Much must change in Kerala

Article

  1. Pulapre Balakrishnan Professor of Economics of Ashoka University, talks about the manmade causes of Kerala floods, and suggest measures to bring resilience.

Important Analysis

  1. Man Made Causes of floods
  • Kerala witnessed widespread deforestation, rampant construction and indiscriminate quarrying which has triggered landslides and also obstructed water channels.
  • Large scale sand mining
  • Improper land use pattern
  • Large scale quarrying for tourism sector
  • Ignored the importance of wetlands.
  • Alienation of agricultural land
  • Constructing large building on flood plain leading to blockage of river stream
  • Concretization of river plains
  1. Suggestion
  • Land use in the State needs review at the level of the State government.
  • Public review of the dams in Kerala and how they are operated, focusing in particular on how their operation may have affected the flooding
  • Proper flood-proofing effort need to be the part of government’s protocol.

Cause for caution

News:

  1. India’s GDP growth rate stands at 8.2% for the first quarter (April-June) of this year.

Important facts:

  1. The growth rate estimates need to be interpreted in the backdrop of:
  • Depreciating rupee.
  • Rising NPAs.
  • Widening trade deficit.
  • Shooting fuel prices.
  1. Despite all these concerning economic trends, the GDP rate presents a robust picture.
  2. Partly, it can be explained by low base effect i.e. low growth rate in the previous year gives inflated effect on the growth rate of the present year
  3. Deeper understanding of this growth paradox require sector wise analysis:
  • Agriculture: agricultural GDP growth quickened as two successive years of good rains improved farm produce, but remained low.
  • Manufacturing and construction: both the industries are gaining revival after the shock of demonetisation and simplification of GST.
  • Services: the growth rate of this sector slowed down, still grew faster than agricultural GDP.
  • Rural wage growth has remained stagnant for the past four years.
  • Consumer Industries: they are reporting robust sales growth.
  • Powered by government salary and pension hikes, private consumption growth has quickened.
  • The share of investments in the GDP has reduced – a direct consequence of NPA crisis.
  • Banking: only a little progress made in recapitalisation and in reforming Public sector Banks.
  1. Challenge before the government:
  • The consumption driven growth is not sustainable after a point, especially if it is financed by government deficit.
  • Mounting macro-economic pressures such as rising crude prices, risk of rising inter-country trade war etc.
  1. Suggestive measures and growth dilemma before the government:
  • Currency devaluation to arrest the trade deficit, but it will also inflate retail fuel prices.
  • Tax cuts on fuel to restrict fuel price hikes will widen fiscal deficit.
  • RBI can increase interest rates to stabilise rupee, but it will increase the cost of borrowing and affect the investments.
  1. Way forward
  • Removing bottlenecks and bringing efficiency in the supply chains.
  • Reducing the dependence on fossils and accelerating transition to renewable source of energy.
  • Inclusion of modern technologies in the manufacturing to boost Make in India, and shorten trade deficit

Casting capers: Maneka sees animals in wrong role

News

  1. The Women and child development Minister Maneka Gandhi accuses the Animal welfare Board of India for not enforcing rules that specify how animals can be depicted in films and television shows

Important Facts

  1. Concerned raised by Minister
  • The Board did not seek details of the species status while giving approval to applicants.
  • The Board allowed the depiction of wildlife in scenes which could promote cruelty to animals.

E.g (a) the board allows the depiction of a Hoolock gibbon in documentary without enquiring from filmmaker about status of permission.

The board had granted request to many applicants for showing snakes and birds even the  applicant did not specified the species information.

  1. The Supreme Court’s had ordered ban on a scene showing animal sacrifice
  2. The prevention of cruelty to Animal Act, 1960, provides the power of search and seizure to police if she/he reason to believe that an offence has been committed on animal.
  3. According to “The performing Animal (Registration) Rules, 2001 provide special guidelines for featuring animals in films and asked the owner of the film to ensure the following
  • Animal is not continuously used for excessive number of takes in shooting.
  • The fight scene shall not be shot in any lives stock holding area
  • The owner shall inform the prescribed authority at least four weeks in advance regarding shoots of animals

Opinion | India’s impossible trinity problem

News:

  1. Analysis of India’s Trinity problem and comparison with past experience in context of currency depreciation
    • Impossible Trinity – It states that country cannot have a Fixed Exchange Rate, An Independent Monetary Policy (Independence of External Factors) and Free Capital flows at the same time. It implies, an open economy can achieve only two of these objective at the cost of third.

Important Analysis:

  1. Indian Rupees has been trading at a very low level, the same situation India has dealt with, in 2013.
  2. Comparison of Economic situation now and then in 2013
  3. Comparison is being made on the account of:
  • Depreciation of Rupees
  • Foreign Investment Outflow
  • Widening Current Account Deficit
  1. Differences between the situations.
  • India’s Macroeconomic Fundamentals is strong as compared to 2013
  • Presently, Inflation is controlled well below double digit.
  • High India’s exchange reserves to sustain imports to 10 months.
  • Improvement in Portfolio inflows
  • Government is committed to fiscal consolidation.
  1. Having the quite strong position of economy now, there are some similarities too, which raises the concern such as Trinity Problem.
  2. Countries such as U.S, China and EU have chosen different set of combination to deal with Trinity dilemma during financial crisis.
  • S has independent monetary policy and no money control, resulting in a flexible exchange rate.
  • China has devalued its currency Renminbi in 2015.
  • EU has given up Monetary policy independence for a stable exchange rate and financial integration.
  • Thailand and Mexico has fixed exchange rate to U.S dollar during forex reserve crisis.
  1. India’s reaction during 2013 crisis to tackle Rupees depreciation
  • RBI imposed partial capital controls to manage depreciation
  • Direct investment by Indian companies abroad were curtailed
  • Restrictions were imposed on money outflow on account of remittance.
  • Foreign currency non—resident (FCNR) deposits were introduced to attract foreign currency.
  • Partial money control with stable exchange rate were adopted
  1. Presently, due to foreign portfolio outflows, India is facing similar trilemma as it faced in 2013.
  2. Factors affecting Foreign currency inflow are divided into Push and Pull factors.
  • Pull Factor – These are country specific factors which pull foreign currency such as:
  • Economic Growth of the country
  • Interest Rates
  • Fiscal stability.

Push Factors – Push capital into emerging market such as:

  • Low interest rate in advanced markets or economy (If country A has low interest rate as compared to B, the capital will be pushed from country A to B in lure of extra capital interest gain).
  1. Open capital account with a floating exchange rate will always lead to periods of appreciation or depreciation.
  2. Though, depreciation of Rupees will make our export cheaper but will increase the cost of import.
  3. Thus it is important for emerging markets like India to deal with both volatile inflows and outflows.
  4. steps to taken by India
  • Either impose capital control or increase interest rates (recently RBI already increased)
  • Focus on foreign inflows to finance CAD.
  • Promote software export.
  1. Market forces should be allowed to determine nominal exchange rate.

Solutions beyond farm loan waivers

Article:

  1. Nilanjan and Manorma, a Professor of Economics has discussed about the in-effectiveness of loan waiver schemes.

Important Analysis:

  1. Research conducted by Tata Trust in Rajasthan has revealed that loan waiver schemes are extremely expensive with limited impact.
  2. Issues associated with loan waiver scheme:
  • Scheme is available only to 15 % of marginal farmers who have taken formal loans.
  • Marginally poor farmers without any formal loans are neglected.
  • After loan waiver scheme, banks reduce credit support to small farmers during next loan cycle.
  • Small farmers use money saved from loan waiver for domestic consumption instead of agriculture. Leading to low agriculture productivity.
  • Very less impact against the money spent. Which further curtails the limit of allocated credit in the subsequent year
  1. Challenges faced by the poor farmers:
  • Due to unavailability to formal loans, they are forced to attract informal loans which is costly.
  • Inadequate storage facility discourages small farmers to grow perishable items on which profit is more.
  • And even if they do grow, they often sell their produce to the person from whom they may have taken the loan.
  1. Report has recommended better remedies for farm distress
  • Spend money on building canals and warehouses
  • Advanced storage facility – will reduce waste of perishable produce.
  • Efficient E-Markets – Could ensure better prices to farmers.
  • Rural Electrification.
  1. Though, there are e-Markets and regulated markets to control the farm distress, some issues are still associated with regulated markets such as:
  • Lower and fragmented market size.
  • Lack of price incentive due to presence of buyer’s cartel.
  • Lack of information on product standard.
  1. Benefits of e-Mandi:
  • Provide direct market access to Farmers by excluding middleman.
  • Symmetry in data would provide better price mechanism to poor farmers.
  • e-Mandis has benefited Rajasthan

Why you shouldn’t expect a cut in fuel prices soon

News:  

  1. Centre decided not to cut the fuel tax on petrol and diesel due to risk of revenue reduction upto 30,000 crore.

Important facts:

  1. Recently petrol in India has been most expensive in South Asia.
  2. Reducing oil price by Rs 2 per litre would impact revenue by Rs 28,000- 30,000 crore.
  3. Tax as reason for high oil price
  • 46% of the oil price is constituted of taxes like Value Added tax (VAT).
  • Maharashtra earned highest revenue from sales tax/VAT on petroleum products in the country followed by UP, Tamil Nadu, Gujarat and Karnataka.
  • Being an ad valorem tax (based on value), high oil prices results in higher revenues for the government.
  • Crude petroleum attracts 20% oil industry development cess, and a National Calamity Contingent Duty (NCCD) of Rs 50 per metric tonne.
  • Petrol and diesel attract a Customs duty of 2.5%.
  • The Centre raised excise duty nine times between 2014-2016.
  1. Reason for non reduction in taxes
  • Taxes are a key revenue source for both the Centre and states, and a cut will hit their fiscal position.
  • Revenue collected is used to finance the high gross fiscal deficit as a percentage of their GDP.
  • Besides taxes, the Centre and the states have other earnings, too, from the petroleum sector.
  • For example, dividend income, dividend distribution tax, corporate/income tax and profit on exploration of oil and gas etc. shore up government earnings.
  • Centre expect states to reduce VAT, as they pass on over 40% of the taxes to the states by horizontal fiscal devolution
  • The oil tax cut, will involve making budget cuts in developmental expenditure for welfare schemes.
  1. Reasons against non reduction of taxes
  • All fuel product prices are not market-linked e.g.,Kerosene and LPG prices continue to be regulated by government. So the government may still have to bear some direct costs by subsidising these products to protect society’s weaker sections.
  • Also, higher oil prices and capital outflows push up inflation, which will increase the government’s borrowing costs.
  1. GST regime
  •  Neither Centre nor states are willing to include the five petroleum products (crude oil, high speed diesel, petrol, natural gas, and aviation turbine fuel in the GST tax regime.
  • Even if petrol and diesel are included under GST, prices are unlikely to fall because of the GST principle of keeping rates close to the earlier tax rates.
  1. The rational approach ahead:
  • Increase the taxation base of direct taxes from income-tax and GST.
  • Improve GDP to non-oil tax ratio so that burden of taxation on oil can be reduced.

Back to PISA after 2009 poor show: how does it assess 15-year-olds?

News:

  1. Ministry of Human Resource Development (MoHRD) has decided to participate in Program for International Student Assessment (PISA), after 10 years.

Important facts:

  1. About PISA
  • It is a triennial international survey, first administered in 2000 and coordinated by the Organization for Economic Cooperation and Development (OECD).
  • It assesses the quality of education systems across the world by evaluating students in science, mathematics and reading.
  • PISA is a competency-based test designed which assess candidate’s ability to apply their knowledge to real-life situations.
  1. Eligibility criteria to participate in PISA:
  • It focuses on 15-year-old students who have either completed or at near the end of their compulsory education.
  • PISA requires the examinees to have finished at least six years of formal schooling.
  1. Significance of PISA
  • PISA has been significant to influence educational practices in many countries.
  • Unlike testing a student’s memory and curriculum-based knowledge, emphasises on individual’s capacity to solve real-life situations.
  1. Criticism of PISA:
  • Academicians have expressed concerns over the impact of such rankings upon students.
  • It is based on standardised testing which relies heavily on quantitative measures.
  • It does not focus upon long-term and enduring solutions but only immediate solutions.
  • Low or no participation of SAARC nations, Greenland, Argentina and the entire African continent, except Algeria and Tunisia.
  1. OECD’s response:
  • OECD stated that there is no evidence to suggest PISA or any other educational comparison has caused a shift to short-term fixes.
  • In fact, according to OECD, it has created opportunities for policy-makers and stakeholders to collaborate across borders.
  1. India back to PISA:
  •  India has participated only once in PISA in 2009, with participation of 16,000 students from 400 schools.
  • India was placed 72nd among the 74 participating countries. The government blamed “out of context” questions for the poor show.
  • It was then decided to boycott the 2012 and 2015 cycles of PISA.
  • HRD Ministry in 2016 set up a committee to review the matter which recommended that the country participate in the 2018 test cycle.
  • MoHRD formally approved the decision to participate in the 2021 cycle of PISA.

Delhi launches doorstep delivery of government services

News

  1. Delhi government has launched an ambitious project to deliver public services at door steps.

Important Facts

  1. Residents can dial 1076 to place a request for doorstep delivery of services.
  2. Request for delivery of services will be provided from 8 am to 10 pm but the call centre setup to facilitate the delivery will function round the clock.
  3. As of now 40 documents can be delivered under this scheme. Plan to extend it further to 100 documents.
  4. Some of the services includes the delivery of:
  • Driving license
  • Marriage registration
  • Ration card
  • Birth certificate
  • Water connection
  1. A nominal fee of Rs 50 per service.
  2. Government has hired VFS global (a private firm), through which the services will be provided.
  3. Mobile Sahayaks will be recruited by the firm. They will help in the functioning by:
  • Visiting homes to help in filling forms, payment of fees and collection of document.
  • Submitting the document at the government office concerned.
  1. A feedback system is in place to register complaints and suggestion.

Benefits

  1. This will end long waiting time at government offices.
  2. Will reduce the scope of touts to operate.
  3. Increase productivity.

Challenges

  1. Teething trouble: Since this is a new initiative it will take some time for smooth functioning.
  2. There can be a potential security threat from the Mobile Sahayaks who will have access to the documents.

Modernizing land records in India

News:

  1. Issues associated with Modernization of Land records in India.

Important Facts:

  1. Digital India Land Records Modernization Programme (DILRM) was started in 2008, to computerized land property registration process and digitalization of all land records in India.
  2. Main objective to this program was
  • To improve the quality of land records and make them more accessible
  • Move towards the guaranteed land titles (document which determines the land ownership).
  1. DILRM was implemented across all the states however the progress shown by different states are varying.
  2. About Nineteen states/UTs have started issuing digitally signed Records of Rights (RoR).
  • RoR is a record which show how the land ownership has been derived and transaction involved.
  1. States has also started linking RoRs with Cadastral Maps (records of area, ownership and value of property)
  2. However, there are some concern over DILRM:
  • It has not addressed the issue of land ownership.
  • Low percentage of computerized of land records (50 % of the state so far).
  • Data of RoR and Cadastral Maps are not updated in 21 % of village, though the data has been digitalised.
  • Only about 48 % of cadastral maps have been digitalised.
  1. Challenges leading to unclear land titles which guarantee land ownership.
  • System of registered sale deeds – allow only the registration of transaction not the title as per the Transfer of property Act 1882 and Registration Act 1908.
  • Data discrepancies – Since the land documentation data is maintained by different government department, they are not updated often.
  • High cost of Property Registration – People avoid registration to avoid payment for stamp duty.
  • Registration Act, 1908– Do not provide for mandatory registration such as transaction of acquisition of land by government and land on lease for less than a year.
  1. Due to all these issue the property ownership is not clearly reflected.
  2. Unclear land titles impede development such as:
  • Institutional credit and social benefits schemes do not reach to marginalized and small farmers.
  • Lack of transparency in Real Estate transaction cause disputes.
  • Risk involved in infrastructure built on unclear land.
  1.   For State to provide guaranteed title and compensation require:
  • Reforms in land registration governing laws
  • System of registered property titles to server primary ownership of evidence.
  • To ensure all land ownership related transaction is updated.
  • Data consolidation which is currently spread among different departments.
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