Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- Pros and cons of formalising the informal sector, policy changes needed to support the informal sector
Context
Attempt to formalise the informal sector would not necessarily benefit it as two recent papers reveal.
What do the research papers reveal?
- The first paper-No strong evidence that formalisation improves business outcomes.
- Published by the National Bureau of Economic Research, economist Seema Jayachandran argues that there is no strong evidence from studies conducted in many developing countries that formalisation improves business outcomes.
- The second article-Formalisation an evolutionary process:
- In the second article, a background paper for the International Labour Organisation (ILO), economist Santosh Mehrotra calls formalisation an evolutionary process.
- During this evolutionary process small, informal enterprises learn the capabilities required to operate in a more formal, global economy.
- He says they cannot be forced to formalise.
The formalisation trap
- Why does the state want to formalise?
- Easy monitoring and taxation: The state finds it easier to monitor and to tax the firms that adopt its version of formality.
- Reduced last-mile cost for banks: Formality can reduce the last-mile costs for banks also.
- Problem with the imposed formalisation
- The added cost outweighs benefits: Ms Jayachandran’s study reveals that most of the formalities imposed from above, add to the costs of the firms that outweigh the benefits of inappropriate formalisation.
How informal sector improves themselves?
- Association with their peers: Small entrepreneurs gain from forming effective associations with their peers.
- Mentoring: They also benefit greatly from ‘mentoring’.
- On job skill development: Skills of small entrepreneurs and their employees are best developed on-the-job.
- This is because they cannot afford the loss of income by taking time off for training.
- Soft skills to form associations and manage enterprises, matter as much for the success of the enterprises as ‘hard’ resources of finance and facilities.
Problems with connecting to global supply chains-
- There is a desire to connect small firms in India more firmly with global supply chains.
- Search for lover cost source supply: Mehrotra points out that the primary motivation of multinational companies for expanding their global supply chains is to tap into lower-cost sources of supply.
- Supply chains compete with each other.
- When wages and costs increase in their source countries, they look for other lower-cost sources.
- Informal-the lowest labour cost firms: The lowest labour cost firms at the end of supply chains are generally informal.
- Thus, the push by the state to formalise firms is countered by the supply chain’s drive to lower its costs.
Way forward
- India’s jobs, incomes, and growth challenges necessitate a reorientation of policies towards the informal sector.
- First-The government and its policy advisers must stop trying to reduce its size.
- The development of an economy, from agriculture to the production of more complex products in the industry, is a process of learning.
- Informal enterprises provide the transition space for people who have insufficient skills and assets to join the formal sector.
- Second-Policymakers must learn to support informal enterprises on their own terms.
- Merely making it easy for MNCs and large companies to invest will not increase the growth of the economy.
- Third-Find ways to speed up the process of learning.
- Policymakers must learn how to speed up the process of learning within informal enterprises by developing their ‘soft’ skills.
- Large schemes to provide enterprises with hard resources such as money and buildings, which the government finds easier to organise, are necessary but inadequate for the growth of small enterprises.
- Fourth-Networks and clusters of small enterprises must be strengthened.
- They improve the efficiency of small firms by enabling sharing of resources.
- More clout to negotiate: They give them more clout to improve the terms of trade in their favour within supply chains.
- Reduced last-mile cost: They reduce the ‘last mile costs’ for agencies and providers of finance and other inputs to reach scattered and tiny enterprises.
- Fifth-The drumbeat for labour reforms must be changed.
- The laws should be simplified, and their administration improved. And, their thrust should be to improve the conditions of workers.
- Finally- The social security framework for all citizens must be strengthened.
- Health insurance and the availability of health services must be improved.
- And disability benefits and old-age pensions must be enhanced.
- The purpose of ‘labour reforms’ must be changed to provide safety nets, rather than make the workers’ lives even more precarious with misdirected attempts to increase flexibility.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- India-Sri Lanka relations, issues involved-Tamil minority, Chinese growing influence etc.
Context
During Mahinda Rajapaksa’s India visit, New Delhi is likely to talk to Colombo on the Tamil issue and counterbalance Beijing’s influence in the Indian Ocean.
Background of the current politics in Sri Lanka
- Sri Lankan Prime Minister official visit to India is taking place a few months after he assumed office and his brother was sworn in as president
- Nationalist wave after attacks: The brothers were voted to the office on a Sinhala nationalist wave, a sentiment that is a fallout of the Easter attacks on Christian shrines, including the Saint Anthony’s shrine, in April last year.
- The attacks had killed more than 250 people, six months before the elections.
- The polarisation worked in favour of the Rajapaksas vis-à-vis Sri Lanka’s 10 per cent Muslim population, mostly Tamils, who are especially numerous on the country’s east coast.
Tamil issue in Sri Lanka
- No engagement with Hindu Tamil: While Muslims have become the number one scapegoat for the Easter tragedy, the Rajapaksas have not tried to engage the Hindu Tamils
- LTTE background: Hindu Tamils, who make about 11 per cent of Sri Lanka’s population, have had an acrimonious relationship with Mahinda Rajapaksa ever since he wiped out the LTTE in 2009.
- Many members of the community became collateral victims in the process.
- Implications for India-Sri Lanka relations: Gotabaya was the defence secretary at that time. The Hindu Tamil factor may complicate India-Sri Lanka relations.
- No inclusion minorities from Sri Lanka in CAA: In the Citizenship Amendment Act the Indian Parliament passed in 2019, the persecuted minorities of Sri Lanka are not taken into account.
- However, the Hindu Tamils of Sri Lanka are feeling insecure again.
China-Sri Lanka axis
- The China factor is likely to aggravate the complication: The Rajapaksas are known to be pro-Sri Lanka. Mahinda Rajapaksa was largely responsible for opening Sri Lanka to massive — and strategic -Chinese investments.
- The Hambantota port issue: The Hambantota Port and 15,000 acres have been conceded to China on a 99-year lease, causing considerable consternation in New Delhi, which apprehends that this deep seaport could be used for military purposes, and not just trade.
- The deal was put on a hold by former PM but the present dispensation wants it to be restored.
- China’s growing clout in the Indian Ocean: India’s efforts were also designed to thwart China extending its influence in Sri Lanka at a time when the Narendra Modi administration is trying to counter Beijing’s clout in the Indian Ocean.
- Modi’s visited on May 30, 2019, just after beginning his second tenure as PM.
Past engagement events
- New Delhi has tried to engage the new Sri Lankan government after the Rajapaksas assumed office.
- India’s foreign minister S Jaishankar, landed in Sri Lanka on November 20, 2019, to invite Gotabaya for his first visit to India — rather than to China.
- Gotabaya visited New Delhi for three days in late November last year.
- Tamil issue discussed: Jaishankar is said to have told Gotabaya that India expects his government to treat Tamils with dignity in the process of reconciliation.
- There is speculation that India might appoint an ambassador of Tamil origin to Colombo.
- Cooperation against terrorism: The Indian PM went further when Gotabaya Rajapaksa visited New Delhi: He announced a $50 million line of credit for security and counter-terrorism
- Line of credit for Infra: India also announced another $400 million for development and infrastructure projects in Sri Lanka.
- That the counter-terror fund would further strengthen cooperation against terrorism.
- Allaying the fears over China: Gotabaya allayed India’s fears on China by saying that Sri Lanka would not allow a third country to affect Sri Lanka-India ties.
Conclusion
While addressing the issue of minority and growing Chinese influence in Sri Lanka both countries need to focus on the other areas of cooperation like counter-terrorism, trade, security, development, technology etc.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- How UPI is transforming payment and settlement, what makes UPI a success.
Context
India has crossed the target of a billion monthly digital payments. Now, to a billion transactions a day.
The story of payment revolution and financial inclusion in India
- Progress on the financial inclusion: India was long a financially excluded nation –only 17 per cent of Indians had a bank account in 2011.
- 50 more years estimate: The World Bank suggests it would have taken 50 more years for 80 per cent of Indians to get a bank account at the pre-2011 speed.
- Yet, we reached that milestone in 2018.
- How? A magical combination of
- Political will (Jan Dhana Yojana and Aadhaar embedding).
- A proactive central bank (creating a non-profit market participant entity and levelling the playing field between non-banks and banks).
- And a technology stack with three layers (identity, payments, and data).
- The rise of UPI
- The swift rise in use: The digital payment transactions on the Universal Payment Interface (UPI) platform rising from 0.1 million in October 2016 to 1.3 billion in January 2020.
- Result of working together: This represents the magic of entrepreneurs, nonprofits and policymakers working together.
- And gives us a new target — a billion transactions a day.
- India’s Payment revolution
- What are the components of the payment revolution: India’s payment revolution comes from-
- A clear vision: Shifting the system from low volume, high value, and high cost to high volume, low value, low cost.
- A clear strategy: Regulated and unregulated private players innovating on top of public infrastructure.
- And trade-offs balanced by design: Regulation vs innovation, privacy vs personalisation, and ease-of-use vs fraud prevention.
- What consumers wanted?
- Consumers wanted a payment experience that was mobile-first, low-cost, 24/7, instant, convenient, interoperable, fintech friendly, inside banking, and safe.
- Answers lies in UPI.
- What did UPI achieve?
- Interoperability: UPI created interoperability between all sources and recipients of funds -consumers, businesses, fintechs, wallets, 140 member banks.
- Instant settlement: UPI settles instantly inside the central bank in fiat money -state-issued money declared by the sovereign to be legal tender.
- Blunted data monopolies: Big tech firms have strong autonomy but weak fiduciary responsibilities over customer data, it was taken care of by UPI.
5 Policy lessons from the success of UPI
- First- how the India stack: Interconnected yet independent platforms or open APIs — are a public good that-
- Lowers costs, spur innovation and blunts the natural digital winner-takes-all.
- Replication in other areas: Replicating this in education, healthcare, and government services are likely to be a harbinger of large scale multi-domain collaborative innovation.
- Second-collaboration: Collaboration can create ecosystems that overcome the birth defects of its constituents–
- The execution deficit of government, the trust deficit of private companies, and the scale deficit of nonprofits.
- Third-policy intervention: Complementary policy interventions are important.
- Demonetisation and GST are changing the stories that firms and individuals tell themselves around cash and informality.
- Fourth-human capital and diversity matter: This revolution needed career bureaucrats to partner with academics, tech entrepreneurs, venture capitalists, global giants and private firms.
- The final lesson-Western model is not needed always: India doesn’t need to be Western or Chinese to be modern. If our policymakers had copied Alipay or US banks, we wouldn’t have leapfrogged their birth defects.
Way forward
- Fix the deadline: The central government must deadline digitising all its payments.
- RBI implement 100+ action items: The RBI must implement the 100-plus action items arising from its own Vision 2021 document and the Nandan Nilekani Committee for Deepening Digital Payments.
- UPI for inward remittances: RBI must also make UPI and RuPay fit for use in our $70 billion inward remittances that currently come through exploitative financial institutions which don’t have clients but hostages.
- Replication of UPI in bank credit: The RBI must replicate the core design of UPI — fierce but sustainable private and public competition in bank credit-
- Our 50 per cent credit-to -GDP ratio is one of the reasons India is poor.
- China’s 300 per cent is the wrong number, but reaching the OECD average of 100 per cent needs the RBI to do many things-
- Raising its human capital and technology game in regulation and supervision.
- Catalysing an ecosystem for lending against the rapidly expanding digital exhaust of small firms and individuals.
- Issuing more private bank licences, facilitating management changes in old private banks with market caps that signal questions about book value, and shepherding governance and human capital revolution at PSU banks.
Conclusion
Converting the collective independence our citizens got in 1947 to individual freedom surely involved universal financial inclusion. The gap between this aspiration and reality was not a lie but a disappointment because our capital got handicapped without labour and our labour got handicapped without capital. Change has begun -the RBI, the finance ministry, and many individuals deserve our gratitude and dues for a billion digital payments a month. We now ask you for a billion digital payments a day.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: FGM
Every year, February 6 is observed as the International Day of Zero Tolerance for Female Genital Mutilation (FGM). As per the WHO, globally, over 200 million girls alive today have suffered FGM in over 30 countries.
Female Genital Mutilation
- FGM is the name given to procedures that involve altering or injuring the female genitalia for non-medical or cultural reasons.
- It is recognised internationally as a violation of human rights and the health and integrity of girls and women.
- Most girls and women who have undergone FGM live in sub-Saharan Africa and the Arab States, but it is also practiced in some countries in Asia, Eastern Europe and Latin America.
- According to the United Nations Population Fund (UNFPA), while the exact origins of the practice remain unclear, it seems to have predated Christianity and Islam.
- It says that some Egyptian mummies display characteristics of FGM.
- Significantly, the ancient Greek historian Herodotus has claimed that in the fifth century BC, the Phoenicians, the Hittites and the Ethiopians practised circumcision.
Why is Female Genital Mutilation practiced?
- Depending on the region, there can be various reasons why FGM is performed. The UNFPA has categorised the reasons into five categories —
- psycho-sexual reasons (when FGM is carried out as a way to control women’s sexuality, “which is sometimes said to be insatiable if parts of the genitalia, especially the clitoris, are not removed);
- sociological or cultural reasons (when FGM is seen as part of a girl’s initiation into womanhood and an intrinsic part of a community’s cultural heritage);
- hygiene and aesthetic reasons (this may be the reason for those communities that consider the external female genitalia as ugly and dirty);
- religious reasons (the UNFPA maintains that while FGM is not endorsed by Christianity or Islam, “supposed” religious doctrines may be used to justify the practice);
- socio-economic factors (in some communities FGM is a pre-requisite for marriage, especially in those communities where women are dependent on men economically).
- Other reasons cited by the WHO include- an attempt to ensure women’s premarital virginity since FGM is believed to reduce libido, and therefore believed to help her resist extramarital sexual acts.
- FGM may also be associated with cultural ideals of feminity and modesty.
Economic cost of FGM
- Beyond the immense psychological trauma it entails, FGM imposes large financial costs and loss of life.
- In 2018, a study on FGM in India said that the practice was up to 75 per cent across the Bohra Muslim community.
- The economic costs of treating health complications arising out of FGM amount to roughly $1.4 billion for 2018 for 27 countries where FGM is performed.
- If the prevalence remains the same, the amount is expected to rise up to $2.3 billion by 2047.
FGM in India
- According to the aforementioned study, the reasons for FGM referred to as “Khafd” in India include continuing an old traditional practice, adhering to religious edicts, controlling women’s sexuality and abiding by the rules stated by the religious clergy.
- It also states that the issue first rose to prominence in India because of two international legal cases on FGM against practising Bohras in Australia and the US.
- In 2018, a bench of then CJI Dipak Misra referred a petition seeking a ban on FGM among Dawoodi Bohra girls to a five-judge Constitution Bench.
- The Dawoodi Bohra community, on the other hand, maintained that the practice should be allowed since the Constitution grants religious freedom under Article 25.
For detailed health risks associated with FGM, navigate to the page:
Health hazards of FGM
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: “Vivad se Vishwas” Scheme
Mains level: Various tax amnesty schemes
The government has introduced The Direct Tax Vivad se Vishwas Bill, 2020.
Direct Tax Vivad se Vishwas Bill
- In essence, the Bill is aimed at resolving direct tax-related disputes in a speedy manner.
- In the last budget, Sabka Vishwas Scheme was brought in to reduce litigation in indirect taxes. It resulted in settling over 1,89,000 cases.
- The Vivad se Vishwas Scheme is to do for direct tax-related disputes exactly what Sabka Vishwas did for indirect tax-related disputes.
Why need such a scheme?
- At present, there are as many as 4,83,000 direct tax cases pending in various appellate forums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court.
- The idea behind the scheme is to reduce litigation in the direct tax arena.
What are the specifics of the scheme?
- A taxpayer would be required to pay only the amount of the disputed taxes and will get a complete waiver of interest and penalty provided he pays by 31st March 2020.
- Those who avail this scheme after 31st March 2020 will have to pay some additional amount.
- However, the scheme will remain open only till June 30, 2020. The scheme also applies to all case appeals that are pending at any level.
How much money is at stake?
- According to reports, over Rs 9 lakh crore worth of direct tax disputes are pending in the courts.
- The government hopes to recover a big chunk of this in a swift and simple way, while offering the taxpayers the relief of not having to fight the case endlessly.
- For a government that is staring at a big shortfall in revenues, especially tax revenues, the scheme makes a lot of sense.
What was the response to the Sabka Vishwas scheme?
- At last count, the government expected to have raised Rs 39,500 crore from the Sabka Vishwas scheme, which was only about indirect tax disputes.
- The amnesty window for Sabka Vishwas closed on January 15 and close to 1.90 lakh crore applications, in relation to taxes worth Rs 90,000 crore was received.
- One of the standout successes of this scheme was Mondelez India Foods Pvt Ltd (which was earlier known as Cadbury India) settled one of its most controversial tax disputes.
- The firm was accused of evading taxes to the tune of Rs 580 crore (excluding taxes and penalties). In the end, Mondelez paid Rs 439 crore on January 20 under the amnesty scheme.
Criticisms of the Bill
- The bill led to an uproar in Parliament.
- The opposition criticised the Bill first for the use of Hindi words in its name, arguing that this was government’s way to impose Hindi on the non-Hindi speakers.
- They also argued that the Bill treats honest and dishonest people equally.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NMMSS
Mains level: Policy measures to curb school dropouts
The NMMSS has helped to reduce the drop-out rate at the secondary and senior secondary classes, informed Union HRD Minister.
National Means-cum-Merit Scholarship Scheme
- The Centrally Sponsored Scheme NMMSS was launched in May, 2008.
- The objective of the scheme is to award scholarships to meritorious students of economically weaker sections to arrest their drop out at class VIII and encourage them to continue the study at secondary stage.
- Under the Scheme one lakh fresh scholarships @ of Rs.12000/- per annum per student are awarded to selected students of class IX every year and their continuation/renewal in classes X to XII for study in a State Government, Government-aided and Local body schools.
- The selection of students for award of scholarships under the scheme is made through an examination conducted by the States/UTs Governments.
Progress of the scheme
- As on date approx 16.93 lakh scholarships have been sanctioned to the Students across the country.
- Heads of all the institutions disclosed that the NMMS Scheme has reduced the drop-out rate at the secondary and senior secondary classes, particularly from Classes VIII to XII.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Lucknow Declaration
Mains level: India-Africa Framework for Strategic Cooperation
The first India-Africa Defence Ministers’ Conclave held in Lucknow has adopted the Lucknow Declaration.
India-Africa Framework for Strategic Cooperation
The declaration:
- Acknowledges contribution of Indian defence forces in humanitarian assistance and disaster relief operations in Africa.
- It appreciates initiation of Africa India Field Training Exercises with the first ever AFINDEX in March 2019 and agree that it will further strengthen cooperation in defence preparedness and security.
- The vision is to achieve ‘a conflict-free Africa, prevent genocide, make peace a reality for all and rid the continent of wars, violent conflicts, human rights violations, and humanitarian disasters.
- It call for deeper cooperation in the domain of defence industry including through investment, joint ventures in defence equipment software, digital defence, research & development etc.
- It recognizes the common security challenges such as terrorism and extremism, piracy, organised crime including human trafficking, drug trafficking, weapon smuggling and others.
- The members endorsed initiatives such as African Peace and Security Architecture (APSA), Silence The Guns in Africa and Agenda 2063.
- It calls for strengthening the UN Counter-Terrorism mechanisms and to ensure strict compliance with the UN Security Council sanctions regime on terrorism.
- It urged the international community to envisage the adoption of Comprehensive Convention on International Terrorism in the UNGA.
- The members recognized the importance of the oceans and seas to the livelihoods of our peoples and that Maritime security is a pre-requisite for the development of Blue or Ocean economy.
- It sought to increase cooperation in securing sea lines of communication, preventing maritime crimes, disaster, piracy, illegal, unregulated and unreported fishing through sharing of information and surveillance.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Second National Judicial Pay Commission
Mains level: Judiciary instititutional issues
The Second National Judicial Pay Commission has filed its report covering the subject of Pay, Pension and Allowances in the Supreme Court.
Second National Judicial Pay Commission
- The Commission is headed by former Supreme Court judge P V Reddy.
- It was set up on the directions of the apex court in May 2017 during the hearing of the All India Judges Association case.
Key recommendations
1) Pay
- It has recommended the adoption of Pay Matrix which has been drawn up by applying the multiplier of 2.81 to the existing pay, commensurate with the percentage of increase of pay of High Court Judges.
- The highest pay which a District Judge (STS) will get, is Rs.2,24,100/-.
2) Pension
- Pension at 50% of last drawn pay worked out on the basis of proposed revised pay scales is recommended w. e. f. 1-1-2016. The family pension will be 30% of the last drawn pay.
- Recommendation has been made to discontinue the New Pension Scheme (NPS) which is being applied to those entering service during or after 2004. The old pension system, which is more beneficial to be revived.
3) Allowances
- The existing allowances have been suitably increased and certain new features have been added. However, the CCA is proposed to be discontinued.
- Certain new allowances viz. children education allowance, home orderly allowance, transport allowance in lieu of pool car facility, has been proposed.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Euthermia
Mains level: Not Much
Euthermia refers to normal body temperature. The thermometer reading of 98.6°F has been a gold standard for a century and a half, ever since a German doctor laid it down as the “normal” body temperature. A new research has found that body temperatures have, in fact, been declining over the last two centuries.
Why we follow 98.6°F?
- In 1851, Carl Reinhold August Wunderlich pioneered the use of the clinical thermometer.
- It was a rod a foot long, which he would stick under the armpits of patients at the hospital attached with Leipzig University, and then wait for 15 minutes (some accounts say 20 minutes) for the temperature to register.
- He took over a million measurements of 25,000 patients, and published his findings in a book in 1868, in which he concluded that the average human body temperature is 98.6°F.
- Most modern scientists feel Wunderlich’s experiments were flawed, and his equipment inaccurate.
- Another study concluded that the average human body temperature is closer to 98.2°F, and suggested that the 98.6°F benchmark be discarded.
The body is cooler
- The Stanford University the researchers confirmed some known trends — body temperature is higher in younger people, in women, in larger bodies and at later times of the day.
- Additionally, they found that the bodies of men born in the early to mid-1990s is on average 1.06°F cooler than those of men born in the early 1800s.
- And the body temperature of women born in the early to mid-1990s is on average 0.58°F lower than that of women born in the 1890s.
- The calculations from the research correspond to a decrease in body temperature of 0.05°F every decade.
Why there’s decrease in body temperature?
- The researchers have proposed that the decrease in body temperature is the result of changes in the environment over the past 200 years, which have in turn driven physiological changes.
- The decrease in average body temperature in the US, they said, could be explained by a reduction in metabolic rate, or the amount of energy being used.
- The environment that we’re living in has changed, including the temperature in our homes, our contact with microorganisms and the food that we have access to.
- Actually the human body is changing physiologically.
So what’s the normal temperature?
- The strong influences of age, time of day, and genders determine the healthy body temperature.
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