9 PM Daily Brief – July 9th,2020

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9 PM for Main examination

GS-2

  1. Digitising public sector
  2. A case for extension: on MGNREGA Scheme
  3. Revisiting social contract due to corona induced crises

GS-3

  1. Challenging the Dragon: Is India ready to boycott China?
  2. Joblessness and opportunity in the time of COVID-19

9 PM for Preliminary examination

FACTLy


1.Digitising public sector

Source – Indian Express

Syllabus – GS 2 – Development processes and the development industry

Context – A three-phase government project uses COVID policy window for a much-needed reform of digitizing India

CAG recommended new project and law called DATA (Digital Accountability and Transparency Act) aimed at transition to mandatory digital payments, accounting, and transactions by government.

 Need of this project

Ensures good governance

Business continuity with all stakeholders is ensured – The electronic records cannot be lost or misplaced like files or paper records and an incontrovertible audit trail can also be conducted.

Three-phases in the project

 Technology architecture – It must ensure that all IT government systems should conform to a prescribed open architecture framework (for instance, IndEA) while ensuring robust security and maintaining privacy.

 100 per cent end-to-end electronic data capture – All receipts and expenditure transactions including demands, assessment, and invoices should be received, processed, and paid electronically.

  Data governance for standards across all government entities – Data standards are rules for describing and recording data elements with precise meanings and semantics that enable integration, sharing, and interoperability. Prescribing data elements for all transactions will ensure standardization, clarify ambiguity, minimize redundant etc.

 Pre-requisites for DATA project

 1. Data Governance Authority – Recurring operations in government entities will require a Data Governance Authority.

2. Three-year timeline – One year for standard-setting by the data governance authority, two years to ministries/departments of the Government of India and states, and three years to all other recipients of government money such as local and autonomous bodies.

 Way Forward – COVID demonstrated how one element of Digital India — Aadhaar enabled Direct Benefit Transfer — facilitated quick and targeted action. But COVID also demonstrated how large parts of the Indian state continue to resist, underinvest in, and delay digitisation. The DATA will expedite the digitisation of India when implemented in true spirit.

2.A case for extension: on MGNREGA Scheme

Source: The Hindu

Syllabus: GS 2 – Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes

Context: In 2020, 8.4 lakh poor households have completed at least 80 days of the 100-day limit for work under the MGNREGS and 1.4 lakh among those have completed the full quota.

About Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

  • It is an employment guarantee act, introduced in 2005 through the National Rural Employment Guarantee Act, 2005.
  • The Act aims to enhance livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
  • It is demand driven. Worker to be hired when he demands and not when the Government wants it. Gram Panchayat is mandated to provide employment within 15 days of work application failing which worker is entitled to unemployment allowance
  • Payment of wages is provided within 15 days of competition of work failing which worker is entitled to delay compensation of 0.05%/ day of wages earned.
  • Ministry of Rural Development (MRD), Government of India in association with state governments monitors the implementation of the scheme.

Benefits of MGNERGA

Status of MGNREGA amidst Covid-19 pandemic

  • The demand for MGNREGS work jumped by 55% from 21.2 million workers in May 2019 to 32.9 million in May 2020.
  • Since April, 3.5 million new workers have registered under the scheme reflecting the job losses in cities.
  • 116 districts, with the highest number of returnees, have witnessed 86% increase in demand under MGNREGS in May from 2019.

Steps taken by government:

  • The completion of full quota of employment and high demand for work is a reflection of the distress amidst Covid-19 pandemic. The government has already introducedPM Garib Kalyan Rozgar yojana to address excess supply of labor owing to reverse migration from the cities.
  • It is a one-time scheme which seeks to provide 125 days of guaranteed employment and focuses on 116 districts across six states, which received the highest number of returnees.

Way Forward:

  • The MGNREGA has acted as insurance for rural dwellers during crop failures and agrarian crises. The government should use lessons from its successes and failures for a more comprehensive job guarantee plan that covers urban India.
  • To start with, the government should focus extension of the 100-day limit and comprehensive implementation of the scheme in all rural areas. This would not only help alleviate distress but boost consumption and aid economic recovery amid the coronavirus crisis.

3.Revisiting social contract due to corona induced crises

Source – The Hindu

Syllabus – GS 2 – Functions and responsibilities of the Union and the States

Context – The pandemic has highlighted the failure of social contracts in many nations as well as multilateral institutions.

Social contract

Social contract is an agreement between a legitimate authority and citizens in which citizens wilfully surrender some of their freedom and liberties for establishing a society with peace and which has security for its members.

Modern society and modern governments use the social contract theory to claim legitimacy for their actions and they rely more on the theory as expounded by Hobbes and Rousseau.

Difference – While Hobbes believed that man, in Nature, was “solitary, nasty and brutish”, for Rousseau, man, in Nature was “born free”.

Similarity – They both agreed that the social contract comprises two distinct agreements-

  1. Opting for collective good – People agreed to establish society by collectively and reciprocally renouncing the rights they had against one another in unbridled nature
  2. Sovereign power is must – They agreed to confer upon one (or more) among them, the authority and power to enforce the initial contract.

Modern government’s misuse of social contract

  1. Consolidating power and centralising tendency – The social contract is being used by modern governments to justify greater aggrandisement of power in the hands of the sovereign, under the garb of “public good” or will of the people.
  2. Neglecting voiceless – In moments of crisis, people look to the state for guidance and taking them to safety. This has led to some sections of society seeking a strong response from a strong leader. But, when the source of power in an unequal society is centralised, the response to the crisis will result in unequal relief to different strata of society.

Implication of failure of social contract in India – Creation of two India

· Urban India – The first is an India that observes social distancing, buys its groceries and provisions by observing all precautions and largely obeys governmental directives about COVID-19 prevention. · Rural India – The second is an India that crowds railway terminals to travel long distances, sometimes for days, to get back to native towns, and when that fails, decides to resort to the drastic step of even walking those hundreds of kilometres, defying all governmental directives

Way Forward – The pandemic crisis can be overcome only when a state is sensitive, has decentralised steps and ensures empowerment and this can be achieved by revisiting the social contract in post-corona India.

4.Challenging the Dragon: Is India ready to boycott China?

Source: Financial Express

Syllabus: GS 3-Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context: There are increased appeals in India to boycott Chinese products and restrict trade with China in the backdrop of the border dispute in Ladakh.

Dependence of India on China:

  • Largest import partner:
    • While China’s share in Indian imports was 15% for the year 2018, that of Saudi Arabia, Switzerland, UAE and the US remained in the range of 4% to 6%.
    • In 2019, 14% of India’s total imports came from China whereas India is less than 1% of Chinese imports.
  • Significant proportion of goods from China:
    • China’s share in Indian imports for intermediate inputs, capital goods and final consumer goods is 12%, 30% and 26%, respectively.
  • Increase in productivity:
    • As 1991 trade liberalization policy ensured the availability of a greater variety of inputs for domestic firms.
  • Lower cost:
    • Competitive pricing: Consider the following products (with their import shares in 2018 in parentheses):
      • Fertilizers (1.82%) are about 76% cheaper
      • Electronic circuits (2.6%) 23%
      • Data processing units (3.5%) are about 10%.
    • Cost of moving to another trade partner: If we consider that both countries pay a premium of even 10% to import from a different trading partner then India would have to additionally incur a cost equivalent to $7.6 billion (0.27% of its GDP). Whereas China would only incur a cost of about $1.6 billion (0.01% of its GDP) if it shifts away from India to another import partner.
  • Costly replacement:
    • Dependence: 571 of the 4,090 products that India imported from China in 2019 constitutes 75% share of China in India’s total imports for each of these products.
  • Investments by Chinese conglomerates:
    • Like Alibaba and Tencent have invested heavily in various Indian start-ups like Paytm, Make My Trip, Ola, Big Basket, Swiggy and Zomato.
  • Value addition:
    • Chinese value-add in total imported manufactured inputs is more than 20% for the following Indian industries: textiles, pharmaceuticals, rubber and plastic, computer and electronics, electrical equipment, and transport equipment.
    • On the other hand, Indian value added in imported inputs of China’s manufacturing industries is under 5%.

Hence a trade war with China at this point of time shall do more harm than good to India’s economy.

Redundancy of sentiments like Boycott China:

  • There is the dominance of Global Value Chains (GVCs) in international trade which implies that a product is not manufactured from start to finish in a single country.
  • Fragmented production: Different countries add value in different stages of this production process. For instance, a Bianchi bicycle undertakes its design and conception in Italy, sources parts and components from China, Japan, and Italy and assembles them in Taiwan, China.
  • Practically not possible: Due to such fragmented production processes and China’s high involvement in GVCs.

Way Forward

  • It is important to understand that it is in the interest of domestic industries (as well as Indian consumers) not to adopt a protectionist stance or engage in a trade war.
  • We should encourage domestic industries and in an effective way for a labour-abundant country like India would be to increase participation in the labour-intensive segments of Global Value Chains.

5.Joblessness and opportunity in the time of COVID-19

Source: The Hindu

Syllabus: GS 3- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment

Context: The COVID-19 pandemic has presented policymakers with the unenviable task of sustaining employment amidst lockdowns.

Background:

  • It would be instructive to compare one of India’s most industrialized and also one of the worst pandemic-hit States Tamil Nadu with other States that have a large manufacturing sector and are net recipients of migrants.
  • The article relies on the Centre for Monitoring Indian Economy (CMIE) even though its employment data series is relatively new.

Trends in Tamil Nadu:

  • Unemployment rate: It increased sharply during the strict lockdown in late March and April 2020 but registered a large turnaround in May when the lockdown was eased.
  • Declined labour participation rate (LPR): Workers are either still hesitant due to the fear of disease or are unable to return due to transport and communications bottlenecks and lack of information even after easing of lockdown.
  • Effect in May:
    • Recent drop-in unemployment rate in May: It was faster in urban areas and among males.
    • The decline in LPR: Itwas less in urban areas, among males and among those with higher education.
    • Schooling: Persons with intermediate levels of schooling were affected more than college graduates as their LPR continued to drop in May.
    • Taking level of education for skill: The lockdown has affected the semi-skilled workforce more than the skilled and unskilled workforce.
  • Demonetization did not significantly impact either the rural or the urban LPR whereas GST had a significant negative effect on urban LPR.

Tamil Nadu like Gujarat and Maharashtra boasts of a large manufacturing sector and these States are among the top four COVID-19-affected States.

Comparing industrialized States:

  • Urban Tamil Nadu compares with urban Gujarat and Maharashtra insofar as its LPR continued to fall in May.
  • Urban unemployment rate: It dropped sharply in May in Tamil Nadu while it continued to rise in Gujarat and Maharashtra.
  • It bears emphasising that the States with low unemployment rates are not necessarily better off if their LPR has dropped sharply.
  • Software/new economy hubs such as Karnataka and Telangana have not seen a very sharp decline in LPR.
  • In most States, rural labour participation picked up probably due to harvest-related activities and there are lower incidence of COVID-19 and the return of urban migrants.

Challenges before TN industries:

  • The longer-term decline in LPR in Tamil Nadu could be attributed to general economic shocks such as demonetisation and the introduction of GST and a combination of industry-specific issues such as changing tastes, a tightening regulatory environment and growing international competition.
  • For example-Challenges to the firecracker industry in Tamil Nadu:
    • It has been hit by campaigns calling for the boycott of polluting industries and products.
    • It faces major challenges due to the change in the regulatory environment such as a ban on barium nitrate in the manufacture of firecrackers.
    • It faces competition from illegal import of cheaper fireworks from China.
  • Counterproductive:
    • The answer to environmental challenges is not a complete shutdown of MSMEs.
    • For example- The closure of tanneries in Dindigul. It led to lost employment and unresolved environmental damage.

Way Forward

  • The pandemic has exposed India’s unsustainable dependence on other countries for a variety of goods and nudged the government to help build supply chains for critical products that are less dependent on foreign countries.
  • States that can adapt quickly to shifting economic currents will recover faster.

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