World is changing fast today:
- The world of today is evolving rapidly.
- Structurally, we are seeing a re-emergence of great power contestation (now between the US and China) unlike any we have seen since the end of the Cold War (when it was between the US and Soviet).
- Fragmented world emerging:
- A rising China is challenging the fundamentals of the liberal global order.
- Meanwhile, support for an expansive American global engagement is at its lowest.
- A fragmented world order is emerging which is redefining the norms and relationships.
- Economic decoupling:
- Moving away from globalization, we are now entering the phase of economic decoupling (countries not trying to not be too interlinked economically with any other country).
- Trade relationships have got affected, with nations looking towards friendlier nations for close cooperation.
- Multilateral institutions struggling:
- Credibility of global multilateral institutions is at its lowest, leading to the emergence of various coalitions.
- Covid-19 and its impact has accentuated these trends.
India at UNSC:
- At the beginning of 2021, India commenced its two year stint as a non-permanent member of the 15-nation United Nations Security Council (UNSC).
- Besides India, Norway, Mexico, Ireland and Kenya also took their place as non-permanent members.
- It is the eighth time that India is part of the powerful UNSC platform.
- India won its eighth UNSC term in 2020 elections when it secured 184 of the 192 votes cast at the UN, signalling a broad acceptance of India’s global role.
India’s action agenda at UNSC:
- India today is more willing than ever before to contribute to its share for global governance via the UNSC.
- India made it clear that it intends to use its time at UNSC “to bring human-centric and inclusive solutions to matters of international peace and security”.
- India also said that it intends to be “a voice for the developing world.”
- India reiterated its commitment to raise its “voice against the common enemies of humanity like terrorism”.
India remains committed to multilateralism:
- Today, multilateralism and global governance is facing one of the most serious challenges in the post-Second World War phase.
In such a time, it is important for a nation like India to step up and contribute its bit, which has been a traditional supporter of multilateralism.
- India has been emphasizing the need for “reformed multilateralism,” in line with today’s needs.
- UNSC is a great platform for India to project its image of a responsible global stakeholder.
India is seeking to redefine its role in the changing world:
- Meanwhile, India is also seeking to redefine its global role in a significant way as rule shaper (not just a rule follower) in the global order.
- As a consequence, India’ss approach to multilateralism and what it wants from being part of the UNSC has also evolved.
- Its critique of the UN has become more specific, calling for UNSC to have better representation and a refreshed mandate.
India has called for UN reform and new multilateralism:
- India has noted that the current outdated leadership structure of the United Nations itself a challenge to its credibility and to its effectiveness.
- The Indian Prime Minister called for a new template of multilateralism that “reflects today’s reality, gives voice to all stakeholders, addresses contemporary challenges, and focuses on human welfare.”
- Underlining growing impatience in India about the pace of reforms in the UN, the Prime Minister asked for how long will India be kept out of the decision making structures of the United Nations.
- The PM has been warning the UN that despite its inherent faith in the global multilateral order, India’s absence from the decision making structures and lack of genuine reforms might force India to look for alternatives.
Reform at UNSC will not be easy:
- India will get an opportunity as part of the UNSC to put some of its core concerns on the global agenda.
- However, it is clear by now that any reform at UNSC will not be easy, and it will definitely not be quick.
- The divisions among major powers on the UNSC today are perhaps at their sharpest ever since the end of the Cold War, which will preclude anything significant from happening in the realm of global governance.
India should use its UNSC tenure to advance its vital strategic interests:
- Meanwhile, India should focus on how its UNSC membership can possibly advance its vital strategic interests.
- From leveraging its role to target issues like terrorism and maritime security to building bridges with Africa, India can do much during its term.
- New Delhi should certainly continue to demand that the UNSC becomes more representative of the changing world.
- In the meantime, it would be wiser to spend its limited diplomatic capital on issues that have a direct bearing on Indian interests.
- Indian diplomacy should be focussed towards making India powerful – in terms of capabilities, institutions and ideational underpinnings.
- That alone will ensure making India the critical node of global governance architecture.
GS Paper III: International Relations
India and Paris Agreement:
- The Paris agreement that India signed in 2015, was India’s inflexion point (moment of dramatic change) in its fight against pollution.
- Specifically, under the Paris agreement, India committed to meet three targets by 2030:
- Cut greenhouse gas emissions intensity of its GDP by 33-35% (vs 2005 levels)
- Increase non-fossil fuel-based power capacity to 40%
- Create an additional ‘carbon sink’ of 2.5-3 billion tonnes CO2 (higher than its emissions currently), by an increase in forest/tree cover
India is taking big leaps and not taking small incremental steps:
- The important thing to note in India’s fight against pollution today is that we now plan to take a leap instead of eyeing incremental improvements.
- This is already visible in many ways:
- LPG penetration is at 97.5% vs 56% in 2015 to replace highly polluting alternative cooking fuels
- City gas penetration is set to reach 70% of the population from less than 10% currently
- Auto norms upgrade straight from BSIV to BSVI, skipping BSV
- Aim to achieve 100% electrified rail network within three years to cut diesel use
- Plans to step-up rail freight capacity by five times to curtail freight movement by roads
- Plans to implement world’s largest renewable capacity addition programme
- India’s renewable capacity doubled in past five years; with solar capacity shooting up nine times (albeit from a low solar capacity earlier)
- Norms to curtail emissions from existing coal power plants
- Raising taxes for diesel cars and cess on coal over time
India is on target to achieve Paris targets:
- Based on current progress, India is expected to achieve its Paris targets much before 2030.
- Already, emissions are down 21% vs 2005 levels (target of 33-35%), non-fossil capacity at 33% (target 40%).
India will perform beyond its targets:
- There is easily scope for India to increase targets over time, aligning itself with other large global economies’ plans to go carbon neutral by 2050/2060.
India is outperforming most of the world on some indices:
- In fact, in certain cases, India’s pace of execution or the stringency of pollution norms is now better than the world.
- For instance, India leapt from BSIV to BSVI auto emission norms, within just three years compared to 5-10 years taken by Europe, China, Hong Kong and Singapore.
- Similarly, India is already at par with global norms for emissions from power gensets and energy efficiency for ACs.
- Going ahead, India is planning to implement the most stringent norms globally.
India’s efforts are also leading to savings in many ways:
- Energy and emissions:
- Towards its green journey, with appropriate capital expenditure (capex), India could save over 106GW of energy and cut 1.1 billion tonnes of annual CO2 emissions by 2030 or over 45% of current its emissions.
- Economic savings:
- Most capex towards pollution curtailment also makes economic sense.
- For instance, waste heat recovery based power projects being implemented by cement companies could achieve payback in less than three years, because they generate power at one-tenth the cost of captive coal-based projects.
- Similarly, as logitics shift from road to rail as Railways’ rail freight capacity increases, logistics costs can reduce by 37% through freight cargo.
- Also, it is leading to cost efficiencies in greener technologies, with
- Cost of renewable power now cheaper than fossil fuel-based power
- Operating cost for electrified rail cheaper than diesel
Power cost for solar-powered agriculture pumps cheaper than diesel-powered pumps, etc.
- Over the next decade, India would continue to cut its diesel consumption, step-up natural gas and renewable power in the energy mix, upgrade emission and energy efficiency norms across sectors, and clean its water bodies.
- Importantly, private sector participation is also growing, with 19 large corporates already announcing plans to go carbon neutral by 2030-50.
- The strong government resolve, rising global focus on climate change issues, investors’ importance to corporates’ environment scores etc. – all of these imply that fighting pollution would be a multi-decade theme.
- India is well aligned, with the rest of the globe on this important issue and is also making great progress.
GS Paper III: Environment Editorial Analysis
Global efforts at diversifying supply chains:
- Global companies have stepped up efforts of diversifying their supply chains in the wake of the Covid-19-induced disruptions and US-China trade tensions.
- They are looking to implement the ‘China Plus One’ strategy i.e., not depending on China alone for any supplies, and looking for more locations.
- For example, large companies like HP have taken steps to diversify their supply chain to mitigate the impact of tariffs in the US, after US slapped tariffs on $500 billion worth of Chinese imports in the past two years.
India can benefit from this:
- The supply chain diversification in manufacturing provides India a chance to emerge as a global manufacturing hub.
- The ability to expand the manufacturing sector – with its trickle-down effect – will be critical to job creation and balanced growth.
India has double task of becoming manufacturing location while cutting its own imports from China:
- While India tires to become a ‘Plus One’ destination for manufacturing to China, India simultaneously must work to reduce its own dependence on China.
- China accounted for 16% of manufactured goods exports globally – and a fifth of imports of both the US and EU – between 2015 and 2019.
Steps needed for India to realize the huge possibilities
Hasten structural reforms that foster competitive ecosystems:
- India’s manufacturing sector is stagnant:
- India’s manufacturing sector’s share of GDP has stagnated at about 15% for the past three decades, reducing the contribution of merchandise exports to GDP to barely 12%.
- In comparision, manufacturing share in China is 30% of GDP (of a nearly five times bigger GDP), while contribution of merchandise exports to GDP is about 20%.
- Even Vietnam moved fast compared to India to emerge as a manufacturing hub for goods such as electronics, leather and textiles because of lower labour costs and free trade agreements (FTAs) with China (which exports goods for manufacturing and assembly in Vietnam).
- India should improve logistics to improve competitiveness:
- India has moved up 14 places to the 63rd position on the World Bank’s ease of doing business ranking in 2019, following structural reforms like GST and fast-tracking of environmental clearances.
- But it still lags far behind countries like South Korea and China.
- India remains uncompetitive on labour, infrastructure and logistics.
- Logistics efficiency is poor with ~70% of freight moving by road despite the fact that moving freight by road, at Rs 2.58 per tonne-km, is expensive compared with Rs 1.41 per tonne-km for Railways and Rs 1.06 per tonne-km for waterways.
- Also, critical inter-linkages between different modes of transport are weak.
Implement immediate labour and land reforms to boost competitiveness:
- While reforms such as the recent amalgamation of 44 labour laws into four codes are welcome, some immediate-term measures could help expand the manufacturing base and attract investments.
- Labour reforms: Increasing the number of working hours – around five Indian states have adopted this so far – and ensuring the ability to fire workers could help enhance competitiveness on labour.
- Labour reforms are also crucial: The government could follow practices similar to Vietnam, and redistribute large parcels on lease along with the right to rent, sub-contract and mortgage.
Improve contract enforcement and dispute resolution timelines:
- The Economic Survey 2019 said delays in contract enforcement and disposal resolution are “the single biggest hurdle to the ease of doing business in India.”
- India takes almost 1,440 days to implement a contract versus 150 days in Singapore because of huge pendency of court cases.
- Reducing this timeline is essential to ease of doing business.
- The government has promoted a culture of resolution with the Insolvency and Bankruptcy Code and Arbitration and Conciliation (Amendment) Act, 2019.
- But a lot more can be done to quicken out-of-court dispute resolution, thereby reducing costs.
Adopt multi-pronged approach to boost sectoral level manufacturing:
- The government should take a long-term view and provide tax and other incentives to build manufacturing ecosystems in new-age sectors such as mobile phones, defence equipment and lithium ion batteries.
- Simultaneously, it should capitalise on established strengths in sectors like textiles, leather, auto components and pharmaceuticals to scale up these sectors.
- FTAs could be useful:
- In readymade garments (RMG), India has ceded ground to Bangladesh and Vietnam, largely because the latter enjoy FTAs.
- For instance, India’s RMG exports to the EU, its biggest market, carry a 9.6% import levy versus zero from Bangladesh, Vietnam and Pakistan.
- In both RMG and leather, India should focus on entering FTAs, apart from resolving issues related to the Merchandise Export from India Scheme (MEIS).
- Strategic incentives:
- After the pandemic, global pharma majors are securing supply chains and reducing dependence on China.
- India is constrained by the fact that imports 68% of its API requirements from China.
- Towards this, the government has launched a Rs 3,000 crore scheme for setting up bulk drug parks. It has also announced a production-linked incentive scheme of Rs 7,000 crore, targeting domestic manufacturing of 53 APIs with high dependence on imports.
- While these schemes are useful, drug-makers can be further helped through more anti-dumping duties and strategic manufacturing incentives.
GS Paper II: Indian Economy
Covid-19 impacted the economy hard:
- Given India’s population density and modest health infrastructure, the government had no option but to order a complete lockdown when coronavirus reached India’s shores.
- As the country stayed indoors, the economy was dealt a crushing blow.
Preparing for post-Covid world:
- While both the central government and the Reserve Bank of India (RBI) have announced mega stimulus packages to revitalize the economy, their impact will only be knows later.
- It is clear that the world will not be the same post covid-19 and even on the economic front there will be a “new normal”.
- Like every crisis, this will also create opportunities and open new horizons, which if leveraged can help strengthen our economy.
Utilizing the Covid crisis to create new opportunities
Impetus for our domestic manufacturing through conducive business climate:
- The Prime Minister’s call for Atmanirbhar Bharat (self-reliant India), can be just the right impetus for our domestic manufacturing.
- The world including India is currently overly dependent on China for raw materials.
- With companies now looking for alternative manufacturing hubs in their bid to de-risk, India could be their destination of choice, provided we offer a conducive environment.
- A conducive business climate with better infrastructure and logistics, simplified land and labour laws and single window clearances can enable India to develop a robust manufacturing ecosystem.
- This will help attract foreign capital, latest technology, create jobs and boost our exports.
- We must also focus on Skill and Scale to be both quality and cost competitive and serve a global customer base.
- Huge scope exists in sectors such as pharma, electronics, automobiles and defence machinery, not only to be self-reliant but also capture a decent slice of the global supply chain.
Move to regime of empowerment by shifting fully to DBT:
- The government announced some useful economic reforms like amendments to the Essential Commodities Act.
- We should also consider phasing out fertilizer and power subsidies that distort the market.
- It is time to move to a direct benefit transfer (DBT) model instead of the appeasement tools like various farm and non-farm subsidies.
- We should utilize this momentum to shift to a regime of empowerment rather than entitlement, as this will bring about a fundamental change for the better.
Use of technology and digitized lending models to boost credit growth:
- With the financial sector reeling under the burden of bad loans, it is time to introduce new digitized lending models using artificial intelligence (AI).
- For example, it could disburse credit basis business flows such as invoices of Goods and Services Tax (GST) and not assets.
- This will be a boon for many startups and small enterprises who would otherwise be denied funding due to lack of collaterals.
- Technology will also enable a more accurate determination of credit risk leading to more realistic pricing of loans, for our banks.
Scale up digital services:
- The current crisis underlines the tremendous utility of social security programmes such as Jan Dhan accounts, Ayushman Bharat and insurance scheme in India, where migrant labourers, daily wage earners and other vulnerable sections form a significant chunk of the population.
- The Jan Dhan scheme in particular enables them to get cash directly from the government bypassing any middlemen or red tape.
- This has tremendous potential to empower the marginalized and bring them under a safety net, especially women and senior citizens.
- The government must scale up the Jan Dhan programme by shifting focus from an account for every household to an account for every adult.
- To help holders derive maximum benefit, along with accounts, we need financial literacy drives, introduction to mobile and digital banking, account linked insurance, custom financial products etc through a seamless integration with Aadhar.
Expand healthcare infrastructure with public-private partnership:
- This pandemic has highlighted the pressing need to expand our healthcare infrastructure to be able to handle emergencies.
- We need:
- Improved coordination between the Centre and different states
- Strong disease surveillance systems
- A ready stock of critical lifesaving drugs and medical equipment
- More diagnostic labs and modern hospitals in every district
- Fast tracking of telemedicine/e-consultations
- In health, the private sector needs to step up and partner with the Government more actively so that basic healthcare is accessible and affordable for all.
- The Government’s decision to provide Viability Gap Funding (VGF) could facilitate their entry.
- Covid-19 will also induce some long term changes in consumption patterns that will help drive expansion and diversification of various digital business channels.
- This could be a boon for e-retailers, online education services, home broadband and virtual private network (VPN) services, digital entertainment etc.
- As the economy reboots, we may see the emergence of a new generation of entrepreneurs.
- This is also the time for the economy to go cash light as digital payments may become the norm, creating a boom for fintech payment companies.
- We may also see some softer benefits, post the Covid crisis.
- As work-from-home increases, it is an excellent opportunity for us to narrow down the economic gender gap.
- As remote working and flexible schedules become the norm in corporates, it can now welcome more women and mothers planning to resume their careers.
- With reduced international travel, as more video conferences and virtual meetings replace physical events and seminars, the carbon footprint could be reduced.
- More “home-offices” will lead to lesser public commute and huge energy savings and hence less emissions.
- This could be just the push our businesses needed to advance the sustainability agenda.
- Winston Churchill famously said after World War II, “Never let a good crisis go to waste”.
- The current pandemic will test the resilience and agility of the Indian economy, but it will also throw up some new opportunities.
- It is up to us to capitalize on them and emerge stronger on the other side of this pandemic.
GS Paper III: Indian Economy
- Locusts are a group of short-horned grasshoppers, that are about the length of 6-8 centimeters.
- According to the FAO, eggs can hatch in about two weeks, with locusts maturing to adulthood in two to four months on average.
- They multiply in numbers as they migrate long distances in destructive swarms (up to 150 km in one day), which can contain as many as 80 million locusts per square kilometer. Swarms can vary from less than 1 square kilometer in size to several hundred square kilometers.
- Four species of locusts are found in India:
- Desert locust (Schistocercagregaria)
- Migratory locust (Locustamigratoria)
- Bombay Locust (Nomadacrissuccincta)
- Tree locust (Anacridium sp.)
- The desert locust does not cause any harm while it moves about independently.
- These winged insects differ from normal hoppers, and become dangerous only when their populations build up rapidly and the close physical contact in crowded conditions triggers behavioural changes.
- They, then, enter the “gregarious phase”, by grouping into bands and forming swarms that can travel great distances (up to 150 km daily), while eating up every bit of vegetation on the way.
- One locust can consume its own weight in food each day.
- The swarms devour leaves, flowers, fruits, seeds, bark and also destroy plants by their sheer weight as they descend on them in massive numbers.
- As per some estimate, a small swarm of the desert locusts eats on average as much food in one day as about 10 elephants, 25 camels or 2500 people.
- Threaten food security:
- The Desert Locust is regarded as the most destructive pest in India as well as internationally.
- If not controlled at the right time, these insect swarms can threaten the food security of countries.
Hurt India recently:
- During late 2019 and early 2020, locusts have caused great damage to the growing rabi crops along western Rajasthan and parts of northern Gujarat.
Hurting Africa this year:
- Desert Locusts, the destructive migratory pests, are currently devouring acres of maize, sorghum and wheat crops in East Africa.
- Kenya is already reporting its worst locust outbreak in 70 years, while Ethiopia and Somalia haven’t seen one this bad in quarter of a century.
- It is common to see locusts in India, but normally only during July-October and mostly as solitary insects or in small isolated groups.
- But this year, the desert locusts appeared along the India-Pakistan border before mid-April.
- The crop-eating pests had first entered Rajasthan from Pakistan in the second week of April.
- After Rajasthan and Madhya Pradesh, the swarm of desert locusts has reached the state of Uttar Pradesh.
- In Uttar Pradesh, locusts are feared to affect 17 districts.
- It is highly concerning as a big swarm of locusts can eat acres of crop within an hour.
Measures to counter them:
- To deal with the situation, Uttar Pradesh’s agriculture department has launched a massive drive to educate farmers on how to keep the locust menace at a bay.
- In Agra, the district administration has deployed 204 tractors mounted with chemical sprays.
- Drone usage permitted:
- The aviation ministry has permitted state government entities to use drones for anti-locust operations.
- Battery-operated rotary-wing drones will be used for aerial surveillance, photography, public announcements and/or aerial spraying of anti-locust pesticides.
Headline : Retributive justice Editorial 6th Dec’19 TheHindu
Outcry for women’s safety after Hyderabad incident:
- The heinous rape and murder of a veterinarian in Hyderabad in late November shook the collective conscience of India.
- It resulted in an outcry for justice for the victim and outrage over the persisting lack of safety for women in public spaces.
Creates societal pressure on justice system for quick justice:
- Such societal pressure for justice invariably weighs upon legal institutions, as the police are required to find the culprits immediately and the judiciary to complete the legal process without undue delay.
But rule of law and procedure must continue to be upheld:
- But these institutions must uphold the rule of law and procedure even in such circumstances.
The ‘encounter’ of the accused was celebrated:
- The killing of the four accused of the rape and murder of the veterinary doctor by the Hyderabad police was celebrated by people in Hyderabad and across India.
Shows anger against gruesome crimes as well as justice system:
- The jubilation over the killings by the police stems from the public anger and anguish over the burgeoning crimes against women.
- There is a perception that the legal institutions are ill-equipped to deal with such crimes and to bring the perpetrators to justice.
However, the encounter raises questions:
- The police claim that they killed the accused in self-defence does not sound fully convincing, and raises disturbing questions.
The encounter must be probed:
- The National Human Rights Commission (NHRC) has deputed a fact-finding team to Hyderabad to probe the incident.
- The guidelines set by the Supreme Court to deal with such events, including the need for an independent investigation, must be strictly observed.
Some improvements in justice system from earlier times for quick justice in gruesome cases:
- There has been greater awareness and improvement in both the policing and judicial process following the ‘Nirbhaya’ case in December 2012 in New Delhi.
- The Telangana government had, in this case as well, issued orders for setting up a fast-track court to try the four accused.
- If the Hyderabad police had followed the successful prosecution similar to the Delhi case, this case could have also brought closure to the case in a time-bound manner.
Much more needs to be done:
- However, much more needs to done in terms of registration and charge-sheeting of sexual crimes by police and addressing the pendency in court of such cases.
- Existing laws on sexual crimes and punishment need better application.
But severe retribution cannot be justice:
- In any case, recourse to brutal retribution as in the case of present ‘encounter’ is no solution.
- On the contrary, the political sanction to deliver such swift retribution would only be a disincentive for the police to follow due process. It may even deter them from pursuing the course of justice.
- Far from ensuring justice to the victims, bending the law in such cases would only undermine people’s faith in the criminal justice system.
- Justice in any civilised society is not just about retribution, but also about deterrence, and in less serious crimes, rehabilitation of the offenders.
GS Paper II: Polity
Section : Editorial Analysis
Headline : An independent fiscal watchdog for Parliament Editorial 21st Sep’19 TheHindu
Access to all of good quality analysis on economic, fiscal or financial matters is important for democracy:
- For an effective democracy, it is important for our electorate and the representatives to have an independent, non-partisan source for these hard facts and evidence.
- This is particularly important for our Parliament, which controls where and how money flows into our government and our country.
- But besides the few Ministers privy to expertise from the civil service, most parliamentarians do not benefit from timely access to good quality analysis on economic, fiscal or financial matters.
Need a non-partisan body like Parliamentary Budget Office (PBO) in India:
- A non-partisan body needs to be appointed with expertise in budgetary, fiscal and economic matters.
- Regardless of a majority or minority government, this body serves parliamentarians equally and without prejudice.
- This body exists in many countries around the world, usually called as Parliamentary Budget Offices (PBOs).
Work of PBOs:
- These bodies help shape the debate and discourse around the state of the nation’s finances and the fiscal implications of significant proposals.
- The work done by PBOs helps drive smarter, more focused debate in the media and with our electorate.
- Besides costing policies and programmes, PBOs provide significant and sometimes the sole source of information on fiscal and economic projections.
- Another data point, different from the government’s, generated by an independent, non-partisan office, helps the parliamentarians to ensure that these projections and estimates continue to be reliable enough for them to make decisions on.
Example of how this body will be useful:
- In the recent time, the Rafale deal controversy in India resulted from uncertainty regarding the true lifecycle costs of the aircraft bought.
- If parliamentarians could access analysis, information and research about defence costing from a PBO (like they do in Canada), they could hold the government to account in case of any discrepancies.
Will there be conflict with the office of CAG?
- A question that arises is the necessity of such an office when we already have an auditor general (CAG).
- However, an Auditor General’s role is to provide retrospective audits and analysis of the financial accounts and performance of government operations. These audits are often focused on the day-to-day goings on of government, and often hone in on the performance of the civil service.
- On the other hand, the PBO provides prospective, forward-looking economic and fiscal projections, as well as policy costings.
- This distinguishes PBO it from an auditor general, which provides useful information, but only after the fact.
Examples of PBO like institutions internationally:
- Internationally, offices like PBO have been established across the world.
- The most prominent such office is the Congressional Budget Office in the United Stateswhich provides impartial advice to both the houses of the legislature.
- Offices in the Netherlands, Korea, Australia and the United Kingdom have also been established for varying lengths of time.
- PBOs are also making an appearance in emerging economies in Sub-Saharan Africa and Southeast Asia.
- Wider role in some countries:
- In some countries, including Australia, the Netherlands, and most recently, Canada, PBOs have also been playing the role of costing electoral platforms during an election campaign.
- In this period, PBOs provide independent cost estimates of electoral platform measures to political parties.
Way forward – India should consider having a PBO:
- Legislatures across the world have witnessed an increasingly stronger executive try to wrest away its rightful power of the purse.
- The amount of information parliamentarians need to scrutinise in Budget documents has exponentially increased and a PBO would assist parliamentarians in this process of scrutiny.
- As the process toward the Union Budget 2020 has already kicked off, it would be relevant for parliamentarians to examine the case for a PBO more deeply.
GS Paper II: International Relations
Section : Editorial Analysis
Headline : Price controls can do more harm than good Editorial 3rd Sep’19 Livemint
Logic behind pricing of pharmaceutical products:
- Many healthcare products such as pharmaceutical drugs require years of research and millions of dollars to develop.
- Even after that, there is always the risk of a new medicine failing to pass human trials.
- As an incentive for research and risks, such firms are granted patents for their formulations that let them charge high “monopoly” prices if and when they are launched.
- The actual cost of making drugs, however, is typically only a tiny fraction of the retail price. So, once the initials costs have been recovered over the span of some years, these tend to yield bumper profits.
Government caps life-saving drugs:
- In case of life-saving drugs, a government would be justified in capping their prices in the public interest.
- Ensuring the cheap availability of old but essential drugs is easily done without any adverse consequences for public health.
- So long as their cost of production is lower than the price caps—which is usually the case—companies would keep selling them.
Proposed government price control on a new list of hygiene products:
- The government is considering bringing essential products such as sanitary napkins and hand wash agents under its price control regime.
Correct objective but wrong method:
- The objective is to make such products affordable to people at large, so that basic hygiene standards are upheld and nobody’s health suffers.
- This is a noble cause, but the method that has been suggested to achieve the aim is not appropriate.
Companies should be able to price their products:
- If the role of pricing products is taken away from companies in markets with vastly differing dynamics, the results could be poor.
Market will ensure correct pricing of products:
- For example, sanitary pads sell in varying grades of quality, offering women with varied budgets a range of options.
- The market for these products is not short of competition.
- The competition between companies to increase sales is enough to guarantee that no single brand can get away with charging too much.
- When there is demand for cheaper variants, a new entrant would fulfil it, which would push existing brands to contain costs and reduce prices.
Price caps lead to products going out of market:
- A price cap imposed on a product can make it unremunerative for its manufacturers to sell, leaving them with no choice but to pull out of the market.
- Seen in the case of coronary stents:
- An example of this is visible in the Indian market for coronary stents used in heart surgeries.
- Some makers of specialized and other premium stents have withdrawn their stents from Indian market in response to a state-ordered price ceiling.
- Selling these at lower rates, they say, does not make commercial sense for them.
- As a result, according to various surgeons, patients in need of superior stents are forced to make do with cheaper alternatives that risk exposing them to health complications.
Government intervention will discourage innovation:
- In contrast to the market determination of prices, an arbitrary maximum retail price set by the government would distort the market by turning innovative products (that use expensive input materials) unprofitable.
- If choice of premium products is not available, it would spell a net welfare loss for Indians.
Government can intervene by subsidizing customers:
- As for the poor cannot afford even the cheapest available sanitary pads unaffordable, the government could intervene in other ways.
- For example, it could use public funds to subsidize low-cost napkins for mass distribution.
- In general, it is best to rely on market forces to have people’s needs met.
- The government’s heart may be in the right place, but price caps in open markets are likely to do more harm than good.
GS Paper III: EconomySection : Editorial Analysis
Headline : Putting the pedal to the metal Editorial 6th Sep’19 TheHindu
- The automobile industry is notoriously cyclical (that is, it sees frequent cycles of ups and downs).
It is also a lead indicator for economic growth.
- The industry is also a lead indicator for economic growth.
- It has been slowing down for about an year, indicating the signs of an impending slowdown.
- The economic growth has also been seeing a decline since the last quarter of calendar year 2018 and intensified with the passage of every month in 2019.
Current auto industry downturn is a major worry:
- While the industry goes through cycles of ups and downs, the current slowdown is something that must be taken more seriously.
- The current downturn in the auto industry is the worst it has seen in a long, long time in terms of depth, scale and character.
How’s the current slowdown different from the usual cyclical downturns?
- The downturn this time is all-encompassing: Every segment of the auto industry, beginning from two-wheelers to passenger cars, light commercial vehicles and heavy commercial vehicles, and even tractors, has been hit.
- Downturn amplified by other factors: A potentially natural, cyclical downturn has been amplified by extraordinary circumstances unleashed by reform measures that may have been well-meaning but have impacted the sector negatively.
- Case of commercial vehicle industry:
- For example, the Goods and Services Tax (GST) has helped in quicker turnaround of trucks. Operators were able to keep the trucks gainfully deployed for 25% more days in a month than before.
- The government is now scrambling to contain the damage by retracting some of their earlier statements and reassuring the industry that the electric motor will not be privileged over the internal combustion engine but it has come too late. This raised existing carrying capacity by up to a quarter.
- These two reform measures impacted the commercial vehicle (CV) industry and only served to advance the cyclical slowdown which was on its way.
- Pollution norms:
- The deadline for the transition to BS-VI norms (from BS-IV) has been set as April 1, 2020.
- Dealers are saddled with inventory of BS-IV vehicles that they need to clear out before the deadline.
- Freight operators are waiting for the steep discounts that are bound to come by as the deadline nears and are not in a hurry anyway to add new trucks given the slowdown in goods movement.
- This also had a negative impact on the CV industry.
- Little innovation by car manufacturers:
- Between Maruti and Hyundai, the two big players that account for two-thirds of the industry, there have been hardly any exciting new launches in the last one year.
- There have been facelifts and limited editions of existing models but the two biggies have not ventured into launching fresh models, at least until very recently.
- In contrast, some new entrants into the market have seen huge interest and bookings, much more than expected.
- Policy choices:
- Finally, an unthinking approach to a critical policymaking area such as electric vehicles (eVs) has only intensified and prolonged the slowdown.
- Key Ministers have tried to contain the damage by retracting earlier statements about eVs and reassuring the industry that the electric motor will not be privileged over the internal combustion engine (ICE) but it has come too late.
Way ahead for the industry
- The onset of festival season sales and the impact of recent measures by the government may help the cycle play itself out soon.
Government can cut GST to quicken the turnaround:
- The government can reduce GST on automobiles from 28% to 18%, even if only for BS-IV vehicles, as they are now lying around in stockyards of vehicle manufacturers and dealers.
- For the industry, this will help clear the clogged pipeline.
- For the government, it will help contain the fallout on its revenue as the lower rate will apply only on a limited stock and until a specified time (say till March 31).
- Prospective buyers, of cars as much as CVs, are delaying their decision as the word is out that the government may consider a tax cut.
- The rate cuts could be announce immediately, and it make a huge difference to the industry.
GS Paper III: Economy
Section : Editorial Analysis
Headline : Bank merger announcement is a needless distraction Editorial 5th Sep’19 IndianExpress
Public Sector Bank (PSB) merger:
- In a major reform measure, the Union Finance Ministry has announced the merger of 10 public sector banks (PSBs) into four entities.
Seen as a response to slowdown:
- The announcement comes in the wake of growth sinking to a six-year low, and was meant to be seen as a big bang response to arresting the slowdown.
Criticism of the move
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In the short term, it will not help in improving the growth rates:
- Some critics of the move say that the merger is actually a needless distraction.
- In the short-term, the mergers will contribute nothing towards engineering a turnaround of the economy.
- Divert banks’ attention from NPAs and Credit growth: Worse still, the administrative and logistic challenges of mergers will divert the mind space of bank managements away from their most pressing task at the moment — of managing the NPAs and aggressively looking for lending opportunities.
- Divert resources away from actual banking: Also, at the lower levels, bank staff will be worrying about their jobs and career prospects while adapting to a new banking culture and new practices at a time when they should be giving their undivided attention to scouting for borrowers and improving service delivery.
In the long term, will the mergers be a net positive?
- It is not unambiguously clear if the mergers will be a net positive in the long term.
- While mergers of banks motivated purely by business considerations lead to efficiency gains, it remains debatable whether the government forced bank mergers are a good thing .
Long-term benefits of mergers:
- Cost efficiency: On the positive side, large banks will entail cost advantages by way of economies of scale such as centralised back office processing, elimination of branch overlap, savings in IT and other fixed costs etc.
- Finance large projects: Large banks will also be able to finance large projects on their own even while staying within the prudential lending norms imposed by the regulator.
Shortcomings of mergers:
- Creation of more banks too big to fail:
- The biggest argument against big banks is that they can become too big to fail (this means government will be forced to bail them out in every crisis and it encourages irresponsible behaviour by big banks).
- The financial sector is all inter-connected and a risk in any part of the system is a risk to the entire system. If a large bank were to fail, it could bring down the whole financial sector with it, as was evident from the collapse of Lehman Brothers in 2008, which triggered the global financial crisis. No country can therefore afford the failure of a big bank.
- The proposed mergers will increase this “too big to fail risk”.
PSBs played an important role in independent India:
- Banks were nationalised 50 years ago in a different era, in a different context.
- PSBs rendered commendable service to the nation by deepening bank penetration into the hinterland and implementing a variety of anti-poverty programmes.
- Financial intermediation by PSBs is one of the factors responsible for India moving from low income to a low middle income country.
But are Public Sector Banks needed anymore?
- While acknowledging the contribution of PSBs, it needs to be asked if we still need PSBs.
- Some experts say that the financial sector is wide enough and deep enough to take care of financial intermediation without the government at the steering wheel.
- Meanwhile, the government could use its mind and time on more important things.
Way towards $5-trillion economy
- There is wide consensus that today’s economic slowdown is due both to cyclical and structural factors.
- By way of cyclical response, the RBI has cut rates and the government has announced a few measures like frontloading expenditures and cutting some taxes.
- The RBI will probably cut rates further and the government will follow on with some more measures.
- However, the most these can do is to lift the growth rate to its potential but that will not make us a $5-trillion economy.
- We will become a $5-trillion economy not by growing at our current potential growth rate but by raising it.
- That requires structural reforms.
- Structural measures will take time to work their way through the system.
- But even the announcement effect of structural reforms can have a big impact.
- Taking PSBs out of government control:
- For example, the government can put out a roadmap for giving up its majority stake in PSBs.
- It will go a long way in shoring up sentiment and getting us off the block to a $5-trillion economy.
GS Paper III: Economics
Section : Editorial Analysis
Headline : Science for disaster management Editorial 31st Aug’19 TimesOfIndia
Managing disaster and emergency risks:
- In an increasingly interconnected world, disaster and emergency risks are becoming more complex and difficult to manage.
- Therefore, it is critically important to optimise the application of scientific and technological capabilities to understand, reduce and manage disaster and emergency risks.
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Use of science and technology:
- Over the last 20 years, science and technology have brought a deeper understanding of how disaster risks are created and how they can be managed.
- We now have reliable information on hazard patterns, data on people (their exposure to hazards), capital assets and economic activity.
- We also have a much greater understanding of fragility or vulnerability of people, assets and systems.
- This can be seen from the huge improvements in various things like
- Forecasting extreme climate and weather events
- Our improved understanding of disasters (like earthquakes and landslides)
- Our ability to model risks and anticipate the impact of disasters even before reaching the disaster site
Increased outreach to scientific community:
- The National Disaster Management Authority (NDMA) is reaching out to the scientific community and working towards a futuristic agenda for disaster risk management in the country.
However, challenges remain in application of Science & Technology:
- At the systemic level, there are two principal challenges worth highlighting.
- On-the-ground application of technology:
- There is still a time lag between the availability of scientific and technological capability and its on-the-ground application.
- For example, mobile computing has been around for more than a decade, yet few post-disaster damage assessments make full use of the technology to come up with quick, rigorous and geo-referenced assessments.
- Similarly, new products and technologies are emanating from the defence establishment that may be useful in disaster response, but their usage is minimal.
- Giving right direction to scientific development:
- The second challenge is on the scientific development side.
- We need to ensure that research is focussed on developing methodologies and tools that respond to real-world challenges and facilitate the shift from disaster management to disaster risk management.
- In this context, there have been some positives in India as it has pursued the application of science and technology for disaster risk management.
- For example, India has systematically pursued the application of space-based technologies for disaster risk management.
- Our national system of science has also continually evolved over the years to meet the needs of disaster risk management professionals.
- For example, some years ago, a number of scientific disciplines were brought together under the umbrella of ministry of earth sciences.
Principles for the next generation of our scientific efforts for disaster risk management:
- We now have to look at the next generation of our scientific efforts to address disaster risk management challenges.
- The next generation of scientific efforts need to be guided by the following three principles:
- Sharper definition of disaster risk management problems:
- We need a sharper definition of disaster risk management problems to galvanise scientific efforts that lead to progress.
- With disaster risk management maturing in India, should be possible to articulate specific requirements from the scientific community.
- Search for scalable, affordable and sustainable solutions:
- While promoting the application of science for disaster risk management at the local level, we should search for scalable, affordable and sustainable solutions.
- In most parts of the country and indeed the world, disaster risks are building up at an alarming rate.
- Our ambition must match the scale of the problem.
- Multi-disciplinary approach:
- We need to enlarge the scope of multi-disciplinary work.
- For example, this may include seismologists interacting with landslide experts, flash flood experts and meteorologists.
- We need to study the interaction between hazards, current and future exposure (population, property and economic activity), and vulnerability.
- This will require multi-disciplinary effort that will push us beyond our comfort zones.
Technology should be complemented by deeper understanding of social and economic processes:
- Over the last few years, there is a lot of enthusiasm for application of big data, machine learning, and artificial intelligence for disaster risk management.
- However, we must recognise that these technologies are not a substitute for a deeper understanding of social and economic processes that make our society vulnerable.
Good risk governance practices should not be overlooked:
- Technology can be complementary, but is not a substitute for the fundamental principles of good risk governance characterised by a responsive government and a risk-aware community.
- The new methods and tools should supplement and not supplant the time tested practices of good disaster risk management.
Way ahead – Coalition for Disaster Resilient Infrastructure:
- In this context, India, with UK and other partners, will be launching a global Coalition for Disaster Resilient Infrastructure.
- The Coalition would prove to be a key milestone towards further strengthening our collaboration.
GS Paper III: Disaster Management
Section : Editorial Analysis
Headline : A road map to transforming India’s energy Editorial 30th Aug’19 HindustanTimes
- Forty years ago, India barely had a car manufacturer, was way behind in the space race, and had an insignificant IT sector.
- Today, India is the world’s fourth largest car manufacturer, and is set to become only the fourth country to land on the moon.
- These achievements should be applauded, but India is just getting started.
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India should play a significant role the energy sector:
- India today has a golden opportunity to play a prominent role in global energy as well.
Energy and economic development:
- Energy and economic development have been deeply intertwined.
- Access to affordable and reliable energy is fundamental to reducing poverty, improving health, increasing productivity, enhancing competitiveness and achieving social justice.
- In the last 30 years, India’s GDP has increased nearly tenfold, while the energy consumption over that period grew nearly 400% (with around 8% last year).
India to overtake China in energy consumption:
- By some estimates, global energy demand seems set to increase by a third.
- By some estimates, India will overtake China as the largest growth market for energy by the mid-2020s.
- This is significant, given that around 30% of the Indian population does not have access to modern sources of energy.
Concerns over emissions:
- More energy consumption tends to lead to more emissions.
- By 2040, India’s share of global emissions seems set to rise from around 7% to 13%, despite the great ambition shown from the government to address climate change.
Dual challenge of increasing energy needs and reducing emissions:
- More energy to improve lives, but with fewer emissions to help address climate change — is what we call the dual challenge.
India can play a leading role in addressing the dual challenge:
- India has the entrepreneurialism, ingenuity and a can-do attitude as well as the tools to reset its energy mix with the low-carbon fuel and power, and reimagine energy.
Ways to achieve this:
- Developing India’s domestic gas production:
- Good for economy:
- There exists huge opportunity with natural gas, in which India has a domestic resource potential of more than 100 trillion cubic feet (Tcf), which includes conventional, unconventional, and yet-to-find gas.
- This resource base has the potential to meet up to 50% of anticipated demand for gas through to 2050.
- So, developing India’s domestic gas production will help reduce energy imports, enable more investment and create jobs.
- Good for environment:
- Natural gas also has a lower carbon intensity per unit of energy than coal in power generation, and offers significant benefits for air quality.
- Longer term, natural gas can be used to produce hydrogen, and decarbonised using carbon capture, use and storage (CCUS).
- Ramping up renewables:
- There is also a big opportunity in renewables, where there are large untapped solar and wind resources.
- Cost of renewables is becoming increasingly competitive with fossil fuels.
- As such, these renewable resources could be further maximised to meet the three to four-fold power demand growth expected in India by 2050.
- They would progressively displace coal in electricity generation, which is important as coal emits about twice as much carbon emissions than gas.
- Decarbonising mobility:
- There is a third opportunity with vehicle electrification and the substitution of liquid fuels with CNG or LNG.
- Costs of light-duty electric car (on a total cost of ownership basis) could converge with conventional vehicles from 2035, and EVs (two and three-wheeler) are close to cost parity today.
- CNG is already competitive in medium and heavy-duty vehicles and LNG is attractive for long-distance trucking.
- Driving digital innovation:
- India also has opportunity in digital innovation, which could help to optimise the energy system and reduce energy demand by as much as 18% by 2050.
- There are opportunities in the field of transport, through autonomous vehicles, ride-sharing and intelligent traffic management systems.
- There are opportunities in buildings (through smart homes), in industry (through connected devices and advanced analytics), in transmission and distribution (though smart grid technologies) etc.
- With these initiatives, India could position itself as a leader in the energy transition.
- India could help address the dual challenge of increasing energy needs and reducing emissions:
GS Paper III: EconomySection : Editorial Analysis
Headline : India’s water crisis: All stakeholders must come together Editorial 29th Aug’19 HindustanTimes
Water stress in India:
- India is home to 17% of world’s population, but has only 4% of the world’s fresh water resources.
- At present, 75% of Indian households do not have access to drinking water, and close to 90% of rural households have no access to piped water.
- India is a water-stressed country, and with 1,544 cubic metre per capita annual availability, we are advancing towards becoming water-scarce.
- Five of the world’s 20 largest cities under water stress are in India.
- As per the Economic Survey 2018-19, by 2050, India will be extremely susceptible to water insecurity.
Economic cost of environmental degradation:
- There are some other aspects that pertain to the economic cost of environmental degradation that India is faced with.
- A 2018 World Bank study pegged the cost of environmental degradation to India at approximately $80 billion per year, which amounts to around 5.7% of our GDP.
- Further, an environment survey of 178 countries ranked India at 155.
- This is extremely worrying, especially since among the BRIC nations, India ranked last.
Water management crucial for India’s future
- Water and its management will determine India’s ability to achieve high economic growth, ensure environmental sustainability, and improve the quality of life.
NITI’s Composite water management index (CWMI) tracking States’ efforts:
- State-led efforts to manage water have been assessed and shared by the NITI Aayog, which has developed the composite water management index (CWMI).
- States are ranked on the management of water and progress in 28 indicators relating to water management.
Community management of water needed:
- Community management of water will be crucial if India is to become water secure.
- For local community driven initiatives, work on community engagement has begun.
Corporations can also play a key role:
- Corporate sector has been playing a role in driving innovation in many sectors.
- Given the magnitude of the challenges India faces, there is a growing role for leading enterprises to help meet development targets.
- In water management, corporations must can a more active role in using their Corporate Social Responsibility (CSR) efforts towards innovation and conservation of water, along with the dissemination of proven practices that help conserve and harness water recharge.
- Corporations should ensure that their CSR commitment and sustainability initiatives are effective and pervasive enough to make a substantial impact.
Examples of effective initiatives by corporations:
- There are flag bearers for conservation efforts among Indian and multinational corporations, and their efforts must be emulated across the board.
- ITC’s integrated water management:
- ITC’s integrated water management approach has been a successful initiative.
- Today, ITC’s integrated watershed development programme covers over one million acres spread across 15,000 water harvesting structures, benefiting over 300,000 people in 43 districts across 16 states.
- This initiative has generated over six million person-days of employment within project villages, reducing levels of distress migration.
- It is now extended to implement four large-scale river basin regeneration projects for achieving water balance and year-round environmental flows in select sub-basins in Maharastra, Tamil Nadu, Telangana and Madhya Pradesh.
- Pilot programme on water use efficiency in agriculture:
- In addition, a pilot programme at scale on “water use efficiency in agriculture” is also being promoted to enable effective demand-side management.
- This initiative has yielded water savings of 20% to 45% in crops like sugarcane, wheat, rice and banana.
- Tata’s Water Mission:
- Tata’s Water Mission aims to provide better access to pure water for six million people spread across 7,000 villages in 12 states, by 2020.
- Key focus areas are to improve access to safe water and sanitation, and to make a difference through rigorous and technologically advanced interventions.
- Pepsico’s sustainability agenda:
- Under its 2025 sustainability agenda, Pepsico is said to aim for a global improvement in water use efficiency in high water risk areas of its direct agricultural supply chain by 15% by 2025.
- Mahindra Hariyali programme:
- Mahindra too is doing extensive work under its Mahindra Hariyali programme.
- As its climate change resistance movement, the initiative is a social upsurge where tree planting is not merely a duty, but, in fact, is termed a celebration.
- Since 2007, this initiative has achieved a target of planting 16 million saplings.
Corporations must make water conservation and management their top CSR concern:
- Many of the CSR activities currently are geared towards water conservation and management.
- But now they need to make it a top priority rather than one of the many avenues where CSR initiatives are undertaken.
- Water is a critical resource and community water management is a must.
- This will range from corporate engagement to smaller scale community initiatives, to individual efforts.
- Now, the entire ecosystem must work in a cooperative manner to ensure India’s water conservation efforts are forward-thinking, while leveraging synergies from the State, corporations, and the community as a whole.
GS Paper III: EconomySection : Editorial Analysis
Headline : Appointment of CDS will fill a void in India’s defence system Editorial 16th Aug’19 IndianExpress
PM announcing the creation of CDS:
- One of the most significant announcements made by Prime Minister Narendra Modi on Independence Day in 2019 is the creation of a Chief of Defence Staff (CDS).
- The CDS is expected to be a four-star military officer, who would act as the single point adviser to the government on military matters.
- The CDS would also coordinate amongst the three services and bridge the differences.
- The appointment of the CDS will make the armed forces more effective.
- The CDS should be one with a good understanding of the global security environment and functioning of the three services.
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Significance of having a CDS:
- Modern military battles cannot be fought by each service fighting independently.
- The present Indian Armed Forces are colonial constructs and were configured primarily to serve the interest of their colonial masters during the great wars.
- The restructuring of armed forces, therefore, is required necessarily as the future wars are going to be short intense affairs where all organs of the state are likely to be employed simultaneously.
- Such a scenario would require unity of command, which is feasible only when the country has a unified command structure led by the CDS.
- Office of CDS has been a long pending demand of the defence forces. It was also recommended by both the Kargil Review Committee led by K Subrahmanyam in 1999, as well as the Committee of Experts set up by Ministry of Defence under the chairmanship of General D B Shekatkar.
Earlier efforts at creating a CDS:
- The Kargil Review Committee had recommended a CDS as well as a Vice Chief of Defence Staff (VCDS).
- A group of ministers headed by the then Deputy Prime Minister examined it and recommended CDS with a tri-service joint planning staff.
- Accordingly, the Headquarters Integrated Defence Staff (HQIDS) was created in 2001.
They failed as bureaucrats created hurdles:
- Despite the importance of the office of CDS, political insecurities and bureaucratic stranglehold over the Ministry of Defence have prevented it from coming into effect.
- In 2001, the bureaucrats succeeded in stalling the appointment of the CDS by creating the perception that it would be far easier for a CDS to stage a coup.
- Consequently, an anomalous situation was created wherein the HDQIDS has been functioning without a head for the past 18 years.
- Ineffective office of Chairman Chiefs of Staff Committee (CISC) was created:
- The VCDS was reconfigured to create the office of the Chairman Chiefs of Staff Committee (CISC).
- The absence of the CDS has limited the ability of CISC to mediate between the three services.
- More significantly, being lower in rank, he could not find acceptance as the sole adviser to the government in a rigidly hierarchical organisation like the military.
Making CDS effective:
- Access to highest levels: For the CDS to be effective, he must have direct access to the defence minister and through him to the prime minister.
- Non-rotational appointments: The post of CDS should not be a rotational appointment; the government must select one after interviewing top officials of the three services.
- Also, to begin with, all defence land and capital budget must be put under the CDS and appointments in inter-service organisations must be made essential for further promotions.
- The government may take inspiration from the US Goldwater-Nichols Department of Defense Reorganization Act and push the three services.
- Despite the PM’s announcement, it is not going to be a smooth affair.
- Bureaucratic resistance: The bureaucrats afraid of losing their salience will create bottlenecks.
- Services resistance: On top of that, individual services, afraid of losing their turf, are bound to resist the CDS’s involvement in their affairs.
It should be followed by Integrated Theatre Commands
- The mere creation of the office is not enough.
- This will need to be augmented by restructuring of the Ministry of Defence (MoD) and creating integrated theatre commands.
- After the reorganisation of MoD and establishment of theatre commands, they should directly be responsible to the defence minister through the CDS for all combat operations.
- Each service chief should majorly be responsible for equipping, organising and training of the forces.
- The creation of the CDS will need to be followed up with further reforms to reconfigure the armed forces to meet India’s aspirations to be a global power.
GS Paper III: Defence & Security
Section : Defence & Security
1) Incisive interventions that blunt the RTI’s edge Editorial 10th Aug’19 TheHindu
2) While the frequency of forest fire appears to have increased in the country, India’s approach towards forest fire management has significant gaps. Elucidate. (10 marks)
3) What is the significance of the UN Security Council? Discuss the need for reforms in the UNSC. (15 marks)
4) Economy: RBI has done its bit, now over to the government Editorial 9th Aug’19 HindustanTimes
5) Enumerate the major factors behind accumulation of non-performing assets in the Indian banking sector in recent years. (15 marks)
6) Editorial 8th Aug’19 IndianExpress: Reduce corporate tax to achieve $5 trillion economy
7) What were the various land revenue settlements introduced by the Britishers in India and how did they impact Indian farmers? (15 marks)
8) Economy: Dividend Tax Distribution, Long Term Capital Gain Tax (LTCG), Surcharge on FPIs
9) RBI: Monetary Policy and Monetary Policy Committee, Important Terminology [Repo rate, MSF, LAF, Reverse repo rate ]
10) About Protocol on Inland Water Transit and Trade (PIWTT), Navigable Inland Waterways, IWAI
Headline : RBI has done its bit, now over to the government Editorial 9th Aug’19 HindustanTimes
Rate cut by RBI:
- Inflation is within control.
- The economy is slowing down. RBI has lowered its growth projections for the first half of the year sharply.
- The RBI’s projections indicate that it expects growth to improve in the second half of the year, and will be 6.9 for the year.
- In light of this, the Reserve Bank of India (RBI) cut the repo rate by 35 basis points, a little more than what it usually does (usually, it’s 25 basis points).
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This itself is not enough to induce higher growth rate:
- There is only so much that a monetary policy can achieve.
- This is because of other issues in the financial system, like a weak rate cut transmission mechanism, a stressed banking sector, and difficulties in the non-bank financial (NBFC) sector.
- This means that other policy changes will be needed to achieve higher growth in the second half of the year.
Need to revive Private investment:
- Private investment is a critical engine of growth for the economy.
- The government neither has the capacity, nor the fiscal space, to lift investment and growth without the participation of entrepreneurs across the country.
- The only way investment in India can pick up is if entrepreneurs are upbeat about the opportunities that the economy has to offer them to make a decent living from doing business.
Government tried some measures to achieve this:
- Between 2014 and 2019, India took some measures to help private sector, including:
- Enacting Insolvency and Bankruptcy Code
- Enacting Goods and Services Tax (GST)
- Improving ease of doing business
- Pushing both public investment and micro, small and medium enterprises credit
But private investment has not picked up:
- The policy initiatives already undertaken have not helped pick up the private investment.
India’s tax regime hurts businesses:
- The most important department that perhaps affects the economy is the tax department or the department of revenue.
- Its job is to increase the share of gross domestic product (GDP) that it collects as taxes.
- To do so, it often proposes new taxes or increases in tax rates.
- Increasing tax rate easier than increasing tax base:
- Often, given the narrow tax base that India has, increasing revenues is easier done by increasing the tax rate or the tax burden of those already paying taxes, than by increasing compliance.
- Lead to evasion:
- In recent years, marginal tax rates have been increasing. This has made trying to evade taxes more attractive.
- Tax department increases harassment in the name of compliance:
- To counter the subsequent loss of revenue through evasion, the tax department has been given greater powers to go after those who they feel are evading taxes.
Tax department not worried about its impact on business sentiment and investment:
- The tax department is not expected to assess the impact of its greater powers on businesses, and the sentiment of businessmen.
- India today has a number of taxes, like the surcharge on income and corporate tax, the Securities Transaction Tax (STT) and, now, the tax on the super-rich, where no analysis is done about the impact of the tax on the economy.
- It is not expected to focus on the impact its proposals on new taxes and tax rates have on GDP or investment.
- For example, what is the impact of the tax on the super-rich? What is the effect of the tax on foreign portfolio investors and stock markets? How is it going to impact investment? The department is not worried about that
Increasing the tax rates indiscriminately is counter-productive:
- Economic theory and the Laffer curve suggest that, beyond a point, increasing the tax rate is counterproductive, even in terms of collecting more revenue.
- Beyond a point, high tax rates can also have negative effects on incentives for investment in the country, for encouraging growth and job creation.
What other steps the government can take to achieve higher growth rates?
Assess potential impact of any new proposals:
- Seeing the business environment today, there is a need for a thorough analysis of the economy-wide impact of policies before new proposals are accepted.
- This needs to be an integral part of policymaking.
- The finance minister has to turn down many proposals that may appear attractive in the short run, and keep tax administration under a tight leash.
Restore the role of DEA in reform and productivity growth in the economy:
- The department of economic affairs (DEA) in the ministry of finance traditionally had the task of pushing for reform and productivity growth in the economy by looking beyond short term and sectoral issues.
- This helped the finance ministry in the past push for lowering taxes, import tariffs, push for greater foreign investment since 1991, and liberalisation and better regulation of the financial sector.
- While sector-specific ministries (such as aviation, railways, steel etc.) focus on their areas or sectors, they may, at times, lobby for what is good for their sector, but not for the economy as a whole.
- The DEA’s traditional role could be restored so that it studies the investment and growth impact of policy proposals before they are accepted.
- The general sense of gloom in business needs to change before we can expect that growth will be higher in the second half of the year.
- RBI has done its bit, now the government needs to do its share.
GS Paper III: Economy
Section : Editorial Analysis
Headline : Five actions to turbocharge India’s public healthcare Editorial 7th Apr’19 IndianExpress
India’s rising population has great health services need:
- India has the world’s second largest population which went from 760 million in 1985 and doubled in size by 2015.
- This rapid rise in population has not seen an appropriate increase in health services for the population.
But Budgetary allocation for health insufficient:
- Budgetary allocation to public health is only 1.2 per cent of the total health expenditure which is far lower than the WHO recommendation of 5 per cent.
- This lack of funds hits public healthcare infrastructure, lack of experienced medical staff to manage the burgeoning population.
- Government statistics show that community healthcare centres are falling short of specialists and 63 per cent of hospital beds belong to private sector.
- This gap is sharper when you look at the rural sector which has a higher percentage of the population and are financially weaker.
Technology and Innovation to tackle healthcare challenges:
- India is experiencing a fast-paced growth on the back of technological disruption and innovative thinking.
- This provides an opportunity to bring the same to solve the public healthcare challenge.
Five urgent actions that can be taken on healthcare:
1. Tracking health outcomes
- Tracking the healthcare outcomes on a real-time basis will allow for a clearer picture for the authorities to deploy funds and resources in the most appropriate manner.
- Judging the health care providers performance on outcomes would introduce a clear target that rewards innovation.
- To ensure this, the policy makers should introduce a standardized collection and reporting methodology.
2. Maintaining digital health records
- India needs a universal system of tracking health records. The system would contain every patient’s complete medical history and would be available to any healthcare provider while still ensuring the privacy and security of the patient information.
- Budgetary allocation while the data collected can also be leveraged to understand the efficacy of the processes and protocols being implemented.
- The larger analysis of this data can help keep a track of healthcare trends, track disease, understand policy impact and anticipate demand for drugs / care.
- This information would be vital to better divert funds to specific resources that are required at the point in time.
3. Government health insurance
- Most people are vulnerable to financial distress related to critical medical procedures and require the national health insurance system for economically viable health coverage.
- Through the use of artificial intelligence and the use of digital health, records actuaries (like insurance analysts) would be able to detect any claim anomalies to prevent fraud.
4. Leveraging a connected India
- Over 60 per cent of the population live in rural areas in India that are in remote locations without easy access to the primary health centres.
- These people avoid treatment for minor injuries and ailments that exacerbate due to non-treatment or incorrect home remedies.
- Mobility and digital technology platforms have the potential of bridging this deficit by allowing doctors to remotely treat patients in under-resourced areas efficiently and economically.
5. Mobile resources for last mile delivery
- Healthcare service professionals who are delivering at the last mile must be empowered with mobile-enabled resources to provide lifesaving care to the doorstep of those living in remote areas.
- These resources can enable mobile diagnostics, improve collection of data and real-time consultation with doctors that are available through Telemedicine solutions.
GS Paper II: Social Issues
Section : Editorial Analysis
Headline : Languages and civilisation Editorial 5th Apr’19 IndianExpress
Importance of language:
- Language is a tool for intellectual and emotional expression.
- Language is a vehicle for the transmission of culture, scientific knowledge and a worldview across generations.
- It is the vital, unseen thread that links the past with the present.
- The great Indian poet Acharya Dandi had said that if the light of language does not exist, we will be groping in a dark world.
Indian literary tradition:
- There is a rich literary tradition in many languages, especially the ones recognised as classical languages by the Government of India.
- Modern Indian languages have ancient roots and are derived in some way from the classical languages.
Great Sanskrit literary heritage in India:
- Sanskrit, of course, is one of the oldest Indo-European languages, dating back to the second millennium BC.
- The manuscripts still in existence in Sanskrit number over 30 million, one hundred times those in Greek and Latin combined, constituting the largest cultural heritage that any civilisation has produced before the invention of the printing press.
- Since studying the classical languages and literature would provide access to authentic sources of history, the National Mission for Manuscripts was set up in 2003.
- Preservation of ancient texts is only the first step. We need to encourage scholars to do research using these primary sources and unearth new nuggets of knowledge.
- It is important to study ancient texts and propagate them among modern audiences.
Classical languages of India:
- Some languages have been given classical language status because of their ancient literary heritage.
- For instance, Tamil literature dates back to 500 BC, Telugu to 400 BC, Kannada to 450 BC, Malayalam to 1198 AD and Odia to 800 AD.
- Each of these languages has a rich treasure house of literature, examples include:
- Sangam literature and Tholkappiyum in Tamil
- Kavitrayam’s Andhra Mahabharatam in Telugu
- Ramacharitham of Cheeraman in Malayalam
- Kavirajamarga of Amoghavarsha in Kannada
- Kharavela’s inscriptions in Odia
- For each of the populations speaking these languages, their literature is a matter of pride and distinct identity and the language is a goddess to be revered. There are songs in praise of these languages in Telugu, Kannada and Tamil.
Honouring those working on classical languages:
- Recently, President’s award was given to scholars of Sanskrit, Pali, Prakrit, Arabic, Persian, Telugu, Kannada, Odia and Malayalam for their service in the preservation and development of classical languages.
- It shows nation’s appreciation and recognition to renowned scholars who are keeping alive the traditional knowledge and acting as the intellectual bridge between the past and the present.
Falling linguistic diversity of India harms our cultural richness:
- India is a multilingual country where more than 19,500 languages or dialects are spoken.
- However, studies by experts estimate that almost 600 languages are on the verge of extinction and that more than 250 languages have disappeared in the past 60 years.
- Almost 97 per cent of the population speaks one of the 22 scheduled languages.
- When a language dies, an entire culture dies.
Preserving and developing India’s linguistic heritage:
- Our languages are a crucial part of our history, our culture and our evolution as a society.
- It is important to protect and conserve our linguistic heritage.
- Protecting our cultural heritage, including languages, is our constitutionally-mandated duty.
- The resources required to develop language technology and artificial intelligence-based tools are inadequate or unavailable for many Indian languages.
- We must harness the power of technology to preserve and promote our languages and culture.
- The Government of India launched the Linguistic Data Consortium for Indian Languages (LDC-IL) in 2008 and has been preparing high-quality linguistic resources over the last 11 years in all the scheduled languages of India.
- The Data Distribution Portal is also being launched, where more and varied datasets will be added using several types of AI-based technologies such as automatic dictation, speech recognition, language understanding, machine translation, grammar and spell check.
- The Central Institute of Indian Languages has been doing commendable work to provide linguistic resources in Indian languages.
A multi-pronged approach:
- Language preservation and development needs a multi-pronged approach.
- Education: It should begin at the primary school level and be continued to higher levels of education. Functional literacy in at least one language should be ensured.
- Usage at homes: More and more people should start using their native languages at home, in the community, in meetings and in administration.
- Encouraging literature: More people should write poetry, stories, novels and dramas in these languages. We must accord a sense of dignity and a sense of pride to those who speak, write and communicate in these languages.
- Publications: We must encourage Indian language publications, journals and children’s books.
- Dialects and folk literature must be given adequate focus.
- Language promotion should be an integral part of good governance.
- Language should become a catalyst for inclusive development.
- By harnessing technology, the mission of “digital India” can be a mission for a literate India and a mission for an inclusive knowledge society.
GS Paper I: Society
Section : Editorial Analysis
Headline : Time for India to relook the agricultural sector Editorial 30th Mar’19 FinancialExpress
India’s progress in agriculture:
- India has made significant strides in agriculture and food security since independence.
- It has transformed from a food deficit nation to ensuring its food security despite an almost four-fold increase in population.
But time has come to relook at agriculture in India:
- India needs to shift from subsistence agriculture to robust agricultural systems that do all of the following:
- Provide food security for all its citizens
- Ensure income security for its farmers
- More diversified and better nutrition for its citizens
- Globally competitive farm productivity levels
Productivity in agriculture can be looked at in two ways:
- On a per hectare basis – India lags but is doing ok
- Over the past few decades, India has increased its productivity on a per hectare basis.
- However, India still lags behind many emerging market peers and most developed nations on this metric.
- On a per farm worker basis – India is doing very poorly
- India is one of the least productive in agriculture on a per farm worker basis amongst major economies.
- Due to small size of farm holdings:
- About 45% of India’s workforce is involved in agriculture compared to national best practices of less than 1%.
- The disproportionately large labour force in agriculture is related to the size of India’s landholdings.
- From an average of 2.7 hectares in 1970, India’s farms have become progressively more fragmented, with the latest Agriculture Census 2015-16 showing that India’s average farm size is now 1 hectare.
- Compare this to say, Canada (~300 hectares), Argentina (~500 hectares) and Ukraine (~1,000 hectares).
- Small landholdings have constrained mechanisation, technology adoption, and economies of scale do not accrue at such levels of landholding.
Ways to improve per-farm productivity
- Farms need to get bigger:
- Land is a state subject, and so states must take the lead in reforms in this regard to allow farm sizes to grow.
- Land Leasing:
- One way to achieve bigger land sizes is land leasing.
- States can come up with their own laws with suitable modifications to NITI Aayog’s Model Land Leasing Act, 2016, as per their needs.
- Digitisation of land records critical for this:
- Accelerating the digitisation of land records is critical for smooth implementation of this game-changing reform.
- Telangana has made significant progress in this regard and other states must follow their example.
- Farmers’ collectives:
- A stronger push is needed to collectivise farmers through various farmer producer companies (FPCs), farmer producer organisations (FPOs) and cooperatives, for bringing collective benefits from scale.
- Reducing wastage by strengthening supply chains:
- The benefits of rising productivity will not accrue to farmers unless the supply and value chain is strengthened, especially in the case of horticulture products.
- NITI Aayog’s Strategy Document points out that the annual cost of post-harvest losses can be nearly Rs. 1 lakh crore.
- The study by the Central Institute of Post-Harvest Engineering & Technology (CIPHET) indicated that the largest amount of losses accrue at the harvesting stage, then at the sorting/grading stage, followed by the transport one.
- Markets and packaging closer to farms:
- We need to target the creation of packhouses much closer to the farm gate.
- Gramin Rural Agricultural Markets (GrAMs):
- The GrAMs scheme is targeting the transformation of 22,000 rural periodic markets close to the farm gate.
- An important component of this scheme is that these GrAMs be kept out of the purview of the State APMC Acts.
- Promoting FPC and FPO ownership of these GrAMs should be considered.
- Similarly, private sector enterprises willing to establish backward linkages should partner with state governments in organising their sourcing through GrAMs.
- Taking farmers out of farming:
- Larger farms with a strengthened supply chains, marketing reforms etc. are incremental solutions to agrarian distress which could collectively serve to double the final output of the overall food supply chain in the country.
- However, even with these reforms, the problem of dismally low productivity per farm worker is not yet suitably addressed.
- Pulling cultivators into non-farm or off-farm activities is also required.
- Remunerative jobs outside agriculture:
- This requires more remunerative jobs being created outside agriculture.
- Creating blue collar jobs in and around agriculture is an attractive option.
- The food processing industry has the potential to generate substantial employment.
- The ‘Make in India’ initiative could be a driver of absorbing some of the labour from rising farm productivity. For speedier progress, labour intensive sectors like the construction sector can absorb labour rapidly.
- Farming as a Service (FaaS):
- FaaS – delivering farm mechanisation solutions, transport solutions or extension services etc. – offers employment generation capacity as well.
- It has the potential to reduce costs for farmers besides generating rural employment.
- For example, Madhya Pradesh has had success in promoting the custom hiring centre (CHC) model.
- PPPs in extension services:
- Partnering with the private sector in delivering extension services is another avenue towards generating rural employment.
- NITI’s Strategy for New India @ 75 pitches for public-private partnership in extension delivery through Krishi Vigyan Kendras (KVK).
- As productivity increases, systems need to be in place for farmers to benefit from the produce, and avoid distressed sales and depressed prices (especially in the case of horticulture products).
- We have to focus more on efficient evacuation with marketing facilities and processing facilities closer to the farm gate.
- Improving productivity should be accompanied by developing an efficient value chain, with adequate grading/sorting and assaying facilities, marketing reforms, encouraging contract farming, and boosting investment in the food processing industry.
- It should also be accompanied by boosting construction and manufacturing in rural areas to absorb the labour generated by higher farm productivity.
GS Paper III: Economy
Section : Editorial Analysis
Headline : A-SAT tech gives India diplomatic bargaining power Editorial 28th Mar’19 LiveMint
Anti-Satellite (ASAT) missile test:
- India has successfully conducted an Anti-Satellite (ASAT) missile test.
- Conducting the test under Mission Shakti, India demonstrated the capability to destroy a satellite in the low earth orbit (LEO) at about 300 km above the earth’s surface, using an anti-satellite missile.
- The Defence Research and Development Organization (DRDO) has demonstrated that we have the capability that only a few (US, Russia and China) among the best have.
- The A-SAT technology is a combination of two technologies in the missile field:
- A long-range missile capability which has been demonstrated by India many times.
- The ballistic missile defence capability, meaning the ability to intercept a missile with another missile. This has also been demonstrated many times by India.
- Integrating these two technologies, the A-SAT system has been created.
Made possible due to the political will of the government:
- Over the last ten years, major building blocks were under development.
- However, decisions like anti-satellite tests are strategic in nature, and they cannot be taken by the scientists.
- They have to be taken by the government with strong political will, as there is fear of backlash from international powers.
- The union government took the decision about two years ago, and after that, DRDO has been able to build the necessary technology for interception of a satellite in lower orbit.
Demonstration of technological abilities:
- With this test, India has reached the pinnacle of missile technology to intercept a satellite that is orbiting at about 7-8 kilometres per second in a lower orbit with the precision of less than one millisecond.
- It consists of a very agile kill vehicle with infrared seeker, excellent command control and communications network and long-range radar systems on ground, all working in unison in an automated manner to enable this interception.
Deterrence against attacks on India’s space assets:
- Satellites form an integral part of a country’s critical infrastructure, with critical applications including navigation systems, communication networks, broadcasting, banking systems, surveillance etc.
- Anti-Satellite (ASAT) missile capability gives India the strength and sends the message of deterrence against anyone messing with our space assets.
- On land, sea, and air, India had all the capabilities in addition to a nuclear deterrent. The new successful missile test adds deterrence in space. If tomorrow there is a war in space, this gives us the defence preparedness.
Defence against long range missiles:
- If we can intercept a satellite, it means we can intercept any object approaching us this fast, like the intermediate-range ballistic missiles and Intercontinental ballistic missiles (ICBMs).
- We can engage these weapons at altitudes of 300 kilometres above ground.
Protects India against any grouping excluding India from conducting such tests:
- Historically, five nuclear-weapon states (NWS)—China, France, Russia, United Kingdom, and the United States, had decided that they can have the nuclear weapons, but others like India cannot. So they made it very very difficult for India to build nuclear weapons.
- In the case of space, there is no such rule mechanism so far.
- But the only countries that had Anti-Satellite Missile capabilities were the US, Russia and China, and there was a possibility that they come together and say that only they can have this capability (like in the case of nuclear weapons).
- With India successfully conducting this test, India ensured itself a role in the future in the drafting of international law on prevention of an arms race in the space.
Adds to India’s national power:
- With this test, India became only the fourth country in the world to demonstrate the capability to shoot down satellites in orbit.
- It strengthens India’s position as a major space power with proven space technology.
- The test has increased India’s bargaining power on the diplomatic front as well.
- Space technologies are continuously evolving at a fast rate.
- In the near future, we could see development of more such space technologies and Mission Shakti paves the way for demonstrations of those capabilities.
- There are more options, in terms of anti-satellite weapons, which could be explored. For instance, jamming and laser anti-satellite weapons will be really important.
GS Paper II: Security Issues
Section : Editorial Analysis
China slowdown presents India an opportunity to shine Editorial 20th Feb’19 LiveMint
Middle income trap:
- Many countries that have succeeded in moving out of mass poverty (through rapid economic growth) have struggled in their effort to move to mass prosperity.
- Research by economists showed that the most common point when inertia sets in (that is per capita income levels stagnate), is when average incomes are either around $11,000 or $15,000 a year.
- This is the famous middle income trap.
- Fewer countries emerge from it than enter it.
Reasons for this:
- Initial growth is input intensive:
- Economic growth in the initial phases is predominantly driven by the use of more inputs (labour, capital etc.).
- The labour force is growing. Investment rates are high.
- At a certain stage, productivity growth is required to leap to the next phase of development:
- After the initial growth phase, the need for productivity growth kicks in.
- The transition from one phase to the other—from using more inputs to using them more productively—is not an easy one.
- Most countries find this transition difficult:
- Economies such as South Africa and Brazil have not, for decades, been able to get out of this “middle income trap”.
- The countries of East Asia also painfully realised this in 1997.
China has arrived at that point:
- China has entered challenging territory of “middle income trap”.
- The International Monetary Fund (IMF) estimates that average incomes in China will be $10,098 this year.
Inputs peaked and now looking for productivity growth:
- The Chinese labour force seems to have peaked. The investment rate is already unsustainably high.
- China is now struggling with the challenge of finding ways to switch the economic growth model from input intensity to productivity growth.
China’s efforts to get out of the middle income trap has led to financial stress:
- China has responded to its challenges of productivity through stimulus measures.
- The credit booms directed by the government have raised the risk of a financial meltdown.
- The true fiscal deficit, which includes subnational borrowing as well as money raised off balance sheet (many local governments in China raise debt without showing it on balance sheet in order to avoid lending limits imposed by central government), is perhaps close to 10% of Chinese GDP.
- Most of this is connected to the challenge of changing the growth model to escape the middle income trap.
China’s worries ahead:
- The ruling Chinese Communist Party fears that any economic collapse will lead to a political collapse of the sort the Soviet Union saw in 1991.
- It is also worried about the sort of financial meltdown that many Asian countries saw in 1997.
- Another fear is a long stagnation (very low growth rates) like the one Japan encountered after its financial bubble burst in 1989, at the very end of its economic miracle.
But China can still come out of the middle income trap:
- Economists have been forecasting the collapse of China for two decades but that has not happened so far.
- China to its credit has seen the most spectacular economic boom in human history as well as the most astonishing development story ever.
- So the possibility that China will extricate itself from the middle income trap should not be dismissed.
Can India catch up with China while it slows down?
China’s economic status built through very high growth rate for a long time:
- In the two decades before its structural slowdown began in 2013, China expanded its economy at double digits in nine years while it grew in excess of 9% for another six years.
- China has on average been growing around two percentage points faster than India since the early 1990s.
India grew fast only for a few years:
- India had one year of double digit growth and three years of 9%-plus growth in the same period.
- As a result, China moved ahead very rapidly.
India lags behind China is many ways:
- Gap in living standards:
- The Indian average income in 2019 is broadly similar to the Chinese average income in 2006. This means is that India is now 13 years behind China in terms of living standards.
- There is a similar gap when it comes to the size of the economy (GDP).
- Gap in global strategic heft:
- China’s economic power gives it enormous strategic heft which it uses aggressively.
- Indian economy needs to grow fast for a long time to achieve similar status.
- Gap in social development:
- There is a large gap between India and China for social development indicators such as health and education.
Now India has a chance to close the gap:
- With China slowing down, India has a chance to close the gap on China.
- India has been growing faster than China in the past couple of years, and has taken over as the fastest growing major economy in the world.
- That is likely to continue as the Chinese economy continues to lose momentum.
Depends on policy choices:
- However, whether the income gap can be closed, or at least narrowed, depends on whether India can improve its economic trajectory even while China slows down.
- A lot depends on the respective policy responses in the two countries.
- It depends on whether China can come up with policies to change its growth model without a financial shock.
- It depends on whether India can accelerate its growth rate over the next two decades.
- The China slowdown is an opportunity for India to close the gap.
- The first condition for that will be policy reforms to sustain higher economic growth.
GS Paper II: International Relations
Section : Editorial Analysis