9 PM Daily Brief – May 30th ,2020

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9 PM for Main examination

GS-2

  1. Industrial Dispute Act
  2. India- Australia

GS-3

  1. Lowering growth rate
  2. How Migrant Issue could be solved?

9 PM for Preliminary examination

FACTLy


1.Industrial Dispute Act

Source –  Indian Express

Syllabus – GS 2 – Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Context – Millions of desperate migrants rushing home presents the challenges associated with Industrial Act

  1. Industrial Dispute Act– This act was enacted to shape the relationship between employer and employee. However, it has created many roadblocks in removing the trust-deficit between two.
  2. Problematic Provisions  under Section v of Act

Implications of these provisions

  1.  Discourage entreprenuership– The thresholds placed on employers discourage them to expand their units and business. This directly affects one of the most crictial element of factor of production that is entrepreneurship.
  2. Promote Informal and dwarf industries– Firms, in order to stay away from bureacratic hussles, employ less than 20 employees and remain dwarf in size. This in turn affects their economies of scale, overall production and profit.
  3. Lack of skilling in employees– These provisions also discourages the employers to provide better skills to their employees. Since investment in skilling leads to employ worker for longer period but also necessitates payment of severance pay which add to cost of production for employer.

Way Forward – For promoting economies of scale and do away with dwarf industries, removal of thresholds under Industrial Dispute is the need of the hour. COVID crises provide us the opportunity to learn lessons and act for welfare of have-nots of the society.

2.India- Australia

Source –The Hindu

Syllabus – GS 2 – Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Context – India’s first bilateral virtual meeting with Australia

Figure 1 – Pillars of relationship

Potential in relation which are yet to be tapped:

  1. Mutual Logistics Support Agreement– This would enhance defense cooperation and ease the conduct of large-scale joint military exercises between two democracies.  It also has potential for Australia’s permanent inclusion in the Malabar exercise with Japan.
  2. 2+2 Format– Currently under 2+2 format secretary level talks are held for Foreign and Defense. This can be upgraded to ministerial level talk in the upcoming virtual summit.
  3. Pandemic control lessons – India and Australia can partner in learning lessons for control of pandemics. Australia has one of the lowest infection rates which make its strategy a successful tool and provide lessons for India too.
  4. Higher Education– Australian Universities are proving to be resilient and pioneers in distance and online learning which can be tapped for Indian students who sail across to Australia for better education.

Way Forward – India- Australia have much in common, underpinned by shared values of a pluralistic, Westminster-style democracies, Commonwealth traditions, expanding economic engagement and increasing high level interaction. The pandemic induced virtual meet is an opportunity to enhance their ties at bilateral level.

3.Lowering growth rate

Source: The Indian Express

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

 Context: The Ministry of Statistics and Programme Implementation (MoSPI) released the data for the fourth quarter (January to March) of the last financial year (2019-20) as well as the provisional estimates of the full-year GDP growth rate.

Expectation by government · 8.5% growth (in July 2019 when it presented the Budget for that year).
The provisional figure · Indian economy grew by 4.2% in 2019-20.

· This is the lowest annual growth rate of GDP registered under the new GDP data series which uses 2011-12 as the base year.

Continued weakening of India’s growth momentum even before Covid-19:

· A similar fall can be seen in the trajectory of the nominal GDP.

· At the time of the 2019-20 Budget presentation in July, nominal GDP was expected to grow by 12%-12.5%.

· By the end of it, provisional estimates peg it at just 7.2%.

· In 2018-19, the nominal GDP grew by 11%.

There are two reasons why this sharp deceleration in the nominal GDP matters:

  1. The nominal GDP growth rate is the base of all fiscal calculations in the country:
    1. The government bases its calculations. For example the amount revenues it will raise and the amount of money it will be able to spend.
    2. A sharp divergence in nominal GDP growth rate basically upsets all other calculations in the economy. For instance, a wrong estimate may result in less revenue generated and as a result government can’t spend much as it expected.
  2. Reflects poorly on the government’s fiscal marksmanship:
    1. It shows that the government was not able to assess the magnitude of economic growth deceleration.
    2. It leads to inaccurate policy making because a government could end up making policies for an economy that doesn’t actually exist on the ground.
    3. For instance, it can be argued that in an economy that was slowing down sharply and that too on account of a decline in demand, even a massive corporate tax cut would be ineffective. To be sure, despite this once-in-a-generation reform, private investments actually fell by almost 3% in 2019-20 — in sharp contrast to the 9% increase in 2018-19.

Problems with Frequent and significant revisions in quarterly GDP:

  • Criticism of New GDP data series base year: It is argued that the new series overestimated India’s GDP by as much as 2.5 percentage points.
  • Frequent and significant revisions affect credibility:The provisional estimates have fluctuated repeatedly. The growth estimate for Q2 has gone from 4.5% to 5.1% and back to 4.4% in a matter of just 5 months. India’s growth rate was decelerating much faster than what was officially accepted:

Undesirable emerging structure of the Indian economy:

  • Along with services, manufacturing growth was supposed to absorb the millions still dependent on agriculture.
  • But 2019 paints a sorry picture in this regard. While the agriculture and allied sectors enjoyed buoyant growth, manufacturing simply lost its way — contracting for three of the four quarters.

Way Forward

There is a need to have correct estimation of GDP estimates to correctly understand the situation and talking decision accordingly in an economy.

4.How Migrant Issue could be solved?

Source: The Indian Express

Syllabus: GS 3-Inclusive growth and issues arising from it.

Context: The National lockdown resulted in millions of migrant labourers deciding to leave their place of work and travel back to their place of residence.

Steps taken to address the Migrant crisis:

· The central government has permitted state governments to utilise the State Disaster Response Fund (SDRF) for setting up shelters for migrants and providing them food.

· The Centre has released Rs 11,000 crore of its contribution in advance to all states on April 3 to augment the funds in their SDRF.

· Additionally, the disbursal of the Revolving Fund (RF) to self-help groups was on-boarded on the PAiSA Portal in April 2020 on a pilot basis in Gujarat and is now being rolled out across all the states.

· The government will also allocate an additional Rs 40,000 crore under MGNREGA to provide work. This measure will help generate nearly 300 crore person days in total and create a large number of durable and livelihood assets, including water conservation assets.

 

Ministry of Housing and Urban Poverty Alleviation’s 2017 report by the working group on migration:

  1. Need to reorient the working of the Construction Workers Welfare Board (CWWB) in each state:
    1. The CWWB provides social security to migrant workers. But the funds’ utilisation is low at 21 %.
    2. According to records available with the CWWB of major states (more influx of migrants), the Centre can transfer a fixed monthly amount for the next three months. Some states like Maharashtra have given one-time payment to such workers.
  2. A comprehensive database of migrant workers needs to be prepared: 
    1. Starting Point:The immediate starting point could be the MNREGA enrollments compared with last year rolls and new additions could be treated as migrant labourers.
    2. Remittances transfer:The PMJDY can also be extensively leveraged to find out the remittance transfers from source to destination. Such remittance transfers could be compared against the 54 districts (2017 report) that exhibit a high level of inter-state out-migration intensity.
  3. Lose access benefits upon migrating to a different location: 
    1. Digitisation: Migrants who are registered to claim access to a number of legal and other entitlements at their source locations lose access because of lack of digitisation.
    2. Utilizing One Nation One Ration Card: All the state governments can start working in unison to ensure the use of such ration cards for extending all benefits other than PDS.
    3. Social security: Portability of food security should be the first step towards portability of healthcare, education benefits. A basic social security framework for migrants, preferably through a simple interstate self-registration process that can be authenticated through SMSs, can be developed.
    4. Put an end to restrictive domicile provisions: For working in different states without losing any benefits.
  4. Utilisation of CWWB funds towards housing for migrant workers in construction and related industries:
    1.  Optimal utilisation of these funds should be considered in light of the announcement by the government on launching a scheme for the migrant labour/urban poor to provide ease of living at an affordable rent.

Way Forward

The government should create a comprehensive database, drawing on the databases of Ayushman Bharat, PM-KISAN, PMJDY, PMUY and MUDRA for future social welfare initiatives.


9 PM for Preliminary examination

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