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9 PM for Main examination
- What should be the policy changes to maximize the economic potential of cities?
- How State fiscal federalism is affected by GST during COVID-19?
- Restrictive Changes introduced in labor laws
- Atmanirbhar Mission
- How Can Blockchain in the events of Pandemic like COVID-19?
- Saving marine environment
9 PM for Preliminary examination
1.What should be the policy changes to maximize the economic potential of cities?
Syllabus: GS-1- Urbanisation
Context: The Covid-19 pandemic has been detrimental to the economic growth of urban centres in India.
Present state of urbanization in India:
- Level of Urbanization:According to 2011 Census, the level of urbanisation in India increased from 27.7% in 2001 to 31.15% in 2011.
- Contribution of Urban areas to the economy: In 2011-12, urban areas in India contribute somewhere between 52.6% to 64.9% of the national output.
Issues and Challenges:
- Pseudo-urbanization: The push and pull factors have resulted into migration of people from rural areas to urban cities. But there has been continuous concentration of population in class I towns making India’s urban development largely lopsided.
- Census towns-based urbanization: Increase in level of urbanization in recent years has been driven by Census towns which are administratively treated as villages. The rural local bodies are not equipped to cater to the needs of large population residing in these census towns and their development is adversely affected due to administrative loopholes.
- Poor Basic Services: Skewed urbanization has led to inadequate provision for social infrastructure i.e. congestion, housing shortages and consequent proliferation of slums, denial of safe drinking water, waste disposal and sewerage problem.
- Regional Disparity: Lopsided urbanization and increased primacy of cities have led to regional imbalances and there has been unequal industrialization and infrastructural development in small and medium sized cities
- Challenges posed by Covid-19 pandemic: The urban to rural migration not only pose of threat of redistribution of coronavirus cases in rural areas but leads to significant challenges for urban economy. These challenges are mainly two-fold:
- Labour shortage in urban areas
- Increase in cost of labour in urban areas
Policy changes required to maximize the economic potential of urban centres in India:
- Economic data generation:Though cities generate a significant amount of economic growth, the economic data is generated and aggregated only at the state and national levels. Therefore, it is important to enhance economic data generation and analysis at the city level for a better outlook.
- Coordination among various policies and programmes: It is important to have coordination among various policies and programmes to avoid underachievement and wastage of resources and increase efficiency.
- Defining urban areas: Often state governments redefine geographical boundaries through administrative orders and classify cities into different categories without considering economic dimensions. It is important to understand the cause and effect relationship between economic growth and urbanization and come up with a new formula to define urban areas.
- Strengthening Urban Local Bodies: It is important to strengthen the autonomy and functionality of urban local bodies and make them drivers of economic growth.
- Balanced Regional Development:There should be an integrated network of cities, towns, villages and planning for economic and infrastructural development of the same can help achieve more regional equity and foster economic growth in urban centres.
Conclusion: A balanced regional development is the need for the hour for sustainable and equitable economic growth.
2.How State fiscal federalism is affected by GST during COVID-19?
Source: The Hindu
Syllabus: GS 2-Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.
Context: The States alleged that their share of taxes are not paid and they have also lost the powers to raise their own sales tax revenues. It is apparent that financially broke State governments are forced to adopt desperate and reviled measures such as opening liquor shops to mobilize money for their fight against COVID-19.
It is the financial relations between units of governments in a federal government system. It deals with the division of governmental functions and financial relations among levels of government.
Expectation: States sacrificed their fiscal powers in the promise of ‘economic efficiency’ and ‘tax buoyancy’ in GST.
Triple blow of GST on states:
- States dependence on Centre:GST forced the States to surrender their powers to raise resources independently through local State taxes and made them dependent at the mercy of the Centre for most of their financial needs. Most States raise resources through a combination of their own taxes and a share in the Centre’s taxes.
Fact: For richer States such as Maharashtra, Tamil Nadu, Gujarat, Delhi, Karnataka, Punjab, Haryana and Kerala, 70% or more of their revenue comes from taxes generated within their State boundaries. Nearly half of these were from the sale of goods and services within the State and the remaining half, from a combination of excise duties on petrol, electricity, alcohol, land registration fees, etc.
- Problem in raising Additional Resources: Before GST, States were free to charge sales taxes as legislated by their State legislatures. If a State had a natural disaster, they could raise additional resources for rehabilitation by raising sales tax rates on goods and services.
- Bearing the brunt of the pandemic: Under GST, States are legally entitled to their share of tax revenues collected in their State. But they are now reliant on the Centre to release these funds to them periodically. When the GST was enacted, States were also guaranteed a minimum tax revenue every year for a period of five years. Amid the current pandemic, the Centre has reneged on both these promises.
How are states supposed to fight corona calamity with no money?
- Other options: Through taxes on sale of petroleum products, alcohol, lottery tickets, electricity, land or vehicle registration. During this extreme lockdown, demand for petroleum products, electricity, land and vehicles has dwindled substantially. So, the only option left for most States is to raise funds through the sale of alcohol.
- Borrowing by states: In order to do that, they need the Centre’s approval to raise their borrowing limit or to stand as guarantors. Since States do not have clear revenue visibility, the rates at which they can borrow are very high and their ability to borrow is severely undermined.
How states would have dealt during the pre-GST era?
- Funds raised through sales taxes to themselves and not be at the Centre’s mercy to release funds.
- They would have raised taxes on select essential goods sold in their States in accordance with their norms.
The COVID-19 has to be fought in a decentralized manner at the local level. The efficient functioning of a GST regime cannot be beholden to political party affiliations at the Centre and the States. The Centre should uphold its financial obligations to the States at this critical juncture and should uphold the spirit of “cooperative federalism”.
3.Restrictive Changes introduced in labor laws
Source – The Hindu
Syllabus – GS Paper 2 – Issues Relating to Development and Management of Social Sector/Services relating to Health, Education, Human Resources.
Context – State giving free hand to market in determining fate of laborers
Changes introduced by state:
Steps taken by states like Madhya Pradesh and Uttar Pradesh under Section 5 of Factories Act. Section 5 of Factories Act grants exemption from provisions of Act for 3 months in case of public emergency.
- Working hours for labourer’s increased from 8 to 12 hours
- Exempted Industries from Right of worker’s section of Factory Act, 1948 – thus employer not bound to provide light, first aid, canteen, rest time, ventilation to workers.
- Industries not bound to maintain register of adult and child worker
- Discourages constitutional objectives– Fundamental rights and Directive Principle of state policy provides for right to life with dignity (Article 21) and provision for just and humane conditions of work and maternity relief (Article 42). The labor law changes impinge on these objectives of constitution.
- Labor law is concurrent subject– State government do not have the authority nullify Central enactments. Also, Constitution does not envisage approval by the President of a State Ordinance which makes a whole set of laws enacted by Parliament inoperable.
- State abdicating its responsibility– In the unequal bargaining power between capital and labour, regulatory laws provide a countervailing balance and ensure the dignity of labour. So, state has the responsibility to promote labor rights for their welfare.
- Vulnerability of trade unions– Amid lockdown, trade unions can’t hold any major protest or organize movements for a better system. Thus, state and industry are capitalizing on their vulnerability which is legally as well as ethically not justified.
- Creation of industrial discontent– The exploitation which will follow in absence of labor laws will lead to discontent and alienation among laborers. This will affect their productivity, efficiency and thus overall industrial growth.
- Labor-surplus nation– Since India is a labor-surplus nation, they thus don’t have luxury to bargain for their rights and hence employers are all powerful to bring in changes they deem fit.
- Conditions to create more employment– Not only labor laws, but the level of infrastructure, policy certainty, availability of capital, industrial policies, trade policies, arbitration system all these factors determine the ability of employers to create more jobs. India thus need reforms across various sectors in its bid to promote job creation and investment.
Suggested steps to resolve the issue:
- Social Dialogue– Government, trade unions and employers need to engage in social dialogue to come out with a framework where competing interests of labors and employers are balanced.
- Fiscal package– According to Keynesian theory, government must provide strong fiscal package to create jobs, create demands and motivate private sector to invest.
- Conditions at workplace– For labor to return to industries three conditions need to be met – provision of transport, Standard operating protocol at workplace for health safety and availability of work.
Way Forward – In Life Insurance Corporation v. D. J. Bahadur & Ors (1980), the Supreme Court highlighted that any changes in the conditions of service can be only through a democratic process of negotiations or legislation. A democratic nation thus needs to lead by example, especially in the COVID crises.
Syllabus-GS-3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
Context – Self- reliant mission of India is not equivalent to protectionism
Protectionism –Policy of protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions placed on the imports of foreign competitors.
Features of Self-reliant India
- Reduced trade deficit and improved balance of payment– India’s Current account to GDP ratio in FY19 was 2.1% which is more so because of dependence on imported goods and comparatively less exports. It also involves imposing tariffs under rules-based order to reduce trade deficit.
- Enhanced domestic production capabilities– Disruption in supply chain across the world due to COVID has increased the need for better production in nation rather than depending on foreign nations.
- Ease of doing business – Self-sufficiency also involves making business climate investor friendly so that there is ease in doing business and catering needs of domestic market. This holds true for domestic firms as well as foreign companies based in India.
- Integration in Global Supply chain – In post covid , globalization 2.0 era , India needs to connect to other countries in terms of export of domestically produced goods and service. This will add to India’s geopolitical advantage in international relations also.
Way Forward – India endorses globalization with focus being on self-sufficiency in times of crises. Self-reliant mission aims to become self-sufficient by improving efficiency, competing with world and helping the world.
5.How Can Blockchain in the events of Pandemic like COVID-19?
Syllabus: GS-3-Science and Technology- Recent developments and their applications and effects in everyday life.
Context: The World Economic Forum (WEF) has said that Blockchain Technology can help boost economy recovery process in Covid-19 times.
A Blockchain is a digital, immutable, distributed ledger that chronologically records transactions in near real time. It is managed by a cluster of computers not owned by any single entity; therefore, it is decentralized.
Working of a Blockchain
Advantages of Blockchain Technology:
- Security: Data in Blockchain technology is almost open source- other users or developers can modify it as they see fit. However, altering logged data within a Blockchain incredibly difficult. This makes Blockchain a particularly secure technology.
- Cost efficient: Blockchain allows peer-to-peer and business-to-business transactions to be completed without the need for an intermediary. Since there’s no middleman involvement tied to Blockchain transactions, it is cost-efficient.
- Decentralization:Due to decentralized networks, Blockchain does not have a single point of failure and is better able to withstand malicious attacks.
- High Quality Data: Blockchain data is complete, timely, accurate, consistent and widely available
- Empowered users:Users are in control of their data and information
- Simplification in data management:With all data collected in single public ledger, it reduces the clutter and complications of multiple ledgers
Concerns associated with Blockchain Technology:
- Nascent technology:Blockchain is still a nascent technology and there are issues such as complex verification process, data limits etc
- Large energy consumption:Blockchain technology uses substantial amount of computer power.
- Security and privacy: Though considered highly secure, there are still cyber security concerns that need to be ensured before general public trust Blockchain technology with their personal data
- Cost: High initial capital cost is a deterrent.
Application of Blockchain Technology in events of pandemic like Covid-19
- Building more resilient supply chains: Blockchain, combined with digitization and Internet of Things can help make supply chains transparent, traceable and cheaper.
- Universal basic income and digital currency:A blockchain-based digital currency can be used for providing Universal Basic Income. Digital Currency will also help mitigate the chances of virus transfer through paper notes.
- Tokenization and fractional ownership:Blockchain technology can help in asset tokenization- the process which converts rights into an asset and then into a digital token. In post Covid-19 times, when there will be cash and capital crunch, tokenization could enable liquidity and fractional ownership of real estate, farm equipment etc.
- Global health record repository: Blockchain technology can help build a global health record repository and ensure security, transparency and privacy benefits.
- Fundraising: Of late, initial coin offerings (ICOs) has emerged as an alternate way of raising money. These are blockchain-enabled crowdsourcing of funds.
- Checking false information:Storing news and information on a blockchain platform will prevent alteration, make information traceable and thus help prevent the development and spread of false information.
Conclusion: Blockchain technology can help overcome the shortcomings of the current system and has the potential to help people during Covid-19 pandemic and similar other future disease outbreaks.
6.Saving marine environment
Source: The Hindu
Syllabus: GS 3- Conservation, environmental pollution and degradation, environmental impact assessment.
Context: The Asia-Pacific region has thrived on our seas from generations. The seas provide food, livelihoods and a sense of identity to the people. But in less than a century, climate change and unsustainable resource management have degraded ecosystems and diminished biodiversity.
Recovery efforts in Oceans need to build a new reality embedded in sustainability:
The study of the Economic and Social Commission for Asia and the Pacific (ESCAP) with the theme ‘Changing Sails: Accelerating Regional Actions for Sustainable Oceans in Asia and the Pacific’ states that without data, we are swimming in the dark.
|Challenges to Oceans
|Lack of Data: Data are available for only two out of ten targets for the Sustainable Development Goal 14, ‘Life Below Water’. Trans-boundary ocean management and linking ocean data is still lags behind.
|· To reduce information gaps due to limitation in methodology and national statistical systems, data is important.
· Utilizing ocean statistics through strong national statistical systems and close cooperation between countries will guide them to monitor trends, devise timely responses and clear blind spots.
|Plastic Pollution: Asia and the Pacific produces nearly half of global plastic by volume, of which it consumes 38%.||· Through effective national policies
· Re-thinking production cycles.
|Overfishing: The percentage of stocks fished at unsustainable levels has increased threefold from 10% in 1974 to 33% in 2015.||· Generating complete data on fish stocks
· Fighting illicit fishing activity
· Conserving marine areas.
|Issue of shipping: The small island developing States of the Pacific experience much lower levels of connectivity, leaving them relatively isolated from the global economy.
|· Closing the maritime connectivity gap: To be placed at the center of regional transport cooperation efforts.
· Navigation through green shipping.
· Enforcing sustainable shipping.
|Localizing agreements: We must fully equip countries and all ocean custodians to localize global agreements into tangible results.
|· Translating international agreements and standards into national action.
· Policies with circular economy approach to minimize resource use and will require economic incentives and disincentives.
India’s efforts to save marine ecosystem:
- Blue Flag certification:
- 12 beaches are being developed by Society for Integrated Coastal Management (SICOM), in accordance with Blue Flag standards.
- The iconic Blue Flag, established in 1985 in France, is one of the world’s most recognised voluntary eco-labels awarded to beaches, marinas, and sustainable boating tourism operators.
- MECOS-3, 2020: Global Marine Ecosystem Meet in Kochi:
- It was the 3rd International Symposium on Marine Ecosystems Challenges and Opportunities (MECOS3) organized by the Marine Biological Association of India (MBAI).
- India-Norway Marine Pollution Initiative
- In partnership, Norway and India will share experiences and competence and collaborate on efforts to develop clean and healthy oceans, sustainable use of ocean resources and growth in the blue economy.
- Single use plastics:
- In October 2019, the Environment Minister said that Getting rid of single-use plastic by 2022 will be “Clean India (Swachh Bharat) Part 2”.
- Hosted World Environment day on 5th June 2018: With the theme “Beat Plastic Pollution” government has asked the citizens to come forward and come together and combat one of the great environmental challenges: curbing plastic usage.
Our oceans are very important to keep our economy afloat. In the post-COVID-19 era, we must use the years ahead to steer our collective fleets toward sustainable oceans.
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