly (MLAs) of the Aam Aadmi Party (AAP).
- They were deemed to have been holding offices of profit as they were parliamentary secretaries to ministers in the Delhi government.
- The party protested the move saying the EC had acted in a unilateral manner as its MLAs had not been given a hearing.
- Chief Minister Arvind Kejriwal had appointed 21 MLAs as parliamentary secretaries soon after the AAP government assumed office in 2015.
- When this decision was challenged before the High Court, the Delhi government sought to retrospectively amend the Delhi Members of Legislative Assembly (Removal of Disqualification) Act, 1997 to exempt parliamentary secretaries from the definition of “office of profit”.
- However, the Lieutenant Governor reserved the matter for the President, who refused to give his assent to the Bill.
- Thus the position of the parliamentary secretaries became precarious.
- The Delhi High Court, in September 2016, set aside the appointment of parliamentary secretaries since it lacked the approval of the Lieutenant Governor.
- Citing this, the AAP claimed that since the appointment was anyway void, the MLAs could not be said to have been occupying an office of profit.
- However, the EC said that the MLAs “de facto” held the office of parliamentary secretaries.
- The AAP now alleges that the EC is acting in a partisan manner, as in other States, the striking down of the office of parliamentary secretaries has not resulted in the disqualification of MLAs.
Office of profit debate
There are multiple questions this issue raises.
Did the EC act in a fair manner and was its decision to disqualify the MLAs legally sound?
The appointment of parliamentary secretaries also raises broader concerns about the nature of executive power in a parliamentary system.
A little history
India’s Constitution makers adopted this idea under Articles 102(1)(a) and 191(1)(a) which state that a lawmaker will be disqualified if he or she occupies “any office of profit” under the Central or State governments, other than those offices exempted by law.
Not defined by the constitution
While the term “office of profit” is not defined in the Constitution, the Supreme Court, in multiple decisions, has laid out its contours.
MLAs as parliamentary secretaries: Rewarding loyalists
- The trend of appointing MLAs as parliamentary secretaries is done across the political spectrum.
- Many of these have been legally challenged and struck down by the judiciary. Recently, the Supreme Court struck down the Assam Parliamentary Secretaries (Appointment, Salaries, Allowances and Miscellaneous Provisions) Act, 2004, calling it unconstitutional.
Hence, the issue has a chequered legal past.
So why do State governments create such posts in the first place?
To reward MLAs: Such posts are mainly to reward MLAs who do find a place in the cabinet
To get around Article164 (1-A): One of the major constraints in cabinet formation is Article 164 (1-A) of the Constitution which limits the number of Ministers in State cabinets — including the Chief Minister — to 15% of the total number of MLAs of the State; for Delhi it is 10% of the total seats. It is to get round this constitutional cap that State governments create such posts.
Article 164 (1-A)
Article 164 (1-A) was inserted by the 91st Constitutional Amendment in 2003 on the recommendation of the M.N. Venkatachaliah-headed National Commission to Review the Working of the Constitution.
Constitutional constraints help in maintaining checks
While it can be debated whether the prescribed cap is too harsh, constitutional constraints and office of profit restrictions seek to prevent the creation of multiple executive posts to reward loyal legislators.
Larger institutional malaise
- Rewarding MLAs with executive posts can restrict them from performing their primary role.
- The creation of such posts can also be attributed to the larger institutional malaise facing the legislatures
- Lawmakers have been enfeebled over the years through measures such as binding party whips and a purely executive-driven legislative agenda
- In such an institutional milieu, lawmakers increasingly seek positions with perks to exercise influence.
Unless legislatures are truly strengthened and the disproportionate power of the executive in the legislature curtailed, the demand for creating such posts will continue to persist.
The Supreme Court on Monday asked the governments of Rajasthan, Haryana and Uttar Pradesh to respond to a plea seeking contempt action against the States for not complying with the court’s order to take stern steps against cow vigilantism
A Bench led by Chief Justice Dipak Misra, acting on a contempt petition filed by Tushar Gandhi, the great grandson of Mahatma Gandhi, asked the States to respond by April 3.
Stern measures asked by SC
On September 6 last year, the apex court had asked all the States to take stern measures to stop violence in the name of cow protection, including
Senior police officers as nodal officers
Appointing of senior police officers as nodal officer in every district within a week and acting promptly to check cow vigilantes from behaving like they are “law unto themselves.”
The senior police officer shall take prompt action and ensure that vigilante groups and such people are prosecuted with quite promptitude
Dedicated Task Force
Observing that such acts of violence “must stop,” it had directed the States to form a dedicated task force in each district.
Status report by Chief Secretaries
It had asked their chief secretaries to file status report giving details of actions taken by them to prevent incidents of cow vigilantism.
SC had directed the States to ensure highway patrolling after it was pointed out that such incidents mostly took place there on the pretext that vehicles were carrying beef.
The court had further asked the Centre to respond to the submission that it could issue directions under Article 256 (obligation of States and Union) of the Constitution to all State governments on issues related to law and order.
Planned Action needed
SC had said that “some kind of planned action is required so that vigilantism does not grow” and efforts have to be made to stop such acts
President Ram Nath Kovind and Prime Minister Narendra Modi on Monday advocated the early passage of the Muslim Women (Protection of Rights on Marriage) Bill, 2017, also known as the triple talaq Bill, during the Budget session of Parliament.
It has been hanging fire in Upper House of Parliament
The Bill had been cleared by the Lok Sabha in December last, but is hanging fire in the Rajya Sabha where a larger Opposition group wants to send it to a Select Committee for further scrutiny, while the government wants early passage of the Bill.
Opposition members are resisting what they term the “criminalisation of divorce” as the Bill proposes a three-year jail term for Muslim men if they pronounce instant triple talaq.
In a bid to revive ties with Nepal, External Affairs Minister Sushma Swaraj will visit Kathmandu from February 1 to 2
- The visit comes weeks after Nepal elected a Leftist coalition, which won the first historic poll under the new Constitution of the country
- The visit by Ms. Swaraj will be the first big diplomatic engagement by the newly elected rulers of Kathmandu.
- Significantly, only last week Prime Minister Narendra Modi had reached out to the elected Prime Minister K.P. Sharma Oli wherein both the leaders had invited each other for a visit
“The visit is in keeping with the tradition of regular high-level political exchanges between India and Nepal, and reflects the expanding bilateral partnership and the importance that the two countries attach to further strengthening it across diverse sectors,” a release from the Ministry of External Affairs said on Monday.
- Ties between Mr. Oli and Mr. Modi had been cold since the former was the Prime Minister during the months-long economic blockade between 2015-16.
- Mr. Oli fought the election through a coalition with former Prime Minister Pushpa Kamal Dahal ‘Prachanda’ though he is yet to be formally sworn in.
China on Monday offered to open talks with India to resolve differences on the China Pakistan Economic Corridor (CPEC), opening the door for removing a major irritant in New Delhi-Beijing ties
New Delhi has objected to the corridor which passes through Pakistan-occupied Kashmir, as violation of its sovereignty
- “We are ready to work with the Indian side through dialogue and communication for a better solution. This best serves the interests of the two countries,” Chinese Foreign Ministry spokesperson Hua Chunying said, when asked to comment on remarks on CPEC by India’s Ambassador to China, Gautam Bambawale.
- In an interview with Global Times last week, Mr. Bambawale had proposed a new phase of dialogue between India and China, which would cover all differences including CPEC.
The National Defence Strategy (NDS) and the National Security Strategy (NSS) released recently by the U.S. showcase the country’s strategic priorities and the way forward. As the two documents lay considerable focus on the ‘Indo-Pacific’, they will serve as crucial policy indicators for India and the region. The previous Obama administration too laid considerable focus on Asia-Pacific under its ‘Rebalance to Asia’ strategy.
India can be a ‘consensus builder’ in its neighbourhood before moving ahead with its role as ‘net security provider’
- The NDS is reflective of the changing geopolitical realities in Asia. The U.S. administration has shifted its focus from the Asia-Pacific to Indo-Pacific as a reference point of its maritime strategy.
- With its withdrawal from the Trans-Pacific Partnership, the U.S. is looking for multilateral economic engagement with Asian economies. On the strategic front, apart from building missile defence systems with Japan and South Korea to checkmate North Korea, U.S. President Donald Trump has shown keenness to align with the ‘Quad’ to counter China’s rise.
China’s intrusion into Indian neighbourhood
- India’s neighbourhood is demonstrating changes under China’s influence.
- Chinese infrastructure and loan diplomacy have impacted India’s immediate neighbourhood.
- There has been a constant Chinese strategic presence in the Indian Ocean Region (IOR).
- At the multilateral level, India is checkmated by China on the issues of terrorism and membership of the Nuclear Suppliers Group.
Little outcome of Act East Policy
- Over the last three years, India has worked to secure a major diplomatic engagement to secure its relations with its immediate neighbourhood as well as further its relations with ASEAN under the ‘Act East’ policy to counter China.
- However, there is little tangible evidence of any significant outcome of the engagement so far.
China can’t risk the success of BRI
- China has invested significant capital to push ahead its ambitious Belt and Road Initiative (BRI).
- Its economy will be dependent on the success of the BRI and cooperation with other states, so China will not want to destabilise the region.
Need for a unity in the Indo Pacific to stand against China
- As no single country in the Indo-Pacific region can rise to the challenge posed by China and other security concerns, there needs to be a building of unity.
- India can be that ‘consensus builder’ in its neighbourhood before moving ahead with its role as ‘net security provider’ in the region.
For the first time, nuclear protein lamin B2, which plays an important role in maintaining the structure and function of the nucleus, has been found to determine the morphology and function of the nucleolus, a roundish entity found inside the nucleus. The nucleolus makes ribosomal ribonucleic acid (rRNA) and ribosomes. Like in the case of the nucleus, the lamin B2 protein is found at the border of the nucleolus, which is again a new finding
The novel role of the nuclear protein has been explored
- In contrast to normal cells that contain one or two spherical and regular-shaped nucleoli, cancer cells may have as many as 10.
- Cancer cells are highly proliferative in nature and require more protein synthesis for survival.
- The demand for additional protein is met by large-sized nucleoli that are distorted in shape or by nucleoli that are found in abundance.
- Cancer cells can also have a large number of nucleoli that are large-sized.
Indian Institute of Science Education and Research (IISER)
Peering deep into cells using a super-resolution microscope, a team led by Kundan Sengupta from the Indian Institute of Science Education and Research (IISER), Pune found that in addition to their location at the border of the nucleus, lamins were found right near the boundary of the nucleolus.
Lamin B2 controls the shape and the function of the nucleolus
- The aggregate occupied more volume than when the nucleoli were separate entities.
- When the lamin B2 was restored to its normal level, the nucleoli regained their original shape.
- This strongly suggests that lamin B2 controls the shape of the nucleolus
- Besides controlling the shape, lamin B2 also controls the function of the nucleolus.
Depletion of Lamin B2
- When the lamin B2 level was depleted in the cancer cells, there was an increase in the levels of ribosomal RNA precursors
- Lamin B2 also modulates the entry and exit of a multifunctional RNA binding protein (nucleoli). This protein too forms an aggregate in the absence of lamin B2
The Economic Survey underscores the need to maintain fiscal credibility
The Economic Survey underscores the need to maintain fiscal credibility
The Economic Survey for 2017-18 paints the picture of an economy that gives reason for both optimism and caution.
GDP growth could accelerate
It projects that GDP growth could accelerate to 7-7.5% in 2018-19, from 6.75% in the current fiscal, reinstating India as the world’s fastest-growing major economy
Key factors for positive outlook
According to Chief Economic Adviser Arvind Subramanian, the key factors contributing to the positive prognosis are the reform measures:
I&B Code and GST
Adding to these domestic enablers are the fair winds of a global recovery that have already lent a lift to overseas demand for India’s goods and services.
Rising oil prices need to be taken into account
But capitalising on these favourable factors while remaining vigilant to other macroeconomic threats, including a key risk in the form of persistently high oil prices, would require exemplary economic stewardship.
A classic emerging market ‘sudden stall
- Among the concerns the CEA has flagged is one relating to what the Survey calls “a classic emerging market ‘sudden stall’ induced by sharp corrections to elevated stock prices.” With Indian stock indices continuing to soar to new highs on an almost daily basis, the Survey warns against “sanguineness about its sustainability”.
Priorities need to be reviewed
On the fiscal front, the survey contends that the Centre needs to reappraise its priorities.
Avoid setting overly ambitious targets
The onus, it argues, has to be squarely placed on establishing and maintaining policy credibility. To this end, it argues against “setting overly ambitious targets for consolidation, especially in a pre-election year” that are based on optimistic and unrealistic assumptions.
- Instead, it recommends a “modest consolidation” that would signal a return to the path of calibrated deficit reductions.
- In doing so, it appears that the Survey is signalling that the government may have to retain the elbow room to stabilise the GST, complete the recapitalisation exercise and, most crucially, support agriculture.
Climate change crucial
Devoting an entire chapter to ‘Climate, Climate Change and Agriculture’, the CEA and his team have stressed on the dangers climate change poses to the outlook for farm growth. With the potential to reduce annual agricultural incomes — by as much as 20-25% for unirrigated areas — the Survey calls for a range of mitigation measures including extensive provision of efficient irrigation technologies and a wholesale review of the cereal-centric approach to policy.
Rapid economic expansion
Citing job creation and education as key priorities, the Survey sets out a plan for rapid economic expansion by recommending that policymakers keep their sights trained on strengthening “the only two truly sustainable engines — private investment and exports.”
The number of people defecating in the open in rural India had reduced to less than half of what it was in 2014, according to the Economic Survey, claiming success in rural sanitation due to Swachh Bharat Mission (SBM), the flagship scheme of the Centre.
90% of those with toilets using them
“As per baseline survey conducted by Ministry of Drinking Water and Sanitation, the number of persons defecating in open in rural areas, which was 55-crore in October, 2014, declined to 25-crore in January, 2018, at a much faster pace compared to the trend observed before 2014,” the Survey said. “So far, 296 districts and 3,07,349 villages all over the India have been declared as Open Defecation Free (ODF)
Completely ODF States
Eight States and two Union Territories, i.e., Sikkim, Himachal Pradesh, Kerala, Haryana, Uttarakhand, Chhattisgarh, Arunachal Pradesh, Gujarat, Daman & Diu and Chandigarh have been declared as ODF completely.”
More than 90% of the individuals, who had access to toilets, were using them in 2016 and 2017
NSSO survey data
“The surveys conducted by National Sample Survey Office (NSSO, 2016) and Quality Council of India (QCI, 2017) on usage of toilets by the individuals who have access to toilets reported more than 90% of individuals using toilets in 2016 and 2017,” the Survey said
Quality of sanitation impacts positively
Underlining that the quality of sanitation and hygiene positively impacts health outcomes, the Survey says, “According to UNICEF, the lack of sanitation is responsible for the deaths of over 100,000 children in India annually and for stunting of 48 % children.”
Better health indicators
A pilot study, conducted by the Bill and Melinda Gates Foundation in selected open-defecation free (ODF) and non-ODF districts, showed that households in ODF districts had “significantly better health indicators”
Economic benefits of staying ODF
The Survey also says that there are economic benefits in becoming open-defecation free.
- “According to the World Bank estimates, the lack of sanitation facilities costs India over 6-% of GDP
- In a report ‘The Financial and Economic Impact of SBM in India (2017)’ UNICEF estimated that a household in an ODF village in rural India saves Rs. 50,000 ($800) every year,” the Economic Survey states.
The government needs to address issues such as rent control and unclear property rights rather than focussing on building more homes under its scheme to provide ‘Housing for All’ by 2022, according to the Economic Survey 2017-18.
Survey urges focus on contract enforcement, unclear rights
- Need to take a more holistic approach that takes into account rentals and vacancy rates.
- “In turn, this needs policymakers to pay more attention to contract enforcement, property rights and spatial distribution of housing supply versus demand,” it said.
- The policies on housing needed to recognise that India has an increasingly fluid population.
- A successful housing policy should enable the ability to move to, between and within cities as job opportunities arise.
- It should also deliver vertical mobility, so that an aspirational population can climb the socio-economic ladder, the Survey explained. It highlighted that two important areas that need to be looked at are the rental segment and vacancy rates.
‘Rental share declines’
Rental housing is important for both horizontal and vertical mobility as it allowed people to access suitable housing without actually having to buy it.
- The share of rental housing has actually been declining in Indian cities since independence from 54% in 1961 to 28% in 2011
- As a proportion, renting accommodation is more prevalent in urban areas than in rural. According to the 2011 Census, the share of households living in rented houses was only 5% in rural areas, but 31% in urban areas.
Increase in vacant houses
It pointed out that despite the shortage of housing in urban India (more than 18 million households in 2012), there is also a trend of increase in vacant houses: from 6.5 million in 2001 to 11.1 million in 2011
- According to the national census, vacant houses constituted around 12% of the share of the total urban housing stock.
- Mumbai has the highest number of total vacant houses (0.48 million), followed by Delhi (0.3 million) and Bengaluru (around 0.3 million).
- In terms of share of vacant houses to total residential stock, Gurgaon ranked highest (26%).
The phenomenon of high vacancy rates is not fully understood but unclear property rights, weak contract enforcement and low rental yields may be important factors. “The spatial distribution of new real estate may also be an issue as the vacancy rates generally increase with distance away from the denser urban cores.”
Following the demonetisation exercise, Indian households are moving away from savings in cash to financial assets, the Economic Survey for 2018 pointed out
‘Shift to financial assets post note ban’
Commenting that the pattern of household savings was significantly different in 2016-17 as compared with the previous five years, the Survey said while the overall financial savings of the households increased more than 20% in 2016-17, which was significantly higher than the growth witnessed in any of the preceding five years, there was a decline in savings in the form of currency by more than 250% (of about ₹5 lakh crore).
Why this decline
“This decline primarily owed to the withdrawal of high denomination currency notes in November 2016 and partial remonetisation by end March 2017,” the Survey said.
- The savings of households were channelled into financial assets like bank deposits, life insurance funds and shares and debentures.
- The growth of savings in mutual funds registered a phenomenal increase of more than 400% over and above the growth of 126% witnessed in 2015-16.
Rise in MF savings
- “Thus within a span of 2 years, savings in the form of mutual funds registered more than 11-fold increase
- That this happened in a period when the BSE Sensex increased by an average of just about 1.5% per annum needs to be analysed in more detail,” the Survey said.
Investment savings slowdown disheartening
- While the investment rate as a share of GDP in the economy declined by nearly 5.6 percentage points between 2011-12 and 2015-16, savings rate declined by two and half percentage points between 2011-12 and 2013-14 and has remained range bound thereafter.
- “India’s investment, savings slowdown is unusual, never happened like this before,” Chief Economic Adviser Arvind Subramanian said.
The Economic Survey 2017-18 said farmer income losses from climate change could be between 15% and 18% on an average, rising to anywhere between 20%-25% in unirrigated areas of the country.
Technologies like drip irrigation hold key to future of agriculture; ‘replace power subsidy with DBT’
- “[The] Prime Minister’s goal of doubling farmers’ incomes — increasingly runs up against the contemporary realities of Indian agriculture, and the harsher prospects of its vulnerability to long-term climate change,” pointed out the survey, adding that India needed to expand irrigation – and do so against a backdrop of rising water scarcity and depleting groundwater resources.
Full Irrigation a problem
- “Fully irrigating Indian agriculture, that too against the backdrop of water scarcity and limited efficiency in existing irrigation schemes, will be a defining challenge for the future.
- Technologies of drip irrigation, sprinklers and water management — captured in the “more crop for every drop” campaign — may well hold the key to future Indian agriculture,” said the survey
Power subsidy needs to be removed
Power subsidy needs to be replaced by direct benefit transfers so that power use can be fully costed and water conservation furthered.
Extreme temperature shocks reduce farmer incomes by 4.3% and 4.1% during kharif and rabi respectively, whereas extreme rainfall shocks reduce incomes by 13.7% and 5.5%. “Once again, these average effects mask significant heterogeneity, with the largest adverse effects of weather shocks being felt in unirrigated areas, it said
Supply shock dominates
- Ex-ante it is not clear which direction farm revenues should move in — on the one hand, these shocks reduce yields, but on the other, the lower supply should increase local prices.
- The results here clearly indicate that the “supply shock” dominates — reductions in yields lead to reduced revenues,” said the Survey
Different agricultures and different challenges
The Survey observes that while thinking about agricultural policy reforms in India, it is vital to make a clear distinction between two agricultures in India.
Northern India: Cereals based
“There is an agriculture — the well-irrigated, input-addled, and price-and-procurement-supported cereals grown in Northern India — where the challenge is for policy to change the form of the very generous support from prices and subsidies to less damaging support in the form of direct benefit transfers.
Central, Western and Southern India
On the other hand there is another agriculture (broadly, non-cereals in central, western and southern India) where the problems are very different such as inadequate irrigation, continued rain dependence, ineffective procurement, and insufficient investments in research and technology (non-cereals such as pulses, soyabeans, and cotton), high market barriers and weak post-harvest infrastructure (fruits and vegetables), and challenging non-economic policy (livestock),” it said.
Less is more said the Economic Survey released on Monday when it comes to appeals by the income tax department for both direct and indirect tax cases.
Income Tax Department is the biggest litigant but loses 85% of cases, says Survey
Faced with a success rate that is less than 30%, the Survey said the tax department would gain from a reduction in appeals pursued at higher levels of the judiciary besides leading to a reduction of workload on high courts and the Supreme Court
4.7% of GDP
“Together, the claims for indirect and direct tax stuck in litigation by the quarter ending March, 2017, amounted to nearly ₹7.58 lakh crore, over 4.7% of GDP,” the Survey said.
Increasing the workload of the judiciary
It said the government’s persistence with litigation despite high rates of failure was increasing the workload of the judiciary and adding to delays and pendency of cases.
Taking a toll on the economy
- This, it said was “taking a severe toll on the economy in terms of stalled projects, mounting legal costs, contested tax revenues, and reduced investment”.
- While it is difficult to estimate the costs of pendency and delay, the Survey found that more than ₹52,000 crore worth of government infrastructure projects have been stalled by various orders of the courts.
Special Leave Petitions becoming the norm
- The survey also reflected on the tendency of the Supreme Court to eagerly entertain appeals directly from any court or tribunal in the form of Special Leave Petitions (SLPs)
- Initially invoked only in “exceptional circumstances”, SLPs were now an overwhelming feature of practice at the Supreme Court, the survey said.
- The rate at which the Supreme Court admits SLPs increased from about 25% in 2008 to almost 40% in 2016.
- “This rising tendency to grant special leave has fundamentally altered the nature of the Court and created a high level of pendency, nearly 85% of which are SLP cases,” the report said.
Dedicated subject matter courts could be established
- The Survey found that dedicated subject-matter courts could have “profound benefits” as seen in the apex court’s recent experiment with constituting an exclusive bench for taxation produced impressive results.
- This may be replicated for other subject matters, and emulated by other high courts, the Survey said.
The Economic Survey has suggested that the Goods and Services Tax (GST) Council should comprehensively review ‘embedded taxes’ and expeditiously eliminate the embedded export taxes to boost India’s manufacturing exports.
Survey moots thorough review of taxes from products left outside the ambit of GST, and from within
The Economic Survey has suggested that the Goods and Services Tax (GST) Council should comprehensively review ‘embedded taxes’ and expeditiously eliminate the embedded export taxes to boost India’s manufacturing exports.
Need for national policy: National Integrated Logistics Policy
Pointing out that high cost of logistics was impacting competitiveness in domestic and global market, it suggested the formulation of a National Integrated Logistics Policy to bring in greater transparency and enhance efficiency in logistics operations.
- “Improving logistics sector has huge implication on exports and it is estimated that a 10% decrease in indirect logistics cost can increase 5-8% of exports,” the Survey said.
Data on the international exports of states
The document has also thrown up some interesting findings on India’s export sector
This included data on the international exports of states, the first in India’s history, showing that five states — Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana — in that order account for 70% of India’s exports
Firm-level analysis on exports
Similarly, for the first time, the Survey did a firm-level analysis on exports and found that export concentration by firms was much lower in India than in the U.S., Germany, Brazil, or Mexico – meaning that India had no ‘exports superstars’ and that its export structure was “egalitarian” in nature.
- “The top 1% of firms accounted for 72, 68, 67, and 55% of exports in Brazil, Germany, Mexico, and USA respectively, but only 38% in the case of India. The top 5% accounted for 91, 86, 91, and 74% in those countries, compared with 59% in India,” the Survey said, adding that the new GST data had made it possible to construct firm-level exports
The current episode of investment slowdown is ongoing, and one that is impacting growth, and therefore investment revival needs to be prioritised urgently to arrest more lasting impact on growth
Measures to regain growth
To help India regain growth, the Survey suggested that the measures, that need to be taken soon,
- Should include easing further the cost of doing business and creating a clear and stable tax and regulatory environment.
- The government must create a conducive environment for small and medium industries to prosper and invest to help revive private investment
The Survey raised concerns over slowdown in savings saying that too was ongoing.
Referring to the simultaneous slump in savings and investment, the Survey asked, “Should policies that boost investment (substantial infrastructure push, reforms to facilitate the ease of doing business or the ‘Make in India’ programme) be given greater priority over those that boost saving?”
Chief Economic Adviser Arvind Subramanian on Monday acknowledged that the country’s monetary authorities may have little choice now but to adopt a policy stance that lets them tamp down on re-emerging inflationary pressures
On whether RBI should change its stance as inflation is rising
Mr Subramanian said, “Now clearly the cycle has turned, inflationary pressures have re-emerged. So it is not just the fact inflation is picking up but also the fact if growth happens the output gap will also start narrowing. From both those perspective the stance of the monetary policy naturally has to change.”
Bond yields shot up
Bond yields shot up after the comments with the yield of new 10 year government bond ended the day at 7.44% as compared to its previous close of 7.31%.
Increase in Consumer price index based inflation – the central bank’s primary yardstick for monetary policy formulation – increased to a 17 month high in December following higher food prices. It was 5.21% in December just below the central bank’s tolerance limit of 6%.
MPC kept the rates unchanged
The monetary policy committee of RBI has kept the key policy rate or the repo rate unchanged in the last two meetings while keeping the neutral stance. The next review meeting is due next week.
Markets have misinterpreted the government’s additional borrowing
- He also said the markets have misinterpreted the government’s additional borrowing numbers as it does not reflect the underlying deficit.
- “Whatever the borrowing that’s been done by the centre and the especially the states, markets have misinterpreted that …it is not going to be financing new deficit but a change in financing away from the NSSF (National Small Savings Fund) towards market borrowing. And that is not a new deficit,” he added.
The Goods and Services Tax has resulted in a 50% increase in the number of indirect taxpayers, the Economic Survey said, adding the fledgling tax regime has already revealed new data on key aspects such as inter-State trade, State-wise exports, and the extent of formalisation in the economy
Voluntary enrolment by small firms lifts number of indirect taxpayers by 50%
“There has been … a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises and want to avail themselves of input tax credits,” the Survey said.
Tax credit preference
In addition, the Survey showed a significant proportion of tax filers eligible for the Composition Scheme have instead opted to file their returns in the regular manner so as to avail of input tax credits
So, about 54.3% of those eligible for the composition scheme chose instead to be regular filers.
Formal sector larger in India
Further, GST data showed that the formal sector in India was larger than earlier thought. “Formality defined in terms of social security provision yields an estimate of formal sector payroll of about 31% of the non-agricultural work force; formality defined in terms of being part of the GST net suggests a formal sector payroll share of 53%,”
The economy is set to grow at 7-7.5% in the next financial year on the back of reviving exports and investment even as the negative effects of demonetisation and the teething troubles of the Goods and Services Tax recede, Chief Economic Advisor Arvind Subramanian said in the Economic Survey 2018.
Economic Survey says effects of note ban, GST have receded. Sounds a note of caution on rising oil prices, stock marketsCalls for medium term focus on education and agriculture
The Survey, tabled in Parliament by Finance Minister further predicted that GDP growth in the current financial year would touch 6.75%, higher than the 6.5% estimated by the Central Statistics Office.
For more reforms
I&B Code and Recapitalisation measures for PSBs to boost economic growth
Looking ahead, it said reform measures like the implementation of the Insolvency and Bankruptcy Code and the recapitalisation plan for public sector banks would go a long way in addressing the twin balance sheet problem afflicting both corporates and banks, which would in turn further boost economic growth.
India to again become the fastest growing economy
“This should allow real GDP growth to reach 6.75% for the year as a whole, rising to 7-7.5% in 2018-19, thereby re-instating India as the world’s fastest growing major economy,” it said.
Mr Subramanian said that a $10 per barrel increase in oil prices results in a slowdown in GDP growth by 0.2-0.4%, and a rise in inflation of 0.3-0.4%.
Policy actions needed
These include completing the reforms needed to effectively address the ailing balance sheets of corporates and banks, and finalising the privatisation of Air India.
Focus areas for medium term
In the medium term, the Survey highlighted three areas that would require a policy focus including:
Employment, education, and agriculture