9 PM Daily Brief – August 6th,2020

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Here is our 9pm current affairs brief for you today

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9 PM for Main examination

GS-1

  1. Urban migrant issue

GS-3

  1. The claim on Nuclear deterrence is misleading
  2. Labour industrial relationship
  3. Resorting to Money Financing to revive the economy

9 PM for Preliminary examination

FACTLy


1.Urban migrant issue

Source: The Hindu

Syllabus: GS-1 –Migration

Context: The massive job loss due to the lockdown made several migrant workers in the urban areas head back to their villages with almost no resources.

The issue of unemployment

  • The Indian labouring classes face issues of unemployment which is an outcome of the fact that 93% of our economy is informal and the Industrial Disputes Act encourages this trend.
  • It orders employers to pay compensation wages, and other benefits, only if workers are hired, and are on the rolls, continuously for over 248 days.
  • Only a minuscule minority stays employed for long as law has had the unintended consequence of making it attractive for management to periodically flip labour around.

Forget the industrial glue

  • The job could be well paid and the worker may have even held it for some time yet the pull of home and family is much stronger for the migrant worker than the industrial glue that comes with an urban occupation.
  • A comparative approach might help to settle this issue:
  • In Surat in 1979, when there was a widespread fear that a satellite was going to fall smack in the city centre and was going to cause untold deaths, a large number of migrants there left for their villages.
  • In Surat, in 1994, the plague scare prompted over 6,00,000 to leave their work stations for the railway station.In both these instances, jobs were not threatened, but there was this perceived fear of death.
  • Only a few migrant workers left at the time of demonetisation in 2016 because this distress was primarily economic, without a threat to life.
  • In 2020, when people started dying because of COVID-19, there was a drastic shift; now, men without families went home because they did not want to die alone.

Data from the survey

  • A YouGov-Mint-CPR Millennial Surveyconducted in 2020 tells us that the Indian millennials depend on their parents’ real estate property and savings to give them a start.
  • A 2018 CBRE survey shows that 80% of young Indian millennials live with their parents.
  • Census figures show that joint families are growing, although slowly, in urban India, but declining in the villages.

Rituals and customs

  • It will take more than a job somewhere to overcome the fear of dying anonymously, without proper ceremonies being performed as in both the religions there is a belief that if rules, are not followed correctly, the soul of the dead person could suffer everlasting pain in the other world.
  • If about 90% of slum dwellers in Dharavi stayed put, post lockdown, it was because most of them lived with their wives and children and did not fear a death without rituals.

Gender factor

  • Women actually form 55% (majority) of rural migrants to urban India but there were fewer of them on highways it was because arranged marriages have brought most of them to the city, not a flimsy job prospect.
  • Rural men migrate with tentative employment prospects and it will be a long time before they can, if at all, imagine getting their families over.
  • About 72% of slum dwellings are owned, not rented and this shows the overwhelming preference the poor have for family life, only if they could afford one.

Conclusion

The urban workers rush to their rural homes because they fear a death where nobody prays for them instead of a life where nobody is willing to pay them.

2.The claim on Nuclear deterrence is misleading

Source:  The Hindu

Gs3: Security Challenges and their Management

Context:  The claim on Nuclear deterrence is misleading. World needs to understand the vulnerability of nuclear weapons and should take steps to disarm nuclear weapons

Nuclear states: As of now, 9 countries around the world possess nuclear weapons. They are, the United States, the Soviet Union/Russia, the United Kingdom, France, China, Israel, India, Pakistan, and North Korea.

Vulnerability of Nuclear Weapons:

  • Large Scale damage: The two atom bombs dropped on the Japanese city of Hiroshima and Nagasaki has killed over 2,00,000 people and got many more injured.
  • Agility: Nuclear weapons can be launched at any time against any target around the world.
  • Absence of effective deterrence mechanism:The introduction of Ballistic missiles has made it nearly impossible for any ballistic missile defence systems to intercept nuclear weapons as they manoeuvre with great speed.
  • Destabilise the world: It not only threatens Nuclear states but also the non-nuclear states.
  • Environment destruction: over 2000 nuclear tests conducted by nuclear states to demonstrate their explosive power has caused long-lasting damage to the environment and public health.
  • Concerns over the controllability of nuclear weapons:In the real world, it is not possible for planners to have complete control over the use of nuclear weapons. The desire to believe in the perfect controllability and safety of nuclear weapons is more likely to lead to accidents and possibly to the use of nuclear weapons.

The false notion of Nuclear deterrence

  • The claims made by the nuclear states that, possessing nuclear weapon will prevent war, promote stability and use of nuclear weapons is impossible owing to its large-scale destructive ability does not have any evidence.
  • Contradicting to the claims, Nuclear threats can be provoking, which might get escalated. For example, the case with Fidel Castro during the Cuban Missile Crisis.
  • Even some of the experts have clearly stated that the idea of possessing nuclear weapons for deterrence is an illusion and the possibility of a nuclear war is much a reality.

Conclusion: There are many instances during which the world came close to nuclear war. These dangerous situations were averted due to diverse and contingent factors and not because of the idea of nuclear deterrence. Hence, the nuclear states should advance themselves towards nuclear disarmament to build a safe world.

3.Labour industrial relationship

Source: The Hindu Business line

Syllabus: GS-3- Economy

Context:  India is living in denial and needs to fix the imperfections of the industry-labour relationship.

Business industry and plausible deniability

  • Plausible deniability involves deliberately not acknowledging information by those in power who are exposed to public scrutiny of their actions, so that they can deny any involvement with certain actions or developments with a reasonable degree of believability.
  • Head of the CIA and America’s chief spymaster, Allen Dulles brought up the concept of plausible deniability during the height of the Cold War in the 1960s.
  • Plausible deniability has been lost on its exact nature of the relationship between business and industry in India that is large-scale, organised, small, medium, unorganised, micro and labour due to the Covid-19 pandemic.

Sudden migration

  • There has been an exploitation and abuse of workers’ rights as many labourers were forced to head back to their native towns post the announcement of a sudden lockdown.
  • Different treatment for permanent and contractual staff:India’s biggest names in business which can claim that they are complying with not just the letter but spirit of labour laws when it comes to their full-time or permanent staff, claim with plausible deniability that their contractual or part-time staff are also treated exactly the same way.

Middle-men

  • Large employers get the labour they need at prices they like, without having to suffer the time consuming burden of agreement which falls on any unit which actually tangles with India’s devious labour laws.
  • The so-called labour contractors, who have contacts and muscle power to back it,provide large numbers of skilled, semi-skilled or unskilled workers at short notice to the organised-sector players.
  • The big companies themselves do not deal with them directly but through agencies and service contractors.
  • These large contractors provide not only employment but often shared housing and even food or mess facilities, and in return take up a healthy slice of the workers’ earnings.
  • Soon after Lockdown 1.0 started these middle men vanished or kicked out these labourers resulting millions of workers on the streets heading home.

Pressure on operations

  • “ Low capacity utilisations, higher production cost and hence margin contraction are likely to impact the companies facing labour shortage due to reverse migration and the manufacturing sector will be at the forefront of the disruption particularly micro, small & medium enterprises in Maharashtra and Delhi”, according to a report by India Ratings & Research.
  • Delhi has a ‘Migrant Dependency Ratio’ of 93.52 and the percentage of migrant labour as part of the total workforce.
  • Haryana is also classified as “highly vulnerable” with an MDR of 51.74.
  • Maharashtra and Gujarat are classified as “moderately vulnerable” with their MDRs at 29.19 and 17.12 respectively.
  • Causes of the reverse migration
  • Preferring the shortcut of dealing with intermediaries and middle men.
  • Treating all legal requirements which increase the cost of labour as a hinderance to business.
  • Treating labour as disposable inputs instead of partners in their business.
  • Impact of the labour shortage
  • Lack of skilled labour will lead to “significant pressure on the output, leading to underutilised capacity”,according to India ratings and research.
  • Manufacturing cost is likely to increase, led by either loss of economies of scale or higher wages of workers, as demand exceeds supply.

Way forward

  • Deals with middle men should be stopped just to save a few bucks.
  • The industry needs to introspect on exploiting the workers’ rights for many years now and a healthy working environment needs to be created.
  • Contractual or temporary staff should not be treated differently than the permanent staff.

4.Resorting to Money Financing to revive the economy

Source: The Hindu

Gs3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context: To finance public spending, given the current situation, money financing will be a better option than debt financing.

Need for Financing: Greater public spending is needed as a policy response to revive the currently depressed economy which can stimulate the growth. But increased public spending will increase fiscal deficit. Hence there is a need for financing.

Ways for Mobilisation of resources: Government can resort to higher taxation or money financing or financing through External debt to cover up the additional expenditures.

Analysis 

High taxation is not feasible: The idea to mobilise resource through increasing tax rates when the economy is in recession is not a prudent solution, so the government is left with other two options.

Issues in External Debt financing: Borrowing from the World Bank and the International Monetary Fund (IMF) has its own problems

  • Repayment through hard currencies: For this the government needs to increase exports which is a difficult task under current circumstances
  • Conditionalities: Loans from IMF and WB is usually accompanied by set of conditions that needs to be adhered this increases governments liability to foreign institutions.
  • Time consuming: As it takes time to negotiate. Whereas the Government needs to spend its time and energy to fight covid-19

Issues in Money financing:

  • Cost associated with money financing: According to experts, money financing to expand public spending is associated with high intangible and institutional costs, also it is widely accepted that money financing is inflationary.

Supporting claims for Money financing: Whether a fiscal expansion is inflationary or not is related more to the state of the economy than the medium of its financing. Currently, the economy is faced with increasing unemployment, so any fiscal expansion in the current situation will not have inflationary effect on economy.

Conclusion: With no reasoned case for denying the option of money financing, Government should rely on money financing to take us back to pre-COVID-19 levels of output and employment.


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