Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 3- India's economic recovery post pandemic
The article highlights the factors that explain that India’s economic recovery is broad-based and sustainable in nature.
Revising India’s GDP forecast
- With major banks, investor advisory groups, and credit rating agencies revising their GDP forecasts for the next financial year while lowering estimates of economic contraction for this fiscal, surely the bounce back is well on track.
- Some of the earlier assessments were too pessimistic and assumed a gradual pace of economic normalisation.
- Thus, a reassessment was given but nevertheless welcome.
Many continue to challenge conventional belief regarding India’s economic recovery being broad-based and sustainable in nature. It is important that we look at underlying data and relate it with steps undertaken by the government with the sole objective of reviving India’s economy.
1) Employment figures
- Economic activity will see a faster revival than employment figures as labour markets tend to lag.
- This is because most firms face costs associated with hiring and firing and they prefer to adjust the working hours before adjusting employment numbers.
- Trends labour market does indicate prospects of a cyclical recovery which will lead to jobs being added at a faster pace than what was originally estimated.
- Critically, the new scheme subsiding part of the EPFO contribution for the unskilled workers will benefit enormously which will then have spill-over effects.
2) Normalisation driven by rural economy
- The bulk of the normalisation of economic activity was driven by the rural economy which eventually benefited the rest of the economy.
- Rural growth has gained momentum and definitely augurs well for the Indian economy as it gets one of the engines firing.
- The strong push by the government towards financing construction of assets has a significant impact.
3) Avoiding excessive and inefficient use of public funds
- The design of the aid by the government is similar in terms of its size to programmes announced by other emerging markets.
- However, the choice of instruments is along the lines those deployed by developed countries.
- The government has refrained from excessive and inefficient use of public funds by restricting expenditures to temporary fiscal commitments.
- This is important as our 2008 response had a lot of permanent fiscal expenditures which led to a systematic deterioration of our macroeconomic fundamentals.
- The government has taken undertaken a sizable fiscal expansion combining automatic stabilizers, cash transfers, bank guarantees, expansion of expenditure under various programs such as MGNREGA, Food Security Act and Urban Affordable Housing Measures.
- The fiscal component under each of these policies can be easily reversed making it possible for India to revert to its fiscal consolidation path a lot sooner.
4) Structural reforms as a part of its economic response package
- These reforms are geared at unshackling the productivity potential in areas such as APMCs, labour markets, other reforms that allow for greater private role within the economy in critical areas such as coal, space technology etc.
- These moves and their productivity gains will help India improve its potential growth rate.
- This means that India should be better equipped at sustaining a high-growth rate of above 7 per cent due to the productivity gains that will be an outcome of the proposed reforms.
- This will further help a faster reduction in fiscal deficit as a percentage of GDP and our public debt to GDP figures.
Conclusion
Strong macroeconomic fundamentals are necessary for sustained economic growth and the government has focused on a response package which prioritises sustainability of growth rather than having a fast yet unsustainable economic recovery from the crisis.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Key trends in India's economic history
Mains level: Paper 3- Analysing India's economic progress
The article analyses India’s economic trajectory after independence and divides it into five phases. India’s progress is also compared with Pakistan’s as both countries have had much in common.
What drives economic growth
- Examining the experiences of different countries to analysing the growth may seem a promising approach.
- However, generalising from specific experiences can be misleading since ground conditions vary hugely across countries.
- There are two ways to avoid the pitfalls of generalising from specific cases.
- 1) The first is to examine the same country over time to look for changes in outcomes at specific points in time.
- 2) A second approach is to compare countries with shared history, culture and geography.
- If there are stark differences in outcomes between them, then there may be some policy lessons to be drawn.
The Indian subcontinent provides lessons from both approaches. The 73 years of post-Independence India has generated a lot of evidence across different political-economic regimes. This period has also provided us with the contrasting experiences of India and Pakistan, two countries that share history, geography and socio-cultural mores.
5 phases of India’s economic progress in 73 years: first approach
- 1) The first phase was the period 1950-65. This was the Nehruvian period of state-led industrialisation.
- Starting in 1950 annual per person GDP growth averaged 2 per cent during this period.
- This translated to aggregate annual GDP growth of around 4 per cent since the population was growing at close to 2 per cent.
- 2) The second phase of post-Independence India was during 1965-84.
- This period was an unmitigated economic disaster with negative per capita growth.
- The phase was marked with increasing state control of the economy, nationalisation of industry, closing of the economy to trade and a systematic weakening of institutions.
- 3) The third phase is 1984-91 when the government ushered in the first round of economic reforms by liberalising capital goods imports as well as starting industrial de-licensing.
- These reforms were rewarded by a growth take-off. India’s annual per capita GDP growth averaged 3.1 per cent while aggregate GDP grew at 5.2 per cent during 1984-91.
- 4) The period 1991-2004 is typically classified as the liberalisation phase.
- The reform effort was reflected in the 4.9 per cent annual per capita GDP growth during 1991-2004.
- 5) India embarked on a distinctive phase of faster growth post-2004 on the back of large investments in infrastructure.
- Per person GDP growth in the period 2004-2015 averaged 7.7 per cent.
- The corresponding aggregate GDP growth averaged 9 per cent.
- This came at a cost, as a number of these infrastructure projects later caused problems in the banking sector on account of burgeoning NPAs, a problem that continues till today.
Comparison with Pakistan
- In 1950, Pakistan’s per person GDP was almost 50 per cent greater than India that year.
- Due to political uncertainty, Pakistan stagnated throughout the 1950s while a politically stable India grew.
- As a result, by 1960, India had almost caught up with Pakistan in per capita GDP terms.
- Unfortunately, from 1964, India went into two decades of economic stagnation while Pakistan opened up to foreign capital.
- By 1984, Pakistan’s per capita income was more than double that of India’s.
- Pakistan’s slowdown began in the 1980s.
- This period coincided with the reforms in India.
- Nevertheless, it wasn’t till as recently as 2010 that India’s per capita GDP finally overtook Pakistan.
4 takeaways
- First, openness to trade and private enterprise usually has positive effects on growth.
- Second, rapacious and exploitative democratic systems do not necessarily promote growth. Pakistan in the 1950s, 1990 and post-2010 is a good example.
- Third, the socio-economic environment surrounding religious fundamentalism may be inimical to growth.
- Fourth, degradation of institutions that regulate, arbitrate and enforce laws can be costly.
Conclusion
India’s growth when analysed from both the perspective offers valuable lessons for India and these lessons must guide India’s future economic trajectory.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: RCEP countries
Mains level: Paper 3- RCEP and India's concerns about it
The article examines the significance of the RCEP and India’s concerns over its provision.
Significance of RCEP
- Last week, 15 East Asian countries signed the Regional Comprehensive Economic Partnership (RCEP), the largest free trade agreement (FTA) ever.
- In 2019, RCEP members accounted for about 30% of world output.
- More importantly, about 44% of their total trade was intra-RCEP, which is a major incentive for the members of this agreement.
- The deal could contribute to the strengthening of the regional value chains.
Comparing RCEP with Trans-Pacific Partnership (TPP)
- The TPP included several regulatory issues including labour and environmental standards and “anti-corruption”.
- All of these issues could raise regulatory barriers and severely impede trade flows.
- In contrast, RCEP includes traditional market access issues, following the template provided by the World Trade Organization (WTO).
- RCEP also includes issues like electronic commerce, investment facilitation that are currently being discussed by WTO members to “reform the multilateral trading system”.
Would RCEP be able to realise trade and investment liberalisation?
- In case of trade in goods, RCEP members have taken big strides towards lowering their tariffs.
- However, commitments made by RCEP members for services trade liberalisation do look shallow in terms of the coverage of the sectors.
- Movement of natural persons, an area in which India had had considerable interest, is considerably restricted.
- The areas of investment and electronic commerce, in both of which India had expressed its reservations on the template adopted during RCEP negotiations, the outcomes are varied.
- The text on investment rules shows that it is a work-in-progress.
- The rules on dispute settlement procedures are yet to be written in.
Will India’s concerns get addressed in near future?
- The answer seems to be unambiguously in the negative on two counts.
- 1) Two of the concerns India had raised, namely, the deep cuts in tariffs on imports from China, and provisions relating to the investment chapter, have become even more significant over the past several months.
- 2) India’s Atmanirbhar Bharat Abhiyan is primarily focused on strengthening domestic value chains, while RCEP, like any other FTA is solely focused on promoting regional value chains.
Consider the question “What were India’s concerns about RCEP that resulted in India not signing it? ”
Conclusion
This suggests that the prospects of India joining the RCEP in the near future appears bleak.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Comparison of TIbetan constitutional scheme with India
Mains level: TIbetan refugees issue
Over 1.3 lakh Tibetans living in exile and settled across India and other parts of the globe shall be electing their next Parliament-in-Exile, called Central Tibetan Administration, and it’s head in May 2021.
Do you think that India’s support for the Tibetan cause is the root cause of all irritants in India-China relations?
Electing the exiled Government
- The Tibetan Parliament-in-Exile (TPiE) has its headquarters in Dharamsala, in the Kangra district of Himachal Pradesh.
- According to the Green Book of the Tibetan government-in-exile, over 1 lakh Tibetans are settled across India.
- The remaining are settled in United States, Australia, Brazil, Canada, Costa Rica, France, Mexico, Mongolia, Germany, United Kingdom, Switzerland and various other countries.
Here is how the Tibetan elections will be held:
Tibetan Parliament-in-Exile (TPiE)
- The Speaker and a Deputy Speaker head the Tibetan Parliament-in-exile.
- The 16th TPiE had 45 members – 10 representatives from each of the traditional provinces of Tibetan – U-Tsang, Dhotoe and Dhomey.
- It includes two members from each of the four schools of Tibetan Buddhism and the pre-Buddhist Bon religion.
- Other representatives are from the Tibetan Communities in North America and Europe; and from Australasia and Asia (excluding India, Nepal and Bhutan).
- Till 2006, it used to be called as Assembly of Tibetan People’s Deputies (ATPDs) with the chairman as its head and a vice-chairman.
Tibetan Constitution
- The Central Tibetan Administration exists and functions on the basis of the Constitution of the Tibetan government called the ‘The Charter of the Tibetans in Exile’.
- In 1991, The Constitution Redrafting Committee instituted by the Dalai Lama prepared the Charter for Tibetans in exile. The Dalai Lama approved it on June 28, 1991.
- In 2001, fundamental changes happened with the amendment of the Charter that facilitated the direct election of the Kalon Tripa by the Tibetans in exile.
- The Kalon Tripa is called Sikyong or president of the Central Tibetan Administration.
The Kashag (Cabinet)
- The Kashag (Cabinet) is the Central Tibetan Administration’s highest executive office and comprise seven members.
- It is headed by the Sikyong (political leader) who is directly elected by the exiled Tibetan population.
- Sikyong subsequently nominates his seven Kalons (ministers) and seeks the parliament’s approval. The Kashag’s term is for five years.
A backgrounder: Democracy for Tibet
- The Dalai Lama began democratization soon after he came to India during the 1959 Tibetan National Uprising.
- He reportedly asked Tibetans in exile to choose their representatives through universal adult suffrage, following which polls were held for electing Tibetan Parliamentarians in 1960.
- Democracy for the Tibetans, thus, began in exile.
- The Dalai Lama, however, continued to remain the supreme political leader. On March 14, 2011, he relinquished his political responsibilities, ending a 369-year-old practice.
Is TPiE officially recognised by any country?
- Not exactly, it is not recognised officially by any country, including India.
- But, a number of countries including the USA and European nations deal directly with the Sikyong and other Tibetan leaders through various forums.
- The TPiE claims its democratically-elected character helps it manage Tibetan affairs and raise the Tibetan issue across the world.
- The incumbent Sikyong, Lobsang Sangay, was among the guests who attended the oath-taking ceremony of our PM in 2014, probably a first.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Office of Profit
Mains level: Office of Profit and associated issue
The Joint Parliamentary Committee on Office of Profit has deliberated on whether a Parliamentarian can continue to teach at University and if this draws the provisions of “Office of Profit” rules.
Note: The Constitution of India does not define the Office of Profit. It has only mentioned it under Article 102 (1) and Article 191 (1).
The concept of ‘Office of Profit’
- MPs and MLAs, as members of the legislature, hold the government accountable for its work.
- The essence of disqualification is if legislators hold an ‘office of profit’ under the government, they might be susceptible to government influence, and may not discharge their constitutional mandate fairly.
- The intent is that there should be no conflict between the duties and interests of an elected member.
- Hence, the office of profit law simply seeks to enforce a basic feature of the Constitution- the principle of separation of power between the legislature and the executive.
What governs the term?
- At present, the Parliament (Prevention of Disqualification) Act, 1959, bars an MP, MLA or an MLC from holding any office of profit under the central or state government unless it is exempted.
- However, it does not clearly define what constitutes an office of profit.
- Legislators can face disqualification for holding such positions, which bring them financial or other benefits.
- Under the provisions of Article 102 (1) and Article 191 (1) of the Constitution, an MP or an MLA (or an MLC) is barred from holding any office of profit under the Central or State government.
An Un-defined term
- The officials of the law ministry are of the view that defining an office of profit could lead to the filing of a number of cases with the Election Commission and the courts.
- Also, once the definition is changed, one will also have to amend various provisions in the Constitution including Article 102 (1) (a) and Article 109 (1) (a) that deal with the office of profit.
- It will have an overarching effect on all the other sections of the Constitution.
Factors constituting an ‘office of profit’
- The 1959 law does not clearly define what constitutes an office of profit but the definition has evolved over the years with interpretations made in various court judgments.
- An office of profit has been interpreted to be a position that brings to the office-holder some financial gain, or advantage, or benefit. The amount of such profit is immaterial.
- In 1964, the Supreme Court ruled that the test for determining whether a person holds an office of profit is the test of appointment.
Several factors are considered in this determination including factors such as:
- whether the government is the appointing authority,
- whether the government has the power to terminate the appointment,
- whether the government determines the remuneration,
- what is the source of remuneration, and
- the power that comes with the position.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: IRNSS, IMO, NaVIC
Mains level: IRNSS
The Indian Regional Navigation Satellite System (IRNSS) has been accepted as a component of the World Wide Radio Navigation System (WWRNS) for operation in the Indian Ocean Region by the International Maritime Organization (IMO).
Try this PYQ:
With reference to the Indian Regional Navigation Satellite System (IRNSS), consider the following statements:
- IRNSS has three Satellites in geostationary and four satellites the geosynchronous orbits.
- IRNSS covers entire India and about 5500 sq. km beyond its borders.
- India will have its own satellite navigation system with full global coverage by the middle of 2019.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) None
What is IRNSS?
- The IRNSS, with an operational name of NavIC (acronym for Navigation with Indian Constellation) is an Indian regional satellite navigation system that provides accurate real-time positioning and timing services.
- It covers India and a region extending 1,500 km around it, with plans for further extension.
- The system currently consists of a constellation of seven satellites, with two additional satellites on ground as stand-by.
- The constellation is in orbit as of 2018, and the system was expected to be operational from early 2018 after a system check.
- It will provide two levels of service, the “standard positioning service”, which will be open for civilian use, and a “restricted service” (an encrypted one) for authorised users (including the military).
Benefits of the move
- This move will enable merchant vessels to use IRNSS for obtaining position information similar to GPS and GLONASS.
- This will assist in the navigation of ships in Indian ocean waters within the area covered by 50°N latitude, 55°E longitude, 5°S latitude and 110°E longitude (approximately up to 1500 km from Indian boundary).
Back2Basics: International Maritime Organisation (IMO)
- IMO is the UN specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships.
- Its primary purpose is to develop and maintain a comprehensive regulatory framework for shipping and its remit today includes safety, environmental concerns, legal matters, technical co-operation, maritime security and the efficiency of shipping.
- IMO is governed by an assembly of members and is financially administered by a council of members elected from the assembly.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: National Digital Health Mission
Mains level: Healthcare in India
The National Digital Health Mission will soon be ready for a nationwide roll-out, confirmed the Chairman of National Health Authority and CEO of Ayushman Bharat.
Must read:
[Burning Issue] Rolling-out of National Digital Health Mission
National Digital Health Mission
- Our PM has launched the National Digital Health Mission on 15th August 2020.
- The mission aims to create an integrated healthcare system linking practitioners with the patients digitally by giving them access to real-time health records.
- It is a complete digital health ecosystem. The digital platform will be launched with four key features — health ID, personal health records, Digi Doctor and health facility registry.
- At a later stage, it will also include e-pharmacy and telemedicine services, regulatory guidelines for which are being framed.
Its implementation
- The NDHM is implemented by the National Health Authority (NHA) under the Ministry of Health and Family Welfare.
- The National Health Authority (NHA), is also the implementing agency for Ayushman Bharat.
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